INSTRUCTION OF CENTRAL BANK OF THE RUSSIAN FEDERATION

of November 27, 2018 No. 4988-U

About modification of the Provision of the Bank of Russia of October 23, 2017 No. 611-P "About procedure for forming by credit institutions of reserves on possible losses"

1. Based on Articles 62, 69 and 72 Federal Laws of July 10, 2002 No. 86-FZ "About the Central bank the Russian Federation (Bank of Russia)" (The Russian Federation Code, 2002, No. 28, Art. 2790; 2003, No. 2, Art. 157; No. 52, Art. 5032; 2004, No. 27, Art. 2711; No. 31, Art. 3233; 2005, No. 25, Art. 2426; No. 30, Art. 3101; 2006, No. 19, Art. 2061; No. 25, Art. 2648; 2007, No. 1, Art. 9, Art. 10; No. 10, Art. 1151; No. 18, Art. 2117; 2008, No. 42, Art. 4696, Art. 4699; No. 44, Art. 4982; No. 52, Art. 6229, Art. 6231; 2009, No. 1, Art. 25; No. 29, Art. 3629; No. 48, Art. 5731; 2010, No. 45, Art. 5756; 2011, No. 7, Art. 907; No. 27, Art. 3873; No. 43, Art. 5973; No. 48, Art. 6728; 2012, No. 50, Art. 6954; No. 53, Art. 7591, Art. 7607; 2013, No. 11, Art. 1076; No. 14, Art. 1649; No. 19, Art. 2329; No. 27, Art. 3438, Art. 3476, Art. 3477; No. 30, Art. 4084; No. 49, Art. 6336; No. 51, Art. 6695, Art. 6699; No. 52, Art. 6975; 2014, No. 19, Art. 2311, Art. 2317; No. 27, Art. 3634; No. 30, Art. 4219; No. 40, Art. 5318; No. 45, Art. 6154; No. 52, Art. 7543; 2015, No. 1, Art. 4, Art. 37; No. 27, Art. 3958, Art. 4001; No. 29, Art. 4348, Art. 4357; No. 41, Art. 5639; No. 48, Art. 6699; 2016, No. 1, Art. 23, Art. 46, Art. 50; No. 26, Art. 3891; No. 27, Art. 4225, Art. 4273, Art. 4295; 2017, No. 1, Art. 46; No. 14, Art. 1997; No. 18, Art. 2661, Art. 2669; No. 27, Art. 3950; No. 30, Art. 4456; No. 31, Art. 4830; No. 50, Art. 7562; 2018, No. 1, Art. 66; No. 9, Art. 1286; No. 11, Art. 1584, Art. 1588; No. 18, Art. 2557; No. 24, Art. 3400; No. 27, Art. 3950; No. 31, Art. 4852; No. 32, the Art. 5115), article 24 of the Federal law "About Banks and Banking Activity" (in edition of the Federal Law of February 3, 1996 No. 17-FZ) (Sheets of the Congress of People's Deputies of RSFSR and the Supreme Council of RSFSR, 1990, No. 27, Art. 357; Russian Federation Code, 1996, No. 6, Art. 492; 1998, No. 31, Art. 3829; 1999, No. 28, Art. 3459, Art. 3469; 2001, No. 26, Art. 2586; No. 33, Art. 3424; 2002, No. 12, Art. 1093; 2003, No. 27, Art. 2700; No. 50, Art. 4855; No. 52, Art. 5033, Art. 5037; 2004, No. 27, Art. 2711; No. 31, Art. 3233; 2005, No. 1, Art. 18, Art. 45; No. 30, Art. 3117; 2006, No. 6, Art. 636; No. 19, Art. 2061; No. 31, Art. 3439; No. 52, Art. 5497; 2007, No. 1, Art. 9; No. 22, Art. 2563; No. 31, Art. 4011; No. 41, Art. 4845; No. 45, Art. 5425; No. 50, Art. 6238; 2008, No. 10, Art. 895; 2009, No. 1, Art. 23; No. 9, Art. 1043; No. 18, Art. 2153; No. 23, Art. 2776; No. 30, Art. 3739; No. 48, Art. 5731; No. 52, Art. 6428; 2010, No. 8, Art. 775; No. 27, Art. 3432; No. 30, Art. 4012; No. 31, Art. 4193; No. 47, Art. 6028; 2011, No. 7, Art. 905; No. 27, Art. 3873, Art. 3880; No. 29, Art. 4291; No. 48, Art. 6730; No. 49, Art. 7069; No. 50, Art. 7351; 2012, No. 27, Art. 3588; No. 31, Art. 4333; No. 50, Art. 6954; No. 53, Art. 7605, Art. 7607; 2013, No. 11, Art. 1076; No. 19, Art. 2317, Art. 2329; No. 26, Art. 3207; No. 27, Art. 3438, Art. 3477; No. 30, Art. 4084; No. 40, Art. 5036; No. 49, Art. 6336; No. 51, Art. 6683, Art. 6699; 2014, No. 6, Art. 563; No. 19, Art. 2311; No. 26, Art. 3379, Art. 3395; No. 30, Art. 4219; No. 40, Art. 5317, Art. 5320; No. 45, Art. 6144, Art. 6154; No. 49, Art. 6912; No. 52, Art. 7543; 2015, No. 1, Art. 37; No. 17, Art. 2473; No. 27, Art. 3947, Art. 3950; No. 29, Art. 4355, Art. 4357, Art. 4385; No. 51, Art. 7243; 2016, No. 1, Art. 23; No. 15, Art. 2050; No. 26, Art. 3860; No. 27, Art. 4294, Art. 4295; 2017, No. 14, Art. 2000; No. 18, Art. 2661, Art. 2669; No. 25, Art. 3596; No. 30, Art. 4456; No. 31, Art. 4754, Art. 4761, Art. 4830; 2018, No. 1, Art. 66; No. 18, Art. 2560, Art. 2576; No. 22, Art. 3043; No. 24, Art. 3400; No. 27, Art. 3950; No. 31, Art. 4852; No. 32, the Art. 5100, the Art. 5115) and according to the solution of the Board of directors of the Bank of Russia (the minutes of the Board of directors of the Bank of Russia of November 23, 2018 No. 35) to bring in the Provision of the Bank of Russia of October 23, 2017 No. 611-P "About procedure for forming by credit institutions of reserves on possible losses", registered by the Ministry of Justice of the Russian Federation on March 15, 2018 No. 50381, the following changes.

