Approved by National Bank of December 23, 1996, the Ministry of Finance of the Republic of Tajikistan of January 2, 1997 and Board of National Bank of Tajikistan of December 23, 1996 No. 59

Regulations on procedure for forming and use of fund of covering of possible losses for loans

I. General provisions

1. This Provision determines the mechanism of classification of loan portfolio and forming of Fund of covering of possible losses for loans obligatory for all banks operating in the territory of the Republic of Tajikistan irrespective of forms of their property. Creation of fund of covering possible, losses according to loans is based on assessment of condition of assets and their classification by quality sign, with determination of the credit risks influencing general condition of bank. Timely identification of shaky credits, is necessary for management of bank for taking measures to prevention of the losses connected with the credits, adjustment of the pursued credit policy. Such assessment more promotes ensuring bank liquidity, protection of interests of its shareholders and clients.

For the purpose of maintenance of stability and steady functioning of bank system of the Republic of Tajikistan commercial banks shall create fund of covering of possible losses for loans. The specified reserves are considered on the balance sheet accounts 10999 "Reserve Possible Ubytkovssuda", 11199 "Reserve of possible losses - the reviewed loans.

2. Contributions to the specified reserve belong on expenses of bank" (the balance sheet account 57101 "Losses from Decrease in Realizable Value — Loans", 57105 "Losses from decrease in realizable value - the reviewed loans", and reduction of account 31301 "Retained incomes", according to article 135 of the Tax Code of the Republic of Tajikistan)."

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