Regulatory Alerts2017-07-06
Asset Classification and Provisioning Regulations
The Central Bank of Myanmar issued these regulations to standardize how all banks classify loans, advances, and other assets into five risk categories based on days past due. Banks must calculate specific provisions ranging from zero to one hundred percent against security shortfalls, maintain a general loan loss reserve of up to two percent, and apply strict rules for interest suspension, overdraft clearance, and collateral valuation. The framework takes effect six months after publication, allowing a three-year staggered transition for provisioning adjustments while repealing prior banking instructions and mandating compliance through corrective sanctions.
Loan & Provisioning(Myan Ver)(6-7-2017)-5 ပညထငစသမတမနမငငတ မနမငငတဗဟဘဏ အမန ကငစအမတ ၁၇/၂၀၁၇ ၁၃၇၉ ခစ၊ ဝဆလဆန ၁၄ ရက (၂၀၁၇ ခစ၊ ဇလငလ ၇ ရက)
မနမငငတဗဟဘဏသည ငရကရအဖ အစညမဥပဒပဒမ ၃၉ င ၁၈၄ တ အရ ဘဏမလကနဆငရကရနအတက အကပစညမက ထတပနလကသည။ ၁။ ဤစညမက ရရနပငခငမ အမအစသတမတခငင လထခငဆငရ စညမဟ ခတငစရမည။ ၂။ ဤစညမသည ဘဏမအလင သကဆငစရမည။
အဓပယဖငဆခက ၃။ ဤစညမတငပရသ စကရပမသည ငရကရအဖ အစညမဥပဒ တငပရသညအတင အဓပယသကရကစရမည။ ထ ပင အကပစကရပမသည ဖပပအတင အဓပယသကရကစရမည- (က) ခင ဆသညမ သတမတကလတစခအတင ပနလညပဆပရန စညကမ ခကဖင ဘဏကထတခထသည ကမကဆသည။ ကတငထတခင ဆသညမ ဘဏမ ကတငထတယငဖစပ တစစအတင ပနလညပဆပရ မည ခငဖစသည။ ခငင ကတငထတခငတင ခင၊ လနဖင ခင၊ ကတငထတခင၊ စရငပထတခင၊ ဝယယထသည ပ ကနင တငခလမ၊ အခရရနရ သ မဟတ ဝယယထသည ငတငခလမ၊ သငကနငတငခလမ၊ ဆကသယဆငရကသ၏ ကလဆင ငလ လကမတ သ မဟတ အခခငတစရပရပအတက ပရနတဝနင လကကန ရငတမတင မပရသ (off-balance sheet) ရရနပငခငအမအစမ ပဝငသည၊
2 (ခ) အခရရနပငခငမ ဆသညမ ခငမင ကတငထတခငမမအပ အခရရနပငခငမဖစပ ရရနရငမ(receivable)၊ ရငမပမမ၊ ရရန ရအတမင အခရရနပငခငတစရပရပတ ပဝငသည၊ (ဂ) ပကကကသညရက ဆသညမ အရငငအတ ပနလညပဆပရန သ မဟတ အတပဆပရနအတက သတမတထသည န ရကအ ကလနသည ရကအရအတကက ဆသည၊ (ဃ) အရငငအတ ပဆပရနပကကကသ ခင သ မဟတ ကတငထတ ခင ဆသညမ ဝငငရလမမရတသည ရရနမသခသင ရလမ မရသ ခင သ မဟတ ကတငထတခငကဆသည၊ (င) ခင သ မဟတ ကတငထတခင ပနလညပဆပရနကလ တမငပငဆင ခငပခင ဆသညမ ခငပနလညပဆပငရန ရညရယ၍ ခင သ မဟတ ကတငထတခင၏ ပနလညပဆပရနကလ ပငဆငခငကဆသည။ ၄။ ဘဏသည ခငမ၊ ကတငထတခငမင လကကနရငတမင လကကန ရငတမပငပရ အခရရနပငခငမတင ဆမဖစပသညအခတင အဆပဆမအတက လလကသ လထခကမ ပလပထရမည။ ယငသ လထရတင ပကကကမ ဖစပသညအပငကသ လထရနမဟတဘ ခငင ကတငထတခင လကကန အလ၏ အတ၊ အရင စရပစလပတင လထရမည။ ခငမင ကတငထတခငမ အမအစသတမတခငင သခလထခင ၅။ ဘဏသည ခငမင ကတငထတခငမ အမအစသတမတခငင သခလထခငက အကပနညလမအတင ဆငရကရမည- စ ခငအမအစမ ပကကကသညရက အမခတနဖ လနညမပတင လထခင (က) စပညသခငမ ရက ၃၀ အထ ၀% (ခ) စငကညရနလသခင ၃၁ ရကမ ရက ၆၀ အထ ၅ % (ဂ) စမပညသခင ၆၁ ရကမ ရက ၉၀ အထ ၂၅ % (ဃ) ရရနမသခသခင ၉၁ ရကမ ရက ၁၈၀ အထ ၅၀ % (င) ရလမမရသခင ရကပင ၁၈၀ နကပင ၁၀၀ %
3 ၆။ စညမအပဒ ၅ ပ ကစရပမအတက ခငမင အခရရနပငခငမအပ အမခပစညတနဖသတမတခငင လထခငက နကဆကတ တငဖပထသည အတင ဆငရကရမည။ သခလထခင ၇။ အပဒ ၂၀ တင ခငပထသညမအပ သခလထခငက ဘဏ၏ငစရငတင မတတမတငထရမညဖစပ ဆမဖစသညလ၏ အအမတစရင၌ကခ၍ နငလမည ကလမသ ယဆငကခခငမပရ။ ခငဆငခအတက အထထလထခင ၈။ ဘဏမသည ခငဆငခအတက အထထလထခငက ခငင ကတငထတခင စစပငလကကန၏ ၂% ထရရမည။ အတဆငရကစ ၉။ ခင သ မဟတ ကတငထတခငတစရပအ ရရနမသခသ ခငအဖစ သတမတလကသညရကမစ၍ ကကခမရရသသ ရရနရအတအလက အတဝငင အဖစ စရငရသငခငက ဆငငထရမည။ ထ အပင စရကပ၍စရငရသငထ သ အတမကလည ပနလညဖယထတရမည။ ၁၀။ ရရနမသခသ သ မဟတ ရလမမရသခငမင ကတငထတခငမ အပ အတအ ဘဏကကကခရရပမသ ဝငငအဖစ သတမတရမည။
စရငပထတခငဆငရကစ ၁၁။ ဘဏ၏စရငရ စရငပထတခငမအ တစဆကတညဖစသ ရကသတ စပတအတင စရငရငလငပ/အပညအဝ ပနလညပဆပခငက စစ ဆငရကရ မည။ ၁၂။ စရငပထတခငတစရပအ စရငရငလငခင/ အပညအဝ ပနလညပဆပခင မပရသပက အဆပခငအ စညမအပဒ ၅ ပ သတမတခကငအည ခငအမ အစက ခကခငပငဆငသတမတရမည။
4 ခငမင ကတငထတခငမအ ပနလညပဆပရနကလ တမငပငဆငခငပခင ၁၃။ ဘဏသည အရငငအတ ပဆပရနပကကကသည ခငအ ပနလညပဆပရန ကလတမငပငဆငခငပရတင ထခငမအ မလခင အမအစသတမတခက အတင ဆကလကသတမတရမည။ ၁၄။ ဘဏသည ပနလညပဆပရနကလ တမငပငဆငခငပထသည ခင၏ ခင အရငင အတပနလညပဆပမအ တစဆကတည ခကလဆကတကရရပက အဆပ ခငအ အမအစပနလညသတမတငသည။
အရငငအတပဆပရနပကကကသည ခငမအ အမအစပနလညသတမတခင ၁၅။ အရငငအတ ပဆပရနပကကကသညခငမ အရင သ မဟတ အတငမ အလက ပနလညပဆပပပက ဘဏသည ခငအ ပမနခငအဖစ ပနလည သတမတငသည။ သ ရတင ပနလညပဆပသညငမသည ယငဘဏမ ခငအသစ သ မဟတ ကမနညလမမမ ရရသညငမမဖစစရ။
