Bosnia and Herzegovina: Decree on Percentage and Manner for Forming and Maintaining Reserves for the Coverage of Loan Losses of Microcredit Organizations

This Decree stipulates the percentage and the manner for forming and maintaining reserves for the coverage of loan losses of microcredit organizations (MCOs). It states that:

• The basis of the calculation of the percentage of reserves will include the loan amount not repaid, the accrued interest, and fees and other items that expose the MCO to business failure;
• The MCO is obliged to return certain items to groups on a monthly basis and is also obliged to:
  • Form reserves for the coverage of loan losses;
  • Remove all receivables from the balance sheet;
  • Maintain the repeated loan;
  • Establish a system that will enable forming and maintaining reserves for the coverage of loan losses.
• The MCO must submit the quarterly report to the Banking Agency of the Federation of BiH (FBA) and that the report must be signed by the authorized person;
• The decree shall come into effect eight days after its publication in the Official Gazette of the Federation of BiH.

The Decree is signed by the President of the Management Board.