Regulatory Alerts2025-06-10
Asset Classification and Provisioning Regulation 2018
The Central Bank of Somalia mandates all licensed banking institutions to implement a board-approved credit risk classification and provisioning policy covering financing contracts, off-balance sheet exposures, and foreign branches. The regulation establishes five distinct asset categories—Pass, Special Mention, Substandard, Doubtful, and Loss—and prescribes corresponding minimum provisioning percentages of five to one hundred percent based on outstanding balances. Banks must conduct quarterly asset reviews, suspend profit accrual on non-performing facilities, and ensure their calculated provisions meet or exceed International Financial Reporting Standard 9 requirements.
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