On 11 July 2016, The National Bank of Serbia adopted amendments to three by-laws of the Law on Banks (Risk Management Decision, Decision on the Classification of Bank Balance Sheet Assets and Off-balance Sheet Items and the Decision on Reporting Requirements for Banks), and in doing so, took a significant step towards effectuating the implementation of the strategies on resolving non-performing loans and the action plan rendered by the Government of the Republic of Serbia and the National Bank of Serbia in cooperation with the IMF, World Bank and EBRD – adopted at the end of last year. Furthermore, the amendments are also intended to improve the regulatory framework for the treatment of restructured receivables, in order to provide sustainable incentives in practice and to prevent unsustainable refinancing, as well as in the area of banks' obligations on reporting the structure of restructured receivables and reporting on banks' non-performing loans. These amendments entered into force on 15 July 2016, whereas amendments to the Risk Management Decision shall be applicable as of 15 July 2016, and the application of the amendments to the Decision on the Classification of Bank Balance Sheet Assets and Off-balance Sheet Items and the Decision on Reporting Requirements for Banks is postponed until 1 October 2016.

 The key amendments of the Risk Management Decision can be separated into three main parts: (i) amendments allowing for the assignment of the bank's undue receivables towards legal entities, entrepreneurs and agriculturalists to other legal entities in order to decrease banks' distressed assets; (ii) amendments related to banks' distressed assets management; and (iii) amendments related to the valuation of the quality of security instruments.

 The first part, related to the assignment of the bank's undue receivables to other legal entities in essence allows for, among other things, the assignment of receivables towards entities undergoing pre-package reorganisation plan implementation.

 The second part, related to bank's distressed assets management includes the regulation of the regulatory procedures and strategies in the banks for monitoring distressed assets, as well as organisational-structural measures which a bank should undertake in order to provide adequate distressed assets management.

 The third part, related to the valuation of the quality of security instruments, provides precise regulation of the security instruments whose value will be subject to the valuation and addresses the duties and obligations of a licensed valuator through manuals for the valuation and the producing of a valuation report, as well as factors and analyses which may impact the security instruments value.

 The latest amendments to the above outlined by-laws represent a signal that the market of non-performing loans may be developing, although the results still remain to be seen and tested in practice.