Circular No. 18/2015/TT-NHNN dated October 22, 2015 of the State Bank of Vietnam regulating on refinancing loans on the basis of special bonds of Asset Management Company for Vietnamese Credit Institutions

THE STATE BANK OF VIETNAM

Circular No. 18/2015/TT-NHNN dated October 22, 2015 of the State Bank of Vietnam regulating on refinancing loans on the basis of special bonds of Asset Management Company for Vietnamese Credit Institutions

Pursuant to the Law No. 46/2010/QH12 dated June 16, 2010 of the National Assembly on the State Bank of Vietnam;

Pursuant to the Law No. 47/2010/QH12 dated June 16, 2010 of the National Assembly on Credit Institutions;

Pursuant to the Decree No.156/2013/ND-CP dated November 11, 2013 of the Government defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;

Pursuant to the Decree No. 53/2013/ND-CP dated May 18, 2013 of the Government on the establishment, organization and operation of Vietnam Asset Management Company (hereinafter referred to as the Decree No. 53/2013/ND-CP);

Pursuant to the Decree No. 34/2015/ND-CP dated March 31, 2015 of the Government amending a number of Articles of the Decree No. 53/2013/ND-CP dated May 18, 2013 of the Government on the establishment, organization and operation of Vietnam Asset Management Company (hereinafter referred to as the Decree No. 34/2015/ND-CP);

At the proposal of the Director of the Monetary Policy Department;

The Governor of the Vietnam State Bank promulgates the Circular regulating on refinancing loans on the basis of special bonds of Asset Management Company for Vietnamese Credit Institutions.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of adjustment

This Circular regulates on refinancing loans in Vietnamese dong of the Vietnam State Bank (hereinafter referred as the State Bank) for credit institutions on the basis of special bonds of Asset Management Company for Vietnamese Credit Institutions (hereinafter referred as special bonds) according to the Decree No. 53/2013/ND-CP and the Decree No. 34/2015/ND-CP.

Article 2. Subjects of application

1. Credit institutions that are established and operated as stipulated under the Law on credit institutions, except for credit institutions with 100% foreign capital, joint-venture credit institutions (hereinafter referred as credit institutions).

2. Organizations, individuals related to the refinancing loans on the basis of special bonds (hereinafter referred as refinancing) of the State Bank for credit institutions.

Chapter II

SPECIFIC PROVISIONS

Article 3. Purposes

The State Bank provides refinancing for credit institutions with a view to supporting the operating capital of credit institutions in the process of handling bad debts according to the Decree No. 53/2013/ND-CP and the Decree No. 34/2015/ND-CP.

Article 4. Conditions for refinancing

The State Bank shall consider and decide refinancing when credit institutions meet the following conditions:

1. Being credit institutions as stipulated under Clause 1 Article 2 of this Circular, having legal ownership of special bonds that are deposited at the State Bank and are not paid by Asset Management Company of credit institutions (hereinafter referred as Asset Management Company).

2. Setting up risk provision levels for special bonds as stipulated according to the Decree No. 53/2013/ND-CP, Decree No. 34/2015/ND-CP and guidelines of the State Bank.

Article 5. Refinancing level

Refinancing level for credit institutions is decided by the State Bank Governor and it is based on the objectives of monetary policy, total value of special bonds, results of risk provision for special bonds and results of handling bad debts but it shall not exceed 70% of the value of special bonds. For credit institutions that are performing restructuring plan that has been approved, the refinancing level shall be decided by the State Bank Governor on each specific case but it shall not exceed 100% of the value of special bonds.

Article 6. Refinancing interest rate

1. Refinancing interest rate for credit institutions shall be decided the Prime Minister in each period.

2. Overdue refinancing interest rate is equal to 150% of refinancing interest rate quoted in the credit contract between the State Bank and credit institution.

Article 7. Time for refinancing

Time for financing is under one year but it must not exceed the remaining time of special bonds.

