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

Ensuring sound financial condition of credit unions through asset management systems
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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.

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