INSTRUCTION OF CENTRAL BANK OF THE RUSSIAN FEDERATION

of June 28, 2016 No. 4054-U

About procedure for forming by the microfinancial organizations of reserves on possible losses on loans

This Instruction based on the Federal Law 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, the Art. 23, the Art. 46, the Art. 50), Item 5 of part 4 of article 14 of the Federal Law of July 2, 2010 No. 151-FZ "About microfinancial activities and the microfinancial organizations" (The Russian Federation Code, 2010, No. 27, Art. 3435; 2011, No. 27, Art. 3880; No. 49, Art. 7040; 2013, No. 26, Art. 3207; No. 30, Art. 4084; No. 51, Art. 6683, Art. 6695; 2014, No. 26, Art. 3395; 2015, No. 27, Art. 4001; No. 29, Art. 4357; 2016, No. 1, the Art. 27) 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 May 26, 2016 No. 14) establish procedure for forming, including creation, use, the size and frequency of calculation by the microfinancial organizations of reserves on possible losses on loans.

1. Reserves on possible losses on loans are created on the rights to claim of the microfinancial organization which arose from the date of entering of information about her into the state register of the microfinancial organizations, following from agreements of microloan and contracts of assignment of rights to claim under the agreements of microloan signed between borrowers and the microfinancial organizations.

2. Reserves on possible losses on loans are created by microfinance company monthly, the microcredit company quarterly as of the last date for microfinance company (quarter for the microcredit company) in the presence of not performed (completely or partially) obligations to the microfinancial organization concerning debt on microloans and on the investments in rights to claim of the microfinancial organization following from contracts of assignment of rights to claim under the agreements of microloan signed between borrowers and the microfinancial organizations (further - the acquired rights to claim under agreements of microloan), and also concerning the obligations on the re-structured microloans established by results of inventory count of debt as of the last date for microfinance company (quarter for the microcredit company). Inventory count of debt for the purpose of this Instruction the check performed by the microfinancial organization registered as of the last date for microfinance company (quarter for the microcredit company) is recognized to debt on the issued microloans and the acquired rights to claim on agreements of microloan for the purpose of identification and determination of duration of overdue payments.

3. Reserves on possible losses on loans are created:

on the amount of principal debt on microloans in which do not join: payments in the form of interest for using microloan, the commission fees, penalties, other payments for benefit of the microfinancial organization following from the agreement of microloan;

on the amount of requirements for the added interest incomes on microloans which join interest for using microloan, and also any predefined the agreement of microloan the income on microloan;

on the amount of investments of the acquired rights to claim under agreements of microloan;

on the amount of requirements for the added interest incomes on investments in the acquired rights to claim under agreements of microloan which join interest for using microloan, and also any predefined the agreement of microloan the income on microloan added by the microfinancial organization from the moment of acquisition of rights to claim by it under agreements of microloan.

4. When forming reserve on possible losses on loans regarding principal debt on microloan and regarding investments in the acquired rights to claim under agreements of microloan the microfinancial organizations create reserves on possible losses on loans in the following procedure.

4.1. The rights to claim granted by the microfinancial organization microloans and acquired under agreements of microloan are grouped in types of borrowers and unite in the following groups:

debt of the physical persons who are not individual entrepreneurs on the agreement of microloan signed for a period of up to 30 days inclusive in the amount to 30 thousand rubles inclusive (further - debt of the physical persons who are not individual entrepreneurs on short-term microloans);

other debt of the physical persons who are not individual entrepreneurs;

debt of the individual entrepreneurs and legal entities who are subjects of small and medium entrepreneurship;

debt of the individual entrepreneurs who are not subjects of small and medium entrepreneurship;

debt of the legal entities who are not subjects of small and medium entrepreneurship.

4.2. Restructured debt of the physical persons who are not individual entrepreneurs on short-term microloans and other restructured debt unite in separate groups. For the purposes of this Instruction the debt is recognized re-structured if the microfinancial organization, including the microfinancial organization from which passed rights to claim under agreements of microloan signed with the borrower the supplementary agreement changing essential conditions of the initial agreement of microloan based on which the borrower acquires the right to fulfill obligations on microloan in more favorable mode (for example, change of repayment period of microloan, the size of interest rate, procedure for its calculation). At the same time for reference of debt to restructured debt of the physical persons who are not individual entrepreneurs on short-term microloans or to other restructured debt initial terms of the contract of microloan regarding the amount of microloan and term for which the initial agreement of microloan, the debt on which is subject to restructuring, is signed are considered.

4.3. The groups created according to subitems 4.1 and 4.2 of this Item, except for debts of the physical persons who are not individual entrepreneurs on short-term microloans and restructured debt of the physical persons who are not individual entrepreneurs on short-term microloans, depending on ensuring obligation fulfillment are subdivided into the following subgroups:

the debt provided with pledge, the guarantee, independent guarantee;

other debt.

4.4. Depending on availability and duration of overdue payments the debt is subdivided on:

debt without overdue payments;

debt with overdue payments lasting from 1 up to 30 calendar days;

debt with overdue payments lasting from 31 up to 60 calendar days;

debt with overdue payments lasting from 61 up to 90 calendar days;

debt with overdue payments lasting from 91 up to 120 calendar days;

debt with overdue payments lasting from 121 up to 180 calendar days;

debt with overdue payments lasting from 181 up to 270 calendar days;

debt with overdue payments lasting from 271 up to 360 calendar days;

debt with overdue payments lasting over 360 calendar days.

