2002 Regulation on Asset Classification and Creation of Possible Loss Reserves by Credit Unions

This document presents the law on asset classification, and creation and use of reserves for possible asset losses for credit unions in Georgia.The document deals with the following aspects:

• General provisions that discuss the need for financial reporting by credit unions, with particular emphasis on asset classification and reserves to cover possible losses;
• Consequence of non-observance of this regulation;
• Obligation of the credit unions with regard to asset classification and reserves;
• Definition of the terms used in this regulation.

The document also provides the asset classification system, according to which credit unions shall self-classify their assets on a monthly basis. It specifies the assets, and prescribes the rules for:

• Classification of loans into four categories;
• Split classification in the case of partially secured loans;
• Classification of deposits;
• Classification and provisioning of non-loan assets.

Further, to cover any possible losses in assets, the documents prescribes the following:

• Creation and use of reserves;
• Accounting and write-offs of asset losses.