2000 Regulation on Asset Classification and the Creation and Use of Reserves for Losses by Commercial Banks

This document presents the law on internal procedures and reporting with regard to the asset classification and reserves for the banks of the Republic of Georgia. It deals with the following aspects:

• Importance of asset classification and creation of reserves, and reporting of the same;
• Regulations and the authorities responsible for ensuring the implementation of the law;
• Obligations of the banks with regard to adherence of the law;
• Definitions of the terms used.

The document also lays down the asset classification systems based on which commercial banks should self-classify their assets. It gives classifications of the following assets:

• Loans into five categories;
• Split classification of partially secured loans;
• Restructured loans;
• Inter-bank deposits;
• Non-asset loans.

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

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