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ASSET CLASSIFICATION AND PROVISIONING FOR DEVELOPMENT FINANCE INSTITUTIONS Directives No. SBB/ 48/2010

LICENSING AND SUPERVISION OF BANKING BUSINESS

Directives No. SBB/ 48/2010     DOWNLOAD (PDF)

ASSET CLASSIFICATION AND PROVISIONING FOR DEVELOPMENT FINANCE INSTITUTIONS

1. Issuing Authority

These Directives are issued by the National Bank of Ethiopia pursuant to the authority vested in it by articles 21 and 22 of Banking Business Proclamation No. 592/2008.

2. Short Title

These Directives may be cited as “Asset Classification and Provisioning for

Development Finance Institutions Directives No. SBB/ 48/2010”.

3. Purpose

The purpose of these Directives is to provide guidelines to development finance institutions to assure that:

3.1loans are regularly reviewed and prudently classified in a manner that appropriately reflect credit risk;

3.2loans which are not performing in accordance with contractual repayment terms are timely recognized and reported as past due ;

3.3accrued but uncollected interest on loans is properly accounted for; and

3.4timely and adequate provisions are made to the “Provisions for Loan Losses Account” in order to ensure that disclosed capital and earnings performance are accurately stated. Continue reading “ASSET CLASSIFICATION AND PROVISIONING FOR DEVELOPMENT FINANCE INSTITUTIONS Directives No. SBB/ 48/2010”