အထထ ၁၆။ ဘဏမသည ဆရနအလအလရသ ခငမအ အကဖတခငင ခင ဆမမအ လလကသလထမပရနအတက စရငရသငခကမက အထက အကဖစစမည မတတမမအ ပညစစ ထနသမထရရမည။ ၁၇။ ဤစညမသည ခငမအ အမအစသတမတခငင လထခငတ င စပလ၍ အနမဆလကနရန သတမတခကမ ခမတပခငဖစသည။ ဘဏမသည အဆပသတမတခကမထက ပ၍တငကပသစနက ခမတငသည။ ၁၈။ ဤစညမအ လကနရနပကကကပက ဘဏသည စညမအဖကဖကသည အတက ငရကရအဖ အစညမဥပဒ ပဒမ ၉၄ င ၉၆ ပဘဏအ ပနလည တညမတစရန အရယဆငရကခငင အဆပဥပဒ ပဒမ ၁၅၄ ပ စမခန ခရနညလမ အရ အရယခငခရမည။ ၁၉။ အကဖပပနကခကင အမစမအ ဤစညမဖင ပယဖကလကသည- (က) မနမငငတဗဟဘဏက ၃၁-၈-၁၉၉၅ ရကစဖငထတပနခသည နက ခကအမတ ၆၊ င
5 (ခ) မနမငငတဗဟဘဏ၏ ၂၁-၁၂-၂၀၁၆ ရကစပ အမစအမတ၊ မဗဘ-၁/ ၁၁၁(FIS)/(၁၉၀၃/၂၀၁၆) ။ ၂၀။ ဤစညမသည ထတပနသညန မစ၍ ခကလအတင အကသကရကစရ မည။ သ သ ဘဏမသည သခလထမပရတင လနညမရပက အဆပ လနညမက ဤစညမထတပနသညန မ သစအတင အညအမခဝလထရမည။ (ပ) ကကမင ဥက
6 အမခပစညမအပ တနဖသတမတခငဆငရ စသတမတခကမ
ဤစညမအပဒ ၆ ငစပလ၍- (က) အရငငအတ ပဆပရနပကကကသ ခငအဖစသတမတပပက အမခ ပစညအမအစအပလက၍ ပငလခငမပရ။ (ခ) အရငငအတ ပဆပရနပကကကသခငတစရပရပအတက ထရသ ငသအမခက သသန လထခငမပမ တပယရမည။ (ဂ) အမ၊ ခ၊ မပငဆငပစညအပ တနဖသတမတခင (၁) တရတင တရစဆပက အမမပပတသလင အတငအကပ ရငစ (Forced Sale Value) က အသပရန။ (၂) လလတငရငခမပလပဆဖစပ သသန စန (Reserve Price) သတမတထပက ထသသန စနက အသပရန။ (၃) လလတငပပကပယသပလင အတငအကပရငစသည သသန စန (Reserve Price) ထကနညပက၊ ၎ငအပင သသန စန အသစမရပက အတငအကပရငစကအသပရန။ (၄) ပကပယသသလလမ သသန စနသည အတငအကပရငစ အပအခခပက၊ ၎ငအပင သသန စနအသစမရပက၊ ပကပယ သသလလမ သသန စနအပ ၁၀% လခပ အသပရန။ မတခက။ ။ အတငအကပရငစမ ကမကင၍ အရညအခင ပညသည တနဖဖတသမ၏ တနဖဖတခကအရဖစ ပသည။ (ဃ) ဒဘငခ- ဒဘငခအ လတလပသလကခရရသ/ စရငရငလငဖကသမ ရအရရ/ စရငစစ/ ကမကငသ တနဖဖတသတ ၏ အသအမတပခင မရဘ တနဖသတမတခငမပရ။ (င) ဘဏစအပရကမတနဖ- ကမမသည ဖပထသညအတင တနဖ ရကင ဘဏကသကသပငမသ ထကမတနဖအအသပရန၊ သကသ မပငပက အသမပရန။ (စ) အစရယယမအ လကရကအပငပလပခင (၁) ဝယဈ၊ ရငဈ သတမတဖပထသ ရယယမ (Quoted Share)- နကဆစကက စနအသပရန။ နကဆကတ
7 (၂) ဝယဈ၊ ရငဈ သတမတဖပထခငမရသ ရယယမ (Unquoted Share)- စကကအခအန စမသပစစဆခကရမသ တနဖဖတရန၊ ဈကကဝငမအနအထ ကစရပတစခခငအပ အခခ ၍ စစရန၊ အကယ၍ ရယယမသည ဈကကတငရငဝယင လင တနဖဖတမက ရယယတစခခငအလက အသတငရပငခငက အသပရန။ (ဆ) စက၊ စကပစညင စကကရယမ - ငငတကမ အသအမတပထသည ကမကင၍ အရညအခငပညသည တနဖဖတသ၏ တနဖဖတခကမရလင ရယခသည စနပတင စစပသ ၂၀% တနဖလနညစနစဖင တကခကရရသည အသတငစအပရကမတနဖက အသပရန။ (ဇ) အမခမ (၁) လပဂလ သ မဟတ အစအဖ - တနဖမရပ (၂) ဘဏမ - တနဖမရပ (ခငခက- ခငအဆင AA သ မဟတ ယငင ညမသညအဆငင အထကရ သည ဘဏကထတပသည ဘဏအမခ အ ကစရပတစခခငအလက စစရန) (၃) ပညထငစသမတ မနမငငတအစရ - တနဖအပည (ဈ) အခသ အမခပစညမအလအတက ဘဏ၏ ခငဆငခစမ ခန ခမမဝဒအရ ကစရပတစခခငအလက စစရန။
