What are regulations on scoring of specific indicators and subgroups of quantitative indicators regarding scoring and rating banks in Vietnam?
As far as I know, there will be new regulations on scoring and rating banks. What are regulations on scoring of specific indicators and subgroups of quantitative indicators regarding scoring and rating banks in Vietnam? Thank you!
Ngoc Anh - anh*****@gmail.com
What are regulations on scoring of specific indicators and subgroups of quantitative indicators regarding scoring and rating banks in Vietnam? - image from internet
Pursuant to Article 13 of the Circular 52/2018/TT-NHNN on the credit rating of credit institutions and foreign bank branches, which is issued by the Governor of the State Bank of Vietnam, stipulating regulations on scoring of specific indicators and subgroups of quantitative indicators in Vietnam:
The score of each quantitative indicator in 06 rating criteria may be 1, 2, 3, 4 or 5; the score given to a subgroup of quantitative indicator ranges from 1 (equivalent to Poor) to 5 (equivalent to Excellent). Followings are specific regulations:
1. The score of a quantitative indicator shall be determined based on the value comparison between that indicator and the corresponding benchmark. The benchmark for scoring of a quantitative indicator shall be determined based on historical data of a credit institution or foreign bank branch. The score of each quantitative indicator shall be determined according to the following specific regulations:
a) The higher the value of a quantitative indicator gets, the lower the level of risk:
(i) The score will stand at 5 if the value of the indicator is either greater than or equal to the benchmark of 1;
(ii) The score will stand at 4 if the value of the indicator is either greater than or equal to the benchmark of 2, and is less than the benchmark of 1;
(iii) The score will stand at 3 if the value of the indicator is either greater than or equal to the benchmark of 3, and is less than the benchmark of 2;
(iv) The score will stand at 2 if the value of the indicator is either greater than or equal to the benchmark of 4, and is less than the benchmark of 3;
(v) The score will stand at 1 if the value of the indicator is less than the benchmark of 4.
b) The higher the value of a quantitative indicator, the higher the risk level:
(i) The score will stand at 5 if the value of the indicator is either less than or equal to the benchmark of 1;
(ii) The score will stand at 4 if the value of the indicator is either less than or equal to the benchmark of 2, and is greater than the benchmark of 1;
(iii) The score will stand at 3 if the value of the indicator is either less than or equal to the benchmark of 3, and is greater than the benchmark of 2;
(iv) The score will stand at 2 if the value of the indicator is either less than or equal to the benchmark of 4, and is greater than the benchmark of 3;
(v) The score will stand at 1 if the value of the indicator is greater than the benchmark of 4.
c) The nearer to 0 the value of a quantitative indicator, the lower the risk level:
(i) The score will stand at 5 if the absolute value of the indicator is either less than or equal to the benchmark of 1;
(ii) The score will stand at 4 if the absolute value of the indicator is either less than or equal to the benchmark of 2, and is greater than the benchmark of 1;
(iii) The score will stand at 3 if the absolute value of the indicator is either less than or equal to the benchmark of 3, and is greater than the benchmark of 2;
(iv) The score will stand at 2 if the absolute value of the indicator is either less than or equal to the benchmark of 4, and is greater than the benchmark of 3;
(v) The score will stand at 1 if the absolute value of the indicator is greater than the benchmark of 4.
d) Benchmark of 1, 2, 3 and 4 of each quantitative indicator applied to each equally-ranked group shall be subject to Article 14 herein.
2. The score of a subgroup of quantitative indicators in each criterion shall be determined by the sum of scores given to specific quantitative indicators multiplied by the weighting factors for these indicators. The weighting factors for quantitative indicators applied to specific equally-ranked groups shall be regulated in Article 15 herein.
3. As for quantitative indicators prescribed in point a and b of clause 1 of Article 7 herein, if credit institutions and foreign bank branches conform to prudential ratios referred to in Circular No. 41/2016/TT-NHNN, the score of a quantitative indicator prescribed in point a and b of clause 1 of Article 7 herein will be increased by 1 point after being determined as provided in point a and d of clause 1 of this Article.
Above are regulations on scoring of specific indicators and subgroups of quantitative indicators regarding scoring and rating banks in Vietnam. Please refer to the Circular 52/2018/TT-NHNN for further information.
Best regards!
