06 Principles for Provisioning and Accounting of Risk Provisions by the SBV

17:37, 10/07/2024

The content is detailed in Circular 39/2013/TT-NHNN stipulating the determination, provisioning, management, and use of risk reserves of the State Bank of Vietnam.

According to Circular 39/2013/TT-NHNN, the provisioning, accounting, and utilization of risk reserves by the State Bank of Vietnam must ensure the following principles:

Provisioning Risk Reserves of the State Bank, Circular 39/2013/TT-NHNN

Source: Internet

- Annually, the State Bank provisions for risk reserves and accounts this into costs, amounting to 10% of the difference between revenues and expenses, not including the risk reserve expenses. The balance of the risk reserve after provisioning must not exceed the required provision.- The provisioning and accounting for the risk reserve within the financial year of the State Bank are centrally conducted at the State Bank (Finance and Accounting Department).- Unused risk reserves for the year are carried forward to the subsequent year for continued use.- In cases where the risk reserve is insufficient to cover losses, the remaining portion will be handled according to the existing financial regulations of the State Bank.- If the required provisioning for the risk reserve is less than the balance before provisioning, the State Bank will reverse the difference into its income.- The risk reserve is generally used to cover losses and damages to assets incurred during operation, after compensation from organizations, individuals responsible for the loss, and insurance organizations (if any) has been accounted for.

Further regulations can be found in Circular 39/2013/TT-NHNN effective from June 1, 2014.

Thu Ba

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