1.1. In Item 1.1:

in paragraph seven of the word "Provisions of the Bank of Russia of December 28, 2012 No. 395-P " about Technique of Determination of Size of Own Means (Capital) of Credit Institutions (" Basel III ") ", No. Registered by the Ministry of Justice of the Russian Federation on February 22, 2013 27259, on November 29, 2013 No. 30499, on October 2, 2014 No. 34227, on December 11, 2014 No. 35134, on December 17, 2014 No. 35225, on March 24, 2015 No. 36548, on June 5, 2015 No. 37549, on October 5, 2015 No. 39152, on December 8, 2015 No. 40018, on December 17, 2015 No. 40151, on August 26, 2016 No. 43442 (Further — the Provision of the Bank of Russia No. 395-P)" shall be replaced with words "Provisions of the Bank of Russia of July 4, 2018 No. 646-P "About technique of determination of own means (capital) of credit institutions ("Basel III")", No. registered by the Ministry of Justice of the Russian Federation on September 10, 2018 52122, on December 19, 2018 No. 53064 (further - the Provision of the Bank of Russia No. 646-P)";

the tenth to state the paragraph in the following edition:

"the assets reflected in financial accounting at fair value through profit or loss according to the Provision of the Bank of Russia of February 27, 2017 No. 579-P "About the Chart of accounts of financial accounting for credit institutions and procedure for its application", the registered Ministry of Justice of the Russian Federation on March 20, 2017 No. 46021, on July 20, 2017 No. 47474, on December 12, 2017 No. 49220, on March 12, 2018 No. 50299, on December 3, 2018 No. 52845 (further - the Provision of the Bank of Russia No. 579-P), and other regulations of the Bank of Russia about procedure for financial accounting in credit institutions, except for the elements of calculation base of reserve specified in Item 2.5 of this provision, the elements of calculation base of reserve specified in Item 2.6 of this provision if the credit institution exercises control (or joint control) over the managing company managing assets of credit institution or exerts considerable impact on activities of such managing company, and the cases specified in the paragraph the second subitem 2.6.2.1 of Item 2.6 of this provision. Determination of control and considerable influence is performed according to the approaches applied to determination of control and considerable influence for the purpose of the Provision of the Bank of Russia of October 2, 2017 No. 606-P "About procedure for reflection on accounts of financial accounting by credit institutions of transactions with securities", No. registered by the Ministry of Justice of the Russian Federation on December 12, 2017 49215, on July 18, 2018 No. 51630);".