Article 8. Extension of refinancing

1. The State Bank shall consider and decide the extension of refinancing for credit institutions complying with regulations under Article 4, Article 5 and Article 6 of this Circular.

2. Extension time for each time shall not exceed the time of the first refinancing of that refinancing account and shall not exceed the remaining time of special bonds.

Article 9. Orders for considering refinancing or extension of refinancing

1. When having demand for refinancing loans or extension of refinancing, credit institutions need to send 05 dossiers directly or by post to the State Bank (Monetary Policy Department). The dossier includes:

a) Refinancing proposal or refinancing extension proposal, of which it must clearly state: name of credit institution; deposit account code in Vietnam dong at the State Bank; purpose of refinancing loan (clearly specify each purpose); time for refinancing proposal or refinancing extension proposal, the total value of special bonds; commit special bonds as the basis for refinancing loan or refinancing extension that is under the legal ownership of credit institution.

b) Asset Management Company:  List of special bonds that is the basis to borrow refinancing or refinancing extension at the State Bank having the confirmation of Asset Management Company according to Appendix 01 promulgated together with this Circular.

2. Within 2 working days since the day of receiving the valid and complete dossier of credit institution as stipulated under Clause 1 of this Article, Monetary Policy Department shall conduct to take opinions of Banking Inspection and Supervision Department, Operation Centre of State Bank of Vietnam and the Asset Management Company.

3. Within 05 working days since the day of receiving the document on taking opinions from Monetary Policy Department as stipulated under Clause 2 of this Article:

a)  Operation Centre of State Bank of Vietnam shall certify the balance of special bonds as the basis for refinancing loans or refinancing extension that are deposited at the State Bank Operation Center according to Appendix II promulgated together with this Circular and send to the Monetary Policy Department and the Banking Inspection and Supervision Department;

b) Asset Management Company shall send the list of special bonds as the basis for refinancing loans or refinancing extension for credit institutions according to Appendix II promulgated together with this Circular and send to the Monetary Policy Department and the Banking Inspection and Supervision Department;

c) Banking Inspection and Supervision Department shall judge credit institution’s performance on meeting requirements about refinancing as stipulated under Article 4 of this Circular, financial capacity, risk provision level of special bonds, demands for refinancing according to purposes proposed by credit institutions, refinancing proposal, rate for refinancing extension, time of refinancing loan, time for refinancing extension for each credit institution, and send to the Monetary Policy Department.

4. Within 05 working days since the full receipt of opinions of units as stipulated under Clause 3 of this Article, Monetary Policy Department shall summarize and propose measures of handling with refinancing proposals or refinancing extension of credit institutions based on objectives of managing monetary policies and obtain opinions from Banking Inspection and Supervision Department, the State Bank Operation Center, Department of Credit for all economic sectors, Asset Management Company;

5. Within 05 working days since the full receipt of the written proposals on obtaining opinions from the Monetary Policy Department as stipulated under Clause 4 of this Article, Banking Inspection and Supervision Department, the State Bank Operation Center, Department of Credit for all economic sectors and Asset Management Company shall send opinions to the Monetary Policy Department;

6. Within 02 working days since the full receipt of the written proposals from the Monetary Policy Department as stipulated under Clause 5 of this Article, the Monetary Policy Department shall summarize and submit to the State Bank Governor for consideration and decision on refinancing proposals or refinancing extension of credit institutions.

7. Within 05 working days since the receipt of the Decision of the State Bank Governor on refinancing loans or extension of refinancing for credit institutions, the Director of the State Bank Operation Center shall sign credit contracts, disburse the refinancing loan or extend refinancing for credit institutions.

Article 10. Competence to sign documents of credit institutions

Competent persons who are on behalf of credit institutions to sign documents on refinancing or refinancing extension at the State Bank must be legal representatives of credit institutions.

Article 11. Paying refinancing loan

1. When refinancing loan is due, credit institution pays all the principal debt and interest for the State Bank. In the case that the paying date is on day-off, holidays, time for refinancing loans shall be prolonged to the next working day.

