RESOLUTION OF BOARD OF NATIONAL BANK OF THE REPUBLIC OF BELARUS

of April 11, 2023 No. 130

About approval of the Instruction for financial accounting of financial instrument transactions

Based on the paragraph of the thirty sixth of Article 26 and part one of article 39 of the Bank code of the Republic of Belarus the Board of National Bank of the Republic of Belarus DECIDES:

1. Approve the Instruction for financial accounting of financial instrument transactions it (is applied).

2. This resolution becomes effective since January 1, 2027.

Approved by the Resolution of Board of National Bank of the Republic of Belarus of April 11, 2023 No. 130

Instruction for financial accounting of financial instrument transactions

Chapter 1. General provisions

1. This Instruction determines for banks, the non-bank credit and financial organizations, "Development Bank of the Republic of Belarus" open joint stock company (further - banks) procedure for reflection in financial accounting of transactions with falling within scope of the International accounting standard (IFRS) 9 "Financial instruments" enacted by the resolution of Council of Ministers of the Republic of Belarus and National Bank of the Republic of Belarus of December 30, 2016 No. 1119/35 (further - IFRS (IFRS) 9), the following financial instruments:

the financial instruments certifying monetary commitment of the debtor (the credits, deposits (deposits), other provided (received) money, securities, the acquired rights of monetary claims according to credit agreements and other agreements) (further if other is not determined, - debt financial instruments);

equity instruments;

agreements of financial guarantee;

obligations on provision of money;

derivative tools;

the financial instruments determined as objects of hedging and hedging instruments.

Requirements of this Instruction extend also to investments in the associated and affiliated legal entities who are considered according to the International accounting standard (IAS) 27 "Separate financial statements" enacted by the resolution of Council of Ministers of the Republic of Belarus and National Bank of the Republic of Belarus of August 19, 2016 No. 657/20, the International accounting standard (IAS) 28 "Investment into associated organizations and joint businesses" enacted by the resolution of Council of Ministers of the Republic of Belarus and National Bank of the Republic of Belarus of August 19, 2016 No. 657/20 (further - IFRS (IAS) 28).

2. Terms and the concepts "depreciated cost of financial asset or financial liability", "gross carrying amount of financial asset", "date of the conclusion of the transaction", "date of calculations", "agreement of financial guarantee", "costs according to the transaction", "hedging instrument", "credit loss", "the credit depreciated financial asset", "accounting method by date of the conclusion of the transaction", "accounting method by date of calculations", "effective interest rate method", "object of hedging", "the expected credit losses", "provision under losses", "purchase or sale on standard conditions", "derecognition", "acquired or the depreciated financial asset created credit", "the predicted transaction", "the derivative tool", "firm contractual commitment", "transaction price", "effective interest rate", "the effective interest rate corrected taking into account credit risk" are used in values, determined by IFRS (IFRS) 9.

The terms "variation margin", "deposit margin" are used in the values determined respectively in paragraphs three and the fourth part one of Item 2 of the Instruction on procedure for making of forward transactions in trade system of the organizer of the securities trading approved by the resolution of the Ministry of Finance of the Republic of Belarus of November 18, 2016 No. 98.

The terms "equity instrument", "financial asset", "financial instrument", "financial liability" are used in the values determined by the International accounting standard (IAS) 32 "Financial instruments: representation", the enacted resolution of Council of Ministers of the Republic of Belarus and National Bank of the Republic of Belarus of August 19, 2016 No. 657/20.

The term "net investments in foreign operation" is used in the value determined by the International accounting standard (IAS) 21 "Influence of changes of the currency rates" enacted in the territory of the Republic of Belarus by the resolution of Council of Ministers of the Republic of Belarus and National Bank of the Republic of Belarus of August 19, 2016 No. 657/20 (further - IFRS (IAS) 21).

The term "fair value" is used in the value determined by the International accounting standard (IFRS) 13 "Assessment of fair value" enacted by the resolution of Council of Ministers of the Republic of Belarus and National Bank of the Republic of Belarus of August 19, 2016 No. 657/20 (further - IFRS (IFRS) 13).

3. In local legal acts of the banks developed taking into account provisions IFRS (IFRS) 9, of IFRS (IFRS) 13, of the International accounting standard (IFRS) 7 "Financial instruments: disclosure of information", the Council of Ministers of the Republic of Belarus and National Bank of the Republic of Belarus enacted by the resolution of August 19, 2016 No. 657/20, of other International accounting standards and their Explanations, Conceptual bases of submission of financial statements (further - international accounting standards) and this Instruction, are determined:

procedure for decision making on recognition, classification (reclassification), derecognition, review of estimated amounts of the payments or receipts provided by the agreement (further - review of estimated amounts), to change of the cash flows provided by the agreement as agreed by the parties (further - modification) the financial assets and the financial liabilities, to cost determination relating to costs according to the transaction, earned by bank of the rewards which are integral part of effective interest rate of the financial instrument;

approaches to determination of effective interest rate, depreciated cost of financial assets and financial liabilities, determination of hierarchy of fair value on financial instruments and evaluation methods of fair value;

procedure for document flow and interaction between structural divisions of bank when implementing financial instrument transactions and their assessment;

approaches to determination of level of credit risk, assessment of the expected credit losses, forming of provision under losses on them on the debt financial assets issued to agreements of financial guarantee, obligations on provision of money;

approaches to cost determination of the issued agreements of financial guarantee, obligations on provision of money on interest rate are lower than market;

procedure for decision making by determination of financial instruments as tools and objects of hedging.