1.2. In Item 1.4:

the paragraph one to state in the following edition:

"1.4. For the purpose of determination of the size of reserve elements of calculation base of reserve, except for requirements (contingent obligations of credit nature) with similar characteristics of credit risk grouped according to Chapter 4 this provision in portfolio of homogeneous requirements (contingent obligations of credit nature) are classified based on professional judgment in one of five quality categories:";

add with the paragraph of the following content:

"Base for calculation of reserve on possible losses are asset costs, specified in Chapters 2 and 5 of this provision, reflected in the corresponding balance sheet accounts, costs of the contingent obligations of credit nature specified in Chapter 3 this provision reflected in off-balance accounts, the settlement sizes determined according to Chapter 6 of this provision. The calculation base of reserve does not join account balances on accounting of accrued expenses and other incomes on financial asset, costs according to the transaction, the adjustments and revaluation increasing or reducing the cost of the financial instrument, creating according to regulations of the Bank of Russia about procedure for financial accounting in credit institutions book value of the financial instrument.".

1.3. The paragraph one of Item 2.1 to state in the following edition:

"2.1. Elements of calculation base of reserve are investments in the securities reflected in balance sheet accounts on accounting of the securities provided by the Section 5 "Transactions with Securities and Derivative Financial Instruments" of Chapter A "Balance sheet accounts" of the Chart of accounts of financial accounting for credit institutions of appendix to the Provision of the Bank of Russia No. 579-P, except for investments in securities, the reserve on possible losses on which is created according to Items 2.6 and 2.7 of this provision, in the securities specified in Item 2.8 of this provision, and also discounted bills according to which reserve is created according to requirements of the Provision of the Bank of Russia No. 590-P.".

1.4. The paragraph one of Item 2.3 to state in the following edition:

"2.3. Elements of calculation base of reserve are the requirements for banking activities and other transactions (except for requirements for receipt of interest incomes for credit requirements) reflected in separate personal accounts of balance sheet accounts 30602, of 324, of 325, of 458, of 459, of 47423, and also requirements for the added other incomes in the part carried on the income, but actually not received reflected in separate personal accounts of balance sheet accounts 47443, of 47502, 47816. At the same time the account balances which are elements of calculation base 47443, of 47502, 47816 decrease previously by the corresponding part of accounts 47441, of 47501, 47814.".

1.5. Item 2.4 in paragraph one:

in the first offer of the word "balance sheet account 60401 (regarding the fixed assets transferred" shall be replaced with words "balance sheet accounts on accounting of the property transferred";

in the third offer of the word of "the leased fixed assets" shall be replaced with words "the leased property".

1.6. Item 2.5 in paragraph one to replace the word "No. 395-P" with the word "No. 646-P".

1.7. In Item 2.6:

to state paragraph two of subitem 2.6.2.1 in the following edition:

"If the asset cost, being under control of managing companies, and also the certificates and other securities issued by managing companies, reflected in financial accounting of credit institution, including based on the reporting of managing companies, is higher than the cost, determined by credit institution, the reserve is created in the amount of this exceeding. In this case requirements of the paragraph of third this subitem are not applied.";

subitem 2.6.3 in paragraph one to replace the word "No. 395-P" with the word "No. 646-P".

1.8. State Item 4.1 in the following edition:

"4.1. The credit institution for the purpose of forming of reserves can combine the elements of calculation base of reserve specified in Items 2.2 (regarding the balance sheet account 30233), 2.3, 2.4, in subitem 3.1.1 of Item 3.1 and in Chapter 5 of this provision, in portfolios of homogeneous requirements (contingent obligations of credit nature).

The credit institution can create reserve on portfolios of homogeneous requirements (contingent obligations of credit nature), the size of each of which (cumulative size of homogeneous requirements (contingent obligations of credit nature) relating to the same partner) does not exceed percent 0,5 from the size of its own means (capital) calculated according to the Provision of the Bank of Russia No. 646-P.

The credit institution with the basic license can create reserve on portfolios of homogeneous requirements (contingent obligations of credit nature), the size of each of which (cumulative size of homogeneous requirements (contingent obligations of credit nature) relating to the same partner) does not exceed percent 1,5 from the size of its own means (capital) calculated according to the Provision of the Bank of Russia No. 646-P.

Signs of uniformity are determined by credit institution independently.".

1.9. In Item 4.3 of the word", not exceeding percent 0,5 from the size of own means (capital) of credit institution," to exclude.

1.10. State Item 4.4 in the following edition:

"4.4. Elements of calculation base of reserve with individual signs of impairment (which availability does not allow to classify elements of calculation base of reserve in the I quality category including if the financial position of the partner is estimated worse, than good, taking into account requirements of Items 3.3 - 3.5 Provisions of the Bank of Russia No. 590-P and (or) are revealed the factors which are the basis for classification of elements of calculation base of reserve according to requirements of paragraphs of the fifth - the thirteenth Item 1. 5, subitem 2.1.2 of Item 2. 1, subitem 2.3.2 of Item 2. 3, subitem 2.4.2 of Item 2.4 of this provision) are estimated (are classified) on individual basis. The credit institution has no right to include in portfolio (shall exclude from portfolio) requirements to the partner (contingent obligations of credit nature) with individual signs of impairment, except as specified, provided by paragraphs the second - the seventh this Item.

