Circular 39: 03 Principles for Risk Provision Accounting by the SBV

16:41, 10/07/2024

This content is issued by the State Bank of Vietnam in Circular 39/2013/TT-NHNN regulating the identification, provisioning, management, and use of risk provisions by the State Bank of Vietnam.

Currently, units under the State Bank of Vietnam perform the determination of specific provisions as stipulated in Articles 4, 6, and 7 of Circular 39/2013/TT-NHNN, prepare reports, and submit them to the Finance - Accounting Department at the end of December 31 annually to serve as a basis for provisioning for risks of the State Bank of Vietnam. The Finance - Accounting Department determines general provisions according to the provisions at Clause 3, Article 7 of Circular 39.

Principles for accounting risk provisions of the SBV, Circular 39/2013/TT-NHNN Source: Internet

To be specific, based on the total specific provisions reported by units under the State Bank of Vietnam and general provisions, the Finance - Accounting Department calculates and accounts for the risk provisions formed in the fiscal year according to the following principles:

- In case the amount of risk provision required to be additionally provisioned is less than 10% of the difference between revenue and expenditure excluding such risk provisions: The risk provision formed in the fiscal year equals the amount of risk provision required to be additionally provisioned;- In case the amount of risk provision required to be additionally provisioned is equal to or greater than 10% of the difference between revenue and expenditure excluding such risk provisions: The risk provision formed in the fiscal year equals 10% of the difference between revenue and expenditure excluding such risk provisions;- In case the amount of risk provision required to be provisioned is less than the balance of the risk provision before provisioning: The State Bank of Vietnam will account according to the provisions at Clause 6, Article 3 of Circular 39/2013/TT-NHNN.

Therefore, the Finance - Accounting Department calculates and accounts for the risk provisions formed in the fiscal year, which must be done according to the principles stipulated in Circular 39/2013/TT-NHNN.

More details can be found in Circular 39/2013/TT-NHNN which is effective from June 1, 2014.

Thu Ba

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