2. Credit institution must pay debt before the due date in the following cases:

a) Within the first five working days of the next quarter, based on the purchase, sale contract of special bonds, Asset Management Company shall use collected debt amounts by money that credit institutions are enjoyed in the quarter from bad debts purchased by special bonds as the basis for refinancing loans to pay for the State Bank and notify in writing to the State Bank Operation Center, credit institutions on amounts paid for each special bond;

b) Within the five working days since special bonds  used as the basis for refinancing loans are due as stipulated by the regulations of the State Bank on purchase, sale and handling with bad debts of Asset Management Company, credit institutions shall pay debt before the due date for the State Bank. The principal amount that must be paid for each special bond that is due is equal to the value of special bond after deducting risk provisions and collect bad debts by amounts written in the list of special bonds attached with the decision on refinancing minus amount paid by Asset Management Company as stipulated under Point a of this Clause;

c) Within 05 working days since the receipt of the writing on unilaterally  terminating  the loan purchase, sale contract by special bonds as the basis for refinancing loan as stipulated on purchase, sale of bad debts of Asset Management Company, credit institutions must pay the principal and refinancing interest amount for the State Bank;

d) When the amount that must be paid before the due date for the State Bank is equal to the amount refinanced by the State Bank, credit institutions shall pay the principal and interest for borrowing refinancing loans.

Article 12. Handling the acts of paying debt late

In the case, refinancing loan is due, credit institution fails to pay debt and not being permitted extending by the State Bank, the State Bank shall take the following actions:

1. Transfer the debt of credit institutions into the overdue debt and apply the overdue refinancing interest rate since the excessive date.

2. Conduct measures to collect debts:

a) Extract the deposit account of credit institutions at the State Bank.

b) Request Asset Management Company to use the collecting money that credit institution is enjoyed from bad debt bought by special bonds to pay refinancing loan for the State Bank.

c) Collect debts from other sources of credit institutions.

d) Request credit institution to transfer the ownership of valuable papers that are under the ownership of credit institution for the State Bank

dd) Take procedures to transfer refinancing into special loans or contribution of capital to, and purchase of shares  of the State Bank at credit institutions as stipulated by the Law.

Chapter III

IMPLEMENTATION PROVISIONS

Article 13. Responsibilities of credit institution

1. Provide the State Bank, Asset Management Company with dossiers, documents on refinancing loans, refinancing extension;

2. Update data on special bonds during the time of refinancing loan proposal, refinancing extension according to Appendix IV promulgated together with this Circular and send it to the State Bank, Asset Management Company when data on special bonds as the basis for refinancing loan or refinancing extension are subject to the change or when being requested;

3. Take responsible before the Law for accuracy, legality of these dossiers, documents provided;

4. Use the capital in accordance with the purpose and pay refinancing loans as stipulated under this Circular; report to the Operation Center of the State Bank, Banking Inspection and Supervision Department and Asset Management Company on payment of refinancing loan before due as stipulated under Point b, Clause 2 of Article 11 of this Circular.

5. Be under the inspection and supervision of the State Bank in complying with regulations under this Circular.

6. Report to the State Bank (Banking inspection and supervision department, Monetary Policy Department, State Bank Operation Center) according to the Appendix V promulgated together with this Circular.

7. Transfer the ownership of valuable papers used to transact with the State Bank, which is under the ownership of credit institutions to fulfill the paying obligation for the State Bank in the case of failing to pay refinancing loan after receiving notifications of the State Bank on requesting to deal with loans;

8. Implement other responsibilities as stipulated by the Law.

Article 14.Responsibilities of Asset Management Company

1. Confirm the list of special bonds as the basis for refinancing loans or extension of refinancing at the State Bank according to Appendix 01 promulgated together with this Circular.