Asset Classification and Provisioning(ENG)(6-7-2017)-5 The Republic of the Union of Myanmar Central Bank of Myanmar Notification No. (17/2017) 14th Waxing Day of Waso 1379 ME July 7, 2017
In exercise of the powers conferred under Section 39 and 184 of the Financial Institutions Law, the Central Bank of Myanmar hereby issues the following Regulations:
- These Regulations shall be called Asset Classification and Provisioning Regulations.
- These Regulations shall apply to all banks. Definition
- The expressions contained in these Regulations are to have same meaning in the Financial Institutions Law. Moreover, the following expressions shall have the meanings given hereunder: (a) “Loans” means debt extended by the banks under repayment terms and conditions with prescribed term. “Advances” means cash advances allowed by the banks to repay within one year.“Loans and advances” includes any loan, discount, advance, overdraft, export bills purchased, other bills receivable or purchased, import bills, a customer’s liability on acceptances or any other credit facilities, and all off-balance sheet items; (b) “other assets” means assets other than loans and advances including receivables, investments, accrued interests and any other assets. (c) “day past due” means the number of days passed since a mandatory date of payment including principal and interest payments or interest payments alone; (d) “non-performing” means a loan or advance that is no longer generating income and which is classified doubtful or loss; (e) “rescheduling” in relation to a loan or advance means the modification of the terms of the loan or advance intended to induce repayment.
