Chương III: Điều khoản thi hành

CIRCULAR

DEBT RESCHEDULING, EXEMPTION OR REDUCTION OF INTEREST AND FEES, RETENTION OF DEBT CATEGORY TO ASSIST BORROWERS AFFECTED BY COVID-19 PANDEMIC

Pursuant to the Law on the State bank of Vietnam dated June 16, 2010;

Pursuant to the Law on credit institutions dated June 16, 2010 and the Law on amendments thereto;

Pursuant to the Government's Decree No. 16/2017/ND-CP dated February 17, 2017 on functions, tasks, entitlements and organizational structure of the State bank of Vietnam;

After reaching a consensus with the Ministry of Finance;

At the request of the Chief Banking Inspector;

The Governor of the State bank of Vietnam promulgates a Circular on debt rescheduling, exemption or reduction of interest and fees, retention of debt category to assist borrowers affected by Covid-Covid-19 pandemic.

Chapter I

GENERAL PROVISIONS

Article 1. Scope

This Circular provides instructions for credit institutions and foreign branch banks (FBB) on debt rescheduling, exemption or reduction of interest and fees, retention of debt category to assist borrowers affected by Covid-19 pandemic.

Article 2. Regulated entities

1. Credit institutions (except policy banks) and foreign branch banks (FBBs).

2. Clients of credit institutions and FBBs (except clients that are credit institutions and FBBs themselves).

3. Other organizations and individuals relevant to debt rescheduling, exemption or reduction of interest and fees, retention of debt category to assist borrowers affected by Covid-Covid-19 pandemic.

Article 3. Application of relevant legislative documents

Regulations of this Circular shall apply to debt rescheduling, exemption or reduction of interest and fees, retention of debt category to assist borrowers affected by Covid-19 pandemic; debt rescheduling, exemption or reduction of interest and fees, debt classification in other cases not mentioned in this Circular shall comply with relevant legislative documents.

Chapter II

SPECIFIC PROVISIONS

Article 4. Debt rescheduling

1. An outstanding debt, including the principal and/or interest (including the debts regulated by the Government's Decree No. 55/2015/ND-CP) may be rescheduled if it fully satisfies the following conditions:

a) The debt is a loan or finance lease;

b) The principal and/or interest arises during the period from 23/01/2020 to the day after 03 months after the day on which the Prime Minister declares the end of the Covid-19 outbreak;

c) The borrower is unable to repay the principal and/or interest on schedule under the loan/finance lease agreement due to decrease in revenue or income caused by Covid-19 pandemic.

2. The debts mentioned in Clause 1 of this Article shall be rescheduled in the following cases:

a) The unpaid debt is undue or up to 10 days overdue according to the loan/finance lease agreement;

b) The debt is overdue (except for the cases in Point a of this Clause) during the period from 23/01/2020 to the 16^th day from the effective date of this Circular.

3. Credit institutions and FBBs shall decide the rescheduling of debts cases specified in Clause 1 and Clause 2 of this Article in consideration of the borrowers’ request and ability to fully repay the principal and/or interest after the debt is rescheduled. The rescheduling shall be suitable for the impacts of Covid-19 and follow these rules:

a) Debts that violate regulations of law shall not be rescheduled.

b) The debt shall not be deferred for more than 12 months from the initial repayment deadline according to the loan/finance lease agreement.

Article 5. Reduction and exemption of interest and/or fees

Credit institutions and FBBs shall, according to their own rules and regulations, decide reduction and exemption of interest and/or fees on extension of the debts (except purchases of corporate bonds) that are due during the period from 23/01/2020 to the day after 03 months after the Prime Minister declares the end of the Covid-19 outbreak and the borrowers are not able to repay the principal and/or interest by the deadline specified in the original agreement due to decrease in revenue or income caused by Covid-19.

Article 6. Retention of debt category

1. Credit institutions and FBBs may retain the categories of the following debts if they have been categorized in accordance with regulations of the State bank of Vietnam (SBV) at the nearest time before 23/01/2020:

a) The outstanding debts that are rescheduled as prescribed in Article 4 of this Circular;

b) The outstanding debts on which interest is exempted or reduced as prescribed in Article 5 of this Circular;

c) The outstanding debts mentioned in Point a and Point b of this Clause, including the debts that have been rescheduled, granted interest reduction or exemption, or re-categorized as prescribed by SBV during the period from 23/01/2020 to the 16^th day after the effective date of this Circular.