4.5. Duration of the overdue debt following from contracts of assignment of rights to claim under the agreements of microloan signed between borrowers and the microfinancial organizations shall include, including, the overdue debt duration under agreements of microloan which arose until concession of rights to claim under agreements of microloan.

5. Values of reserves are established percentage of the amount of principal debt on microloans or from the amount of investments on the acquired rights to claim under agreements of microloan depending on group and subgroup of debt, and also from duration of overdue payments on debt according to appendix to this Instruction.

6. The microfinancial organizations determine the size of the reserves reflecting the size of possible losses of the microfinancial organization for microloans and the acquired rights to claim under agreements of microloan by multiplication of the amounts of principal debt by microloans and multiplication of the amounts of investments of the acquired rights to claim under contracts of microloan for value of reserves depending on group and subgroup of debt and from duration of overdue payments. The reserve size on possible losses on loan created on principal debt on microloan cannot exceed the amount of principal debt on microloan. The reserve size on possible losses on loan created on investments in the acquired rights to claim under the agreement of microloan cannot exceed the investment amount of the acquired rights to claim under the agreement of microloan.

7. The reserve size on possible losses on loans regarding requirements for the added interest incomes is determined by multiplication of the amount of requirements for the added interest incomes by the value equal to the relation of the size of the created reserve on possible losses on loan on principal debt determined according to items 4 - 6 these Instructions, to the amount of principal debt by loan on which the specified reserve is created. The reserve size on possible losses on loans regarding requirements for the added interest incomes for investments in the acquired rights to claim under the agreement of microloan is determined by multiplication of the amount of requirements for the added interest incomes by the value equal to the relation of the size of the created reserve by possible losses by loans on investments in the acquired rights to claim under the agreement of the microloan determined according to items 4 - 6 these Instructions, to the amount of investments of the acquired rights to claim under the agreement of microloan under which the specified reserve is created.

8. The reserves created according to this Instruction on possible losses on loans are used by the microfinancial organizations in case of write-off from balance of bad debt for microloans, and also cashless debt on the acquired rights to claim on agreements of microloan. The debt is recognized hopeless if the microfinancial organization takes necessary and sufficient legal and actual acts for its collection which possibility of implementation follows from the law, customs or the agreement, and on realization of the rights following from debt collateral availability in the presence of documents and (or) acts of the authorized state bodies necessary and sufficient for decision making about write-off of bad debt at the expense of the reserves created under it, including court resolutions, acts of judicial police officers-contractors, acts of bodies of state registration, and also other acts proving impossibility of collection of bad debt. Write-off from balance of the microfinancial organization of bad debt is the borrower of agreement obligations of microloan proved in case of non-execution within at least one year to decision date about write-off of bad debt.

9. Write-off of bad debt by the microfinancial organization at the expense of the reserve created for it is performed according to the decision of authorized body of the microfinancial organization.

At the same time with write-off from balance of bad debt on principal debt for the provision account on possible losses on loans according to the decision of authorized body of the microfinancial organization the debt on the percent added under the relevant agreement of microloan is written off.

10. Forming of reserves on possible losses on loans is performed by the microfinancial organizations in the amount of at least:

30 percent from the sum of reserves determined according to this Instruction on possible losses on loans on the last number of quarter in which this Instruction becomes effective;

60 percent from the sum of reserves determined according to this Instruction on possible losses on loans in time no later than December 31, 2016;

100 percent from the sum of reserves determined according to this Instruction on possible losses on loans in time no later than December 31, 2017.

11. The microfinancial organizations shall provide proper document creation, the reserves used for the purposes of calculations on possible losses for loans.

The documents of the microfinancial organizations used for the purposes of calculations of reserves on possible losses on loans are subject to storage according to the procedure, established by the Federal Laws and other regulatory legal acts.

The Bank of Russia, its territorial offices and authorized representatives according to article 76.5 of the Federal Law of July 10, 2002 No. 86-FZ "About the Central bank the Russian Federation (Bank of Russia)", item 4 of part 4 of article 14 of the Federal Law of July 2, 2010 No. 151-FZ "About microfinancial activities and the microfinancial organizations" perform observance of procedure for the forming of reserves on possible losses on loans established by this Instruction. In case of failure to carry out of established procedure of forming of reserves by the microfinancial organization on possible losses for loans the Bank of Russia applies the corrective actions provided by the Federal Laws to the microfinancial organization.

12. This Instruction becomes effective after 10 days after day of its official publication.

From the date of entry into force of this Instruction to declare invalid the Instruction of the Bank of Russia of July 14, 2014 No. 3321-U "About procedure for forming by the microfinancial organizations of reserves on possible losses on loans", registered by the Ministry of Justice of the Russian Federation on August 11, 2014 No. 33520 ("the Bulletin of the Bank of Russia" of September 3, 2014 No. 78).

Appendix

to the Instruction of the Bank of Russia of June 28, 2016 No. 4054-U "About procedure for forming by the microfinancial organizations of reserves on possible losses on loans"

Values of reserves on possible losses on microloans for the microfinancial organizations (as a percentage)

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