Vietnam: General provisioning level of credit institutions from July 11, 2024

General provisioning level of credit institutions in Vietnam

General provision is the amount set aside to cover risks that may occur but are not yet identified when making specific provisions.

The general provisioning rate of credit institutions is guided as follows:

(1) For credit institutions (excluding microfinance institutions), foreign bank branches, the general provision amount to be set aside is determined as 0.75% of the total outstanding loans classified from group 1 to group 4, excluding the following:

- Deposits at credit institutions, foreign bank branches according to the provisions of the law and deposits at overseas credit institutions;

- Loans, term purchases of valuable papers between credit institutions, foreign bank branches in Vietnam;

- Purchases of certificates of deposit, bonds issued domestically by other credit institutions, foreign bank branches;

- Purchases and resale of the Government of Vietnam bonds on the securities market in accordance with the provisions of law on the issuance, registration, custody, listing, and trading of the Government of Vietnam debt instruments on the securities market;

- Other debts arising from activities stipulated in Clause 2, Article 3 of Decree 86/2024/ND-CP of Vietnam's Government between credit institutions, foreign bank branches in Vietnam in accordance with the law.

(2) For microfinance institutions, the general provision amount to be set aside is determined as 0.5% of the total outstanding loans classified from group 1 to group 4 (excluding deposits at credit institutions, foreign bank branches according to the provisions of the law).

Decree 86/2024/ND-CP of Vietnam's Government takes effect from the date of signing.

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