Regulations on Provisions for Risk Handling

The Governor of the State Bank of Vietnam (SBV) recently issued Document No. 7789/NHNN-TTGSNH on risk provisioning and utilisation of the provisioning to deal with the risky loans.

 

Accordingly, the Governor requires Chairpersons of the Board of Directors and General Directors of State-owned commercial banks and joint stock commercial banks to review and re-evaluate the possibility of sale of secured assets, the market value of secured assets to determine the proper value and the discounting rate of secured assets, making maximum risk provisioning, and setting up funds to deal with non-performing loans (NPLs) by risk provisioning right in 2012. Banks base on their performance and NPLs to review and adjust profit targets in 2012 to a reasonable level in order to create favourable conditions for dealing with non-performing loans in 2012.

 

Banks also need to actively conduct loan classification and utilisation of the provisioning to deal with non-performing loans, especially loans of Group 5 in accordance with the regulations on loan classification, provisioning and utilisation of the provisioning to deal with credit risks in banking operations of credit institutions. They actively coordinate with customers to restructure loans; recover due and overdue debts; actively handle secured assets as well as take strict management and surveillance measures for those loans already tackled by the means of risk provisioning and monitored off balance-sheets in order to recover capital in line with the laws.