Circular No. 13/99 Modifying Circular No. 13/94 on Portfolio Classification

BANK OF THE REPUBLIC OF BURUNDI
CIRCULAR NO. 13/99 MODIFYING CIRCULAR NO. 13/94 ON PORTFOLIO CLASSIFICATION

1. In order to operationalize the refinancing policy, banks and financial institutions are required to classify their portfolios as follows:

CATEGORY A: CLAIMS ELIGIBLE FOR REFINANCING
These are current and monitored claims under Circular No. 12/94 on risk classification and provisioning policy that meet the following conditions:

A.1. Short-term clients i) at least one complete operating year ii) a net profit ≥ 5,000,000 BIF iii) a FRN ratio ≥ 20% iv) not listed in the register of issuers of bounced checks v) tolerable payment incidents: up to 3 monthly promissory notes or 1 quarterly note unpaid for one month after maturity. vi) for credit lines, an account remaining without a credit movement for 3 months is equivalent to the case of 3 unpaid monthly notes (or 1 quarterly note) in the preceding point (A.1.v). To this effect, banks and financial institutions must transmit to the BRB quarterly the history of movements in refinanced clients' accounts. vii) clients whose balance sheets from the last fiscal year have not reached the BRB by at least June of the current fiscal year will be automatically downgraded.

A.2. Medium- and long-term clients and various investment credits (excluding social housing) i) an internal rate of return (IRR) ≥ 10% for new projects ii) no payment incidents beyond the limit set in point A.1.v for outstanding credits.

A.3. Social housing clients
No payment incidents beyond the limit set in point A.1.v.

CATEGORY B: OTHER CLAIMS
Other claims that have received mobilization approval but do not or no longer meet the above-enumerated criteria.

CATEGORY C:

1. Claims that have not requested or obtained mobilization approval will be classified in this category.
2. To access refinancing, banks and financial institutions must be compliant with banking laws and regulations.
3. Only promissory notes representing Category A claims (updated monthly) will be admitted to effective refinancing. Furthermore, the Bank of the Republic authorizes banks and financial institutions to classify their own credits into Category A, B, or C as they are granted without requiring prior approval, provided that they strictly follow this circular.
4. Monthly, during the classification update, banks and financial institutions must transmit to the central bank:

• the updated classification;
• the elements to assess reclassifications;
• the documents to judge classification for new refinancing-eligible clients.

5. This circular annuls and replaces Circular No. 13/94 of September 2, 1994.

Done in Bujumbura, on March 8, 1999
BANK OF THE REPUBLIC OF BURUNDI
C. SINZOBAHMVYA G. BANYIYEZAKO
First Deputy Governor Governor