law: Co-Operative Societies Act 2008 
  28.
  
  Bad and doubtful Loan allowance
  1.      A credit union shall
  
  establish and maintain on its books and accounts a minimum allowance for loan
  
  losses in the amount of three (3) percent of its total loan portfolio.
  2.      When a credit union
  
  identifies a loan as a doubtful or, uncollectible loan, the credit union shall
  
  immediately allow for the doubtful loan by-
  a.     
  
    establishing
  
  on its books and accounts an allowance for the doubtful loan in an amount equal
  
  to the difference between-
                       
  
   i.        
  
    the
  
  book value of the loan, including any interest due and unpaid and interest
  
  accrued; and
                      
  
   ii.        
  
    the
  
  realizable book value of the loan as estimated by the credit union;
  a.    
  
     
  b.    
  
    reporting
  
  on any income statement it prepares, including its annual income statement
  
  required pursuant to Regulation 10, as a loss from income an amount as an
  
  allowance for doubtful loans equal to the sum of allowances for all doubtful
  
  loans established in accordance with paragraph (a) ; and
  c.     
  
    reporting
  
  on any balance sheet it prepares, including its annual balance sheet-
                       
  
   i.        
  
    the
  
  value, as an asset, of its doubtful loans in an amount equal to the value of
  
  all the doubtful loans as stated on its books and accounts less the allowance
  
  for the doubtful loan established in accordance with sub paragraph (a) ;
  
  and
                      
  
   ii.        
  
    any
  
  property or other assets acquired in the financial year pursuant to a
  
  foreclosure realisation proceedings on a loan that was a doubtful loan at an
  
  amount not greater than the realizable value of the loan-
  A.    
  
    as
  
  estimated by the credit union pursuant to paragraph (a) (ii); and
  B.    
  
    as
  
  stated on the books and accounts of the credit union before the property or
  
  assets were realized pursuant to the foreclosure or other proceedings.
  1.      
  2.      
  3.      Notwithstanding
  
  paragraph (2), a society registered under the former society Act in respect of
  
  the financial year prior to the society’s continuance may, instead of charging
  
  its allowance for doubtful loans to its income in the manner required by
  
  paragraph (2)(b) , charge the amount of the allowance as calculated
  
  pursuant to paragraph (2)(a) to the reserve required by the Act.
  4.      A credit union shall
  
  report, at the end of each financial year to the Registrar-
  a.     
  
    the
  
  number and amount of doubtful loans for which an allowance has been made in
  
  accordance with this Regulation in that financial year;
  b.    
  
    the
  
  amount of allowance for doubtful loans made pursuant to paragraph (2) or (3) in
  
  that financial year; and
  c.     
  
    the
  
  value of property and other assets recovered in that financial year on doubtful
  
  loans.
  1.      
  2.      
  3.      
  4.      
  5.      The Board of
  
  directors of a credit union shall cause a list of all doubtful loans to be
  
  available at the registered office of the credit union for any examination
  
  required by the Credit Committee, Supervisory Committee or the auditor of the
  
  credit union, and the Board shall send a copy of that list to the Registrar.
  6.      The list referred to
  
  in paragraph (5) includes with respect to each doubtful loan-
  a.     
  
    the
  
  name of the borrower;
  b.    
  
    the
  
  amount of the loan; and
  c.     
  
    the
  
  amount of any allowance made pursuant to this Regulation.
  1.      
  2.      
  3.      
  4.      
  5.      
  6.      
  7.      Where a credit union
  
  determines that the allowance for doubtful loans required by paragraph (2) will
  
  result in a net loss on its income statement for the financial year, it shall
  
  immediately notify the Registrar in writing of that fact.