4 levels of credit risk-weighted assets of microfinance institutions in Vietnam

According to Circular No. 33/2015/TT-NHNN of the State Bank of Vietnam (SBV), credit assets of a MFI shall be classified according to the level of risks into the following groups:

Credit assets given a risk weight of 0% include:

- Cash;

- Deposits at SBV;

- Outstanding debts which are entirely secured by deposits (either voluntary deposits or compulsory savings) at the MFI;

- Outstanding debts which are entirely secured by financial instruments issued by the Government;

- Outstanding debts of trusted loans and loans given by trust funds according to regulations on offer and acceptance of trusteeship performed by other credit institutions and foreign bank branches.

Credit assets given a risk weight of 20% include:

- Deposits at commercial banks;

- Outstanding debts of loans which are entirely secured by deposits at other credit institutions or foreign bank branches in Vietnam;

- Outstanding debts of loans which are entirely secured by financial instruments issued by state-owned financial institutions, other credit institutions or foreign bank branches in Vietnam.

Credit assets given a risk weight of 50% include:

- Outstanding debts of loans secured by housing, land use rights, housing attached to land use rights of borrowers at the MFI;

- Outstanding secured debts of savings and borrowing clientele at the MFI.

Credit assets given a risk weight of 100% include:

- Outstanding debts other than those specified above;

- All credit assets other than those specified above.

View levels of credit risk-weighted assets at Circular No. 33/2015/TT-NHNN of the State Bank of Vietnam, effective from March 01, 2016.

- Khanh Chi -

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