When forming accounting policy banks can determine that on the financial assets and financial liabilities carried at fair value through profit or loss, interest incomes (expenses), dividends are not recognized separately taking into account the conditions of application of such approach to the certain financial assets and financial liabilities carried at fair value through profit or loss provided by banks.

4. Analytics of financial instrument transactions shall provide information on each financial instrument or set of financial instruments with identical characteristics taking into account requirements of this Instruction.

5. Purchase or sale of financial assets is reflected in standard conditions in financial accounting with use or accounting method by date of the conclusion of the transaction, or accounting method by date of calculations taking into account the approaches provided by IFRS (IFRS) 9. The chosen method is determined by bank in accounting policy and applied according to IFRS (IFRS) 9.

6. When making by bank on its own behalf and at own expense financial instrument transactions obtaining or payment of money are reflected in financial accounting using the corresponding balance sheet accounts * groups 180 "Receivables on transactions of bank with financial instruments, precious metals and gemstones with National Bank, other banks", 181 "Accounts payable on transactions of bank with financial instruments, precious metals and gemstones with National Bank, other banks", 380 "Receivables on transactions of bank with financial instruments, precious metals and gemstones with clients", 381 "Accounts payable on transactions of bank with financial instruments, precious metals and gemstones with clients" taking into account requirements of this Instruction and other legislation.

Receipt of the income, payment of expenses on financial instruments are reflected in financial accounting using balance sheet accounts on accounting of imputed incomes or expenses, debit or accounts payable, calculations and balance sheet accounts of group 640 "Accounts of disposal" proceeding from content of the made transaction.

Transactions on derecognition of financial instruments, including as a result of their reclassification, modification, are reflected in financial accounting using the corresponding balance sheet accounts of group 640 "Accounts of disposal".

Financial instrument transactions in foreign currency are reflected in financial accounting taking into account IFRS (IAS) 21, of requirements of the Instruction for financial accounting of foreign currency transactions approved by the resolution of Board of National Bank of the Republic of Belarus of April 11, 2023 No. 129, and this Instruction.

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* Accounts are specified according to the Chart of accounts of financial accounting in banks, the non-bank credit and financial organizations, "Development Bank of the Republic of Belarus" open joint stock company established according to appendix to the resolution of Board of National Bank of the Republic of Belarus of April 10, 2023 No. 126 "About the Chart of accounts of financial accounting in banks, the non-bank credit and financial organizations, "Development Bank of the Republic of Belarus" open joint stock company.

7. In case of transactions with securities and derivative tools in trade system of Belarusian Currency and Stock Exchange open joint stock company (further - JSC Belarusian Currency and Stock Exchange) and implementation of calculations for them on the basis of clearing of net amount of debit (credit) line item of bank are reflected in financial accounting with use of the balance sheet accounts 6339 "Clearing accounts", 1825 (1835) "Calculations for operations on the stock exchange with JSC Belarusian Currency and Stock Exchange.

8. Debit or the accounts payable arising according to sales agreements or purchases of financial assets on the terms of delay (payment by installments) of payment is reflected in financial accounting using the corresponding balance sheet accounts of classes 1 "Money, precious metals and gemstones on banking activities, interbank transactions", 2 "The credits and other means provided to clients", 3 of "The account on transactions of the clients" intended for financial accounting of other means provided (attracted) to other banks or clients (from other banks or clients).

9. The procedure for financial accounting of derecognition of financial assets and financial liabilities by their transfer under the agreements which are not providing cost recovery of such financial instruments money (offsetting, compensation, exchange, etc.), is determined by bank independently in the local legal act taking into account conditions of the signed agreements, International Financial Reporting Standards.

In case of determination of procedure for the financial accounting of financial instruments which is not settled by this Instruction, banks are guided by International Financial Reporting Standards and other legislation.

Chapter 2. General requirements to recognition and assessment of financial instruments

10. The financial assets and financial liabilities classified by bank in case of initial recognition according to IFRS (IFRS) 9 are reflected in financial accounting in balance sheet accounts of classes 1 "Money, precious metals and gemstones on banking activities, interbank transactions", 2 "The credits and other means provided to clients", 3 of "The account on transactions of clients", 4 "Securities. Derivative tools and hedging instruments. The financial liabilities of bank carried at fair value", 6 "Other assets and other obligations", groups 52 "Investments in the legal entities carried at fair value", the corresponding financial assets and financial liabilities intended for accounting in the following groups:

the financial assets considered on depreciated cost;

the financial assets carried at fair value through other comprehensive income;

the financial assets carried at fair value through profit or loss;

the financial liabilities considered on depreciated cost;

the financial liabilities carried at fair value through profit or loss.

In case of initial recognition financial assets and financial liabilities are assumed to financial accounting at their fair value.

On the financial assets and financial liabilities considered on depreciated cost or at fair value through other comprehensive income, fair value increases or decreases by cost amount according to the transaction, the earned rewards which are integral part of effective interest rate.

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