CBIRC Issues New Rules on Expected Credit Loss Methods

China’s banking authority has issued a new set of rules on methods for assessing the expected credit losses of commercial lenders.

The China Banking and Insurance Regulatory Commission (CBIRC) announced on 18 May that it had recently released the “Commercial Bank Expected Credit Loss Method Implementation Measures” (商业银行预期信用损失法实施管理办法).

CBIRC said that the goal of the new Measures is to standardise internal control mechanisms and management procedures for expected credit loss methods, as well as to “firm up” the foundations for the management of credit risk provisions.

The Measures focus on standardisation in four key areas including:

  1. Clarifying administrative mechanisms for the implementation of expected credit loss methods.
  2. Firming up the foundation for the implementation of expected credit loss methods.
  3. Standardising expected credit loss method implementation procedures.
  4. Strengthening regulation of expected credit loss methods.

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