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BNR cuts bad debt provisions
Lenders will now be able to cut the provisions set aside to write off bad debts, namely for loans with 90-day default period or for loans subject to legal actions, with maximum 25% of collaterals’ value, after the central bank approved the new regulation. National Bank of Romania announced Friday that the new regulation on the classification of loans and placements, such as the constitution of bad debt provisions had been approved by the board of the institution. The regulation project was drafted after recent talks of BNR with Romanian Association of Banks.Nevertheless, the lenders cannot reduce provisions in case of current interest default or a loan default period longer than 90 days, according to the new regulation.The prior regulatory framework was not allowing the adjustment of provisions for loan default period longer than 90 days. BNR says the new regulatory groundwork is aimed to line up national regulations to International Financial Reporting Standards in terms of guarantees scheme afferent to bad debts with a default period longer than 90 days in setting up provisions. The new form of the regulation will be in force once it’s published in the Official Gazette, in line with legislation in force.