2. Credit institutions and FBBs shall classify and make bad debt provision for the debts mentioned in Clause 1 of this Article according to their rescheduled term without having to put them into a higher-risk category.

3. From the rescheduling date, credit institutions and FBBs are not required to record the interests on the outstanding debts that are rescheduled, debts on which interest is reduced or exempted, debts that remain current non-performing loans (Group 1) as prescribed in this Circular as revenue (estimated). Instead, they shall be monitored off-balance sheet and recorded as revenue when they are collected in accordance with regulations of law.

Article 7. Responsibilities of credit institutions and FBBs

1. Credit institutions and FBBs shall decide debt rescheduling, exemption or reduction of interest and fees, retention of debt category in accordance with Article 4, Article 5 and Article 6 of this Circular; make sure this policy is not taken advantage of for profiteering or incorrectly reflect the credit quality.

2. Issue internal regulations on rescheduling, exemption or reduction of interest and fees, retention of debt category in accordance with this Circular and uniformly apply them throughout their systems. Such regulations shall include:

a) Criteria for identification of debts of borrowers affected by Covid-19 pandemic;

b) Procedures, responsibility of each individual and department for debt rescheduling, exemption or reduction of interest and fees, retention of debt category. Make sure the individual or department that makes a decision on rescheduling, exemption or reduction of interest and fees, retention of debt category is different from the individual and department that approves the credit extension, except credit extensions approved by the Board of Directors, Board of Members, General Director/Director or parent bank (for FBBs). In case the credit extension and debt rescheduling is approved by a council, the chairperson of the council that approves the debt rescheduling must be different from the chairperson of the council that approves the credit extension, and at least two thirds (2/3) of the members of the former must be not be members of the latter;

c) Frequently review borrowers’ solvency after debt rescheduling, exemption or reduction of interest and fees, retention of debt category as prescribed by law; control and supervise the process off debt rescheduling, exemption or reduction of interest and fees, retention of debt category.

3. Within the first 10 days of the month, the credit institutions (except people's credit funds) and FBBs shall submit a report to SBV (through Sector Credit Department) on debt rescheduling, exemption or reduction of interest and fees, retention of debt category up to the last day of the previous month in accordance with the Appendix hereof.

4. Within the first 10 days of the month, the people's credit funds shall submit a report to the SBV branch of the province in which they are headquartered (hereinafter referred to as “SBV branch”) a report on debt rescheduling, exemption or reduction of interest and fees, retention of debt category up to the last day of the previous month in accordance with the Appendix hereof.

Article 8. Responsibilities of SBV units

1. Sector Credit Department shall:

a) Consolidate the reports mentioned in Clause 3 Article 7 of this Circular and Point a Clause 3 of this Article;

b) Take charge and cooperate with Financial Policy Department, Bank Supervision and Inspection Agency, SBV branches in advising the Governor of SBVV resolving issues that arise during the implementation of this Circular.

2. Responsibilities of Bank Supervision and Inspection Agency

Carry out inspection and supervise credit institutions and FBBs implementing this Circular.

3. SBV branches shall:

a) Submit a consolidated report from reports submitted by people's credit funds in their provinces as prescribed in Clause 4 Article 7 of this Circular to Sector Credit Department within the first 15 days of the month;

b) Carry out inspection and supervise credit institutions and FBBs implementing this Circular.

4. Credit Information Center (CIC) shall:

Adjust borrowers’ credit information in accordance with this Circular at the request of credit institutions and FFBs.

Chapter III

IMPLEMENTATION CLAUSES

Article 9. Effect

This Circular comes into force from March 13, 2020.

Article 10. Organization of implementation

Chief of Office, Chief Banking Inspector, heads of SBV units, Director of SBV branches, Chairpersons of Boards of Directors, Board of Members, General Director/Director of every credit institution and FBB are responsible for the implementation of this Circular./.

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