2. Coordinate with Monetary Policy Department to deal with refinancing proposal, refinancing extension of credit institutions; send opinions as stipulated under Point a Clause 2 Article 11 and Point b Clause 2 Article 12 of this Circular;

3. Pay refinancing loan of credit institutions at the State Bank as stipulated under Point a Clause 2 Article 11 and Point b Clause 2 Article 12 of this Circular;

4. Notify the State Bank operation center and Banking Inspection and Supervision Department terminating the loan purchase, sale contract by special bonds as the basis for refinancing loan or refinancing extension;

5. Take the prime responsibilities of and coordinate with credit institutions and other related units to implement the measures on handling debts, guaranteed assets of bad debts bought by special bonds to refund refinancing loan for the State Bank.

Article 15. Responsibilities of units under the management of the State Bank

1. Monetary Policy Department

a) Receive the refinancing and refinancing extension proposal dossier from credit institutions.

b) Take the prime responsibilities of and coordinate with related units to submit to the State Bank Governor for considering and making decisions on refinancing and extension of refinancing for credit institutions.

c) Coordinate with related agencies to consult for the State Bank Governor about refinancing interest rate on the basis of special bonds to submit to the Prime Minister for decision.

2. Banking Inspection & Supervision Department

a) Coordinate with Monetary Policy Department to deal with refinancing proposal, refinancing extension of credit institutions; send opinions to the Monetary Policy Department as stipulated under Point c Clause 3, Clause 5 Article 9 of this Circular;

b) Inspect, supervise and handle violations of credit institutions, Asset Management Company on complying with regulations under this Circular.

c) Take the prime responsibilities and coordinate with related units to take procedures on transferring refinancing loan of credit institution into special loans or contribution of capital to, and purchase of shares of the State Bank at credit institution.

3. The State Bank Operations Center

a) Co-ordinate with Monetary Policy Department to deal with refinancing proposal, refinancing extension of credit institutions; send opinions to the Monetary Policy Department as stipulated under Point a Clause 3, Clause 5 Article 9 of this Circular;

b) Sign the credit contract with credit institution, disburse, extend refinancing, collect refinancing loans as stipulated under this Circular and record, supervise special bonds as the basis for refinancing loan and other responsibilities related to special bonds when credit institution borrows refinancing loans at the State Bank.

c) Notify Asset Management Company about the disbursement, collection of refinancing loans for credit institutions attached with the list of special bonds that are blocked with 05 working days since the day of disbursement, collection of refinancing loans;

d) Report to credit institutions on obligations of paying refinancing loans for the State Bank;

dd) Report to the State Bank Governor on lending, collecting debt and the balance of refinancing loan for credit institutions and at the same time, send to Banking Inspection & Supervision Agency, Asset Management Company, Monetary Policy Department, Department of Credit for all economic sectors;

4. Department of Credit for all sectors: coordinate with Monetary Policy Department to deal with refinancing proposal, refinancing extension of credit institutions; send opinions to Monetary Policy Department as stipulated under Clause 5 Article 9 of this Circular;

5. Finance and Accounting Department: Guide the accounting record related to the refinancing of the State Bank for credit institutions as stipulated under this Circular.

6. The branches of the State Bank at cities, provinces: inspect, supervise and handle violations for credit institutions under its competence in complying with these regulations under this Circular;

Article 16. Implementation provisions

1. This Circular takes effect on December 10, 2015 and replaces the Circular No. 20/2013/TT-NHNN dated September 09, 2013 of the State Bank of Vietnam regulating on refinancing loans on the basis of special bonds of Asset Management Company for Vietnamese Credit Institutions;

2. Refinancing loans on the basis of special bonds of Asset Management Company that still remain until the effective day of this Circular shall continue to implement as signed in the contract between the State Bank and credit institutions;

3. The chief the Office, the director of the Monetary Policy Department and heads of the units of the State Bank, directors of provincial-level State Bank branches; chairperson of the Board of Members Council and general directors of Asset Management Companies; chairperson of the Boards of Members Council and the Board of Directors, general directors (directors) of credit institutions shall implement this Circular.

For the State Bank Governor

Deputy Governor

Nguyen Thi Hong

* All appendices are not translated.