Regulatory Alerts2022-01-01
On the Reclassification of Distressed Loans and Their Provisioning
The Central Bank of Djibouti mandates that any loan with at least one unpaid installment exceeding 30 days must be reclassified as a distressed loan and provisioned quarterly based on the severity of the delay. Specifically, institutions must set provisions at 20%, 50%, or 100% for payment delays of 31–90, 91–180, and 181–360 days respectively, while claims overdue beyond 360 days are written off but tracked off-balance sheet for recovery, with overdrafts subject to 75% or 100% provisions at 30 and 90 days past due. Upon reclassification, interest recognition ceases and is monitored off-balance sheet, with any subsequent recoveries recorded as exceptional income, and the directive takes effect immediately upon signature.
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