Losses for which the SBV uses risk provision to handle

Circular 39/2013/TT-NHNN stipulates that the State Bank is authorized to use the risk provision to handle losses arising from certain items, for example:

Source: Internet

- Currency and gold deposited at foreign banks, lending and settlement with foreign banks:

- Losses of currency, gold, and other assets deposited at foreign banks due to force majeure events such as war, terrorism, bankruptcy, natural disasters in the country where the State Bank invests or holds assets, and when the foreign bank is no longer able to settle.

- Refinancing activities:

- Debts (principal and interest) written off according to the decision of the Prime Minister of the Government of Vietnam, but not provided compensation by the Government of Vietnam to the State Bank.- Loans, amounts paid on behalf of credit institutions with sufficient evidence proving irrecoverable when the credit institution is dissolved or bankrupt in accordance with the law.

- Settlement with the State and State Budget: Settlements with the State and State Budget handled following the Prime Minister of the Government of Vietnam's approval. The State Bank presides, cooperates with the Ministry of Finance to report, and submits to the Prime Minister of the Government of Vietnam for permission to use the risk provision to handle settlements with the State and State Budget, including:

- Settlements with the State and State Budget that have expired or have no settlement deadline and after a minimum period of 5 (five) years with no solution;- Other settlements with the State and State Budget.

- Other receivables:

- Losses on receivables in the course of operations with reliable evidence that there are no longer subjects to recover from or the subjects are no longer able to pay.

- ....

Thus, the total amount of risk provisions set aside and accounted for as expenses over the years is used to handle losses arising from some of the items mentioned in Circular 39/2013/TT-NHNN.

See the detailed provisions in Circular 39/2013/TT-NHNN which took effect from June 1, 2014.

Tue Ba

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