Requirements to partners (contingent obligations of credit nature) concerning which be revealed the circumstances specified in paragraph seven of Item 1.5 of this provision can are included in separate portfolios with the created reserve in the amount of 100 percent.

If the loan debt of the borrower or the requirement to it (contingent obligations of credit nature) are classified on individual basis and on she (he) there are individual signs of impairment, other requirements to this partner (contingent obligations of credit nature) cannot be included in portfolio, except for requirements to the partner (contingent obligations of credit nature), the size of each of which does not exceed percent 0,01 from the size of own means (capital) of credit institution (but no more than 1 000 000 rubles), and at the same time the cumulative size of the specified elements of calculation base of reserve relating to the same partner does not exceed the size specified in paragraphs second and third Item 4.1 of this provision.

The requirements to the partner (contingent obligations of credit nature) included in portfolio according to which individual signs of impairment, except as specified, the specified in paragraphs five - the seventh this Item are revealed are excluded from the corresponding portfolio in the terms established by Chapter 5 of the Provision of the Bank of Russia No. 590-P except requirements to the partner (contingent obligations of credit nature), the size of each of which constitutes no more 0,01 of percent from the size of own means (capital) of credit institution, but does not exceed 1 000 000 rubles which are excluded from the corresponding portfolio in time, stipulated in Item 4.6 this provision.

The credit institution has the right to include in portfolio (not to exclude from portfolio) requirements to the partner (contingent obligations of credit nature) up to 10 000 000 rubles, belonging to the subject of small and medium entrepreneurship which is that according to the Federal Law of July 24, 2007 No. 209-FZ "About development of small and medium entrepreneurship in the Russian Federation" (The Russian Federation Code, 2007, No. 31, Art. 4006; No. 43, Art. 5084; 2008, No. 30, Art. 3615, Art. 3616; 2009, No. 31, Art. 3923; No. 52, Art. 6441; 2010, No. 28, Art. 3553; 2011, No. 27, Art. 3880; No. 50, Art. 7343; 2013, No. 27, Art. 3436, Art. 3477; No. 30, Art. 4071; No. 52, Art. 6961; 2015, No. 27, Art. 3947; 2016, No. 1, Art. 28; No. 26, Art. 3891; No. 27, Art. 4198; 2017, No. 31, Art. 4756; No. 49, Art. 7328; 2018, No. 1, Art. 89; No. 28, Art. 4149; No. 32, the Art. 5106) which financial position taking into account requirements of Items 3.3 - 3.5 Provisions of the Bank of Russia No. 590-P are estimated not worse than average and on which there are no other individual signs of impairment.

In case of deterioration in assessment of financial position of the partner - the subject of small and medium entrepreneurship taking into account requirements of Items 3.3 - 3.5 Provisions of the Bank of Russia No. 590-P to bad inclusive the credit institution has the right not to exclude from the conforming portfolio requirements (contingent obligations of credit nature) up to 5 000 000 rubles, belonging to this partner, in the absence of other individual signs of impairment.

If in portfolio there are requirements (contingent obligations of credit nature) relating to partners, the financial position and (or) quality of providing which worsened owing to emergence of the emergency situation specified in paragraph nine of subitem 3.1.1 of Item 3.1 of the Provision of the Bank of Russia No. 590-P (further - emergency situation), credit institution has the right not to exclude the specified requirements (contingent obligations of credit nature) from earlier built portfolios within three years from the date of emergence of emergency situation.".

1.11. "45901 - 45917," to add Item 5.1 after figures with figures "478,".

1.12. State Item 5.5 in the following edition:

"5.5. In case of absence on balance of credit institution of credit requirements according to which the interest incomes specified in Items 5.1 - 5.4 these Chapters are added the settlement reserve on possible losses is determined by requirements for receipt of interest incomes proceeding from risk assessment which is carried out according to this Provision or the Provision of the Bank of Russia No. 590-P depending on the credit requirement according to which are added interest incomes (are saved up).";

1.13. Add Chapter 5 with Item 5.6 of the following content:

"5.6. In the presence of providing on the elements of calculation base of reserve specified in this Chapter, the size of the created reserve is determined according to the procedure, established by Chapter 6 of the Provision of the Bank of Russia No. 590-P.".

2. This Instruction is subject to official publication and becomes effective since January 1, 2019.

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