- A bank shall make adequate provisions for impairment of loans, advances and other assets on and off-balance sheet whenever the impairment occurs. The specific provisions for the impairment is to be made against all outstanding balance (principle and interest) of the loans and advances, not just the past due portion. Classification of loans and advances and specific provisions
- A bank shall classify and make specific provisions in the following manner: Sr. No. Classification of loans/ advances Days past due Provisions on shortfall in security value (a) Standard 30 days past due 0% (b) Watch 31 to 60 days past due 5% (c) Substandard 61 to 90 days past due 25% (d) Doubtful 91 to 180 days past due 50% (e) Loss Over 180 days past due 100%
2 6. For the purposes of paragraph 5, valuation of the securities and provisioning for any other assets shall be in accordance with annexure. Specific Provisions 7. The specific provision shall be recorded in the bank’s accounts and charged to the profit and loss account in the month in which it occurs and shall not be spread over future periods except as allowed under paragraph 20. General Provisions 8. Banks are required to maintain general loan loss reserve by making general provisions up to 2% of total outstanding loans and advances. Treatment of interest 9. All interest accrued (but uncollected) from the date a loan or advance is classified as doubtful shall be suspended and any interest already accrued shall be reversed. 10. Interest earned on loans and advances which are classified as doubtful or loss shall only be recognized as income when the interest has been collected by the bank. Treatment of overdraft 11. A bank shall ensure that all overdraft loans in its books are cleared/ paid in full for a period of two consecutive weeks annually. 12. If an overdraft loan is not cleared/paid in full, such loan must be immediately classified in accordance with paragraph 5. Rescheduling of Loans and Advances 13. A bank may reschedule a non-performing loan provided that the rescheduled loan remains classified in the same category. 14. A bank may reclassify the rescheduled loan if, the borrowers has complied with the terms of rescheduled loan for 6 consecutive months. Reclassification of Non-Performing Loans 15. Upon full settlement of all arrears in interest or principal, the bank may reclassify the loan as a performing loan: Provided that the funds for the repayment of the arrears are not obtained from the creation of new loans or debt instruments from the same bank. General 16. Banks shall maintain adequate records supporting their evaluations of potential loan losses and the entries made to ensure adequacy of the provisioning for loan losses. 17. These Regulations set out the minimum requirements in respect of classification and provisioning of loans and advances. Banks may adopt a more stringent standard. 18. Failure to comply with these Regulations constitute a violation and is subject to corrective actions or sanctions as may be imposed under section 94 and 96 of the Financial Institutions Law and administrative penalties under section 154 of the said Law. 19. The following instruction and memorandum are hereby repealed: (a) Central Bank of Myanmar Instruction No.6 dated August 31, 1995; and (b) Memorandum Letter Number MaBaBa-1/111(FIS)/(1903/2016) dated December 21, 2016.
3 20. These Regulations shall come into effect six months from the date of these Regulations. However, banks can stagger the shortfall in the specific provisioning in equal amounts over a period of three years from the date of these Regulation. Sd./ xxxxxxxxxx (Kyaw Kyaw Maung) Governor
4 Criteria for valuation of Security/Collateral In relation to paragraph 6 of these regulations: (a) The past due status for non-performing loan is not changed based on the value of the security. (b) In regards to cash collateral, the amount of cash security can be deducted from the outstanding balance of the loan before specific provisions are calculated. (c) Charge/Lienholder’s caveat over real estate property- (1) Where court proceeding are not yet instituted, forced sale value (FSV) is used. (2) Where auction is pending and reserve price (RP) has been fixed, RP is to be used. (3) Where auction has been aborted and FSV of the property is lower than RP, and in the absence of new PR, FSV is to be used. (4) Where aborted RP is based on FSV, and in the absence of new RP, a 10% discount should be made on the aborted RP. Note: the FSV should be as valued by independent professional valuers. (d) Debenture - No value can be given unless it is certified by an independent receiver/ liquidator/ auditor/professional valuer. (e) Assignment of book debts - No value can be given unless the bank can prove that the debtors are worth the value quoted. (f) Pledge of shares (1) Quoted - The latest market price (2) Unquoted -Value may be given provided the test of marketability is met. The condition of marketability would be considered based on the merit of each case. If it can be demonstrated that the shares are marketable, the basis of valuation applied should be the net tangible asset per share. (g) Plant, machinery and equipment - In the absence of internationally recognized professional valuation, the net book value would be applicable using a 20% depreciation rate on a straightline on the acquisition price. (h) Guarantees (1) Personal or corporate - No value (2) Banks - No value (Exception: the guarantor bank which has credit rating AA or equivalent and above may be considered on a case-by-case basis.) (3) Government of Myanmar - Full value (i) All other collateral to be considered on a case-by-case basis according to credit risk management policy of the bank. Annexure