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BNR approves new Regulation on risk provisions

The Board of Directors of the National Bank of Romania (BNR) approved on Thursday the new Regulation on the classification of credits and placements and the establishment, settlement and use of credit risk specific provisions.

The new regulatory framework is aimed at progressively bringing the national regulations in line with international financial reporting standards (IFRS) as far as the regime of guarantees for credits past due date by over 90 days in the process the establishment of the provisions, announced a BNR release

The basic change consists of a more flexible regulatory framework, with the new regulation allowing lenders to consider a maximum share of 25 pct of the recoverable amount of guarantees when establishing the provisions for the aforementioned credits, unlike the previous framework that did not allow the adjustment of provisions for credits past due date by more than 90 days.

The amended version of the Regulation comes in effect on the date of its publication in the Official Gazette.

The Regulation amends Normative Act No. 8/2007 on the amendment and supplementation of the Application Rules No. 12/2002 for BNR Regulation No. 5/2002 on the classification of credits and placements and the establishment, settlement and use of specific credit risk provisions.

Normative Act 25/06/2007 was published in the Official Gazette of June 28, 2007 and includes the List of accounts related to Account No. 3811 - Overdue claims; 3821 - Doubtful claims; 4811 - Overdue claims, 4821 - Doubtful claims, the List of accounts related to account 3812 - Overdue interest rates, 3817 - Attached claims, 3822 - Doubtful interest rates, 3827 - Attached claims,4812 - Overdue interest rates, 4817 - Attached claims, 4822 - Doubtful interest rates, 4827 - Attached claims and the List of accounts 399 - Provisions for overdue and doubtful claims, and 493 - Provisions for financial leasing operations.

The changes operated in 2007 in the Normative Act refer to the use of the specific credit risk provisions.The normative act provides that these provisions are mandatory only if the amounts to adjust are related to a credit/placement, if 'all legal recovery possibilities have been used up or the prescription term has come due or contractual rights related to the said credit/placement have been transferred.'

 

Sursa: http://www.rompress.ro

Tags: provisions claims doubtful overdue credits regulation bnr credit