Circular 18/2022/TT-NHNN debt purchase and sale by credit institutions and foreign bank branches

  • Summary
  • Content
  • Status
  • Vietnamese
  • Download
Save

Please log in to use this function

Send link to email

Please log in to use this function

Error message
Font size:

ATTRIBUTE

Circular No. 18/2022/TT-NHNN dated December 26, 2022 of the State Bank of Vietnam amending and supplementing a number of articles of Circular No. 09/2015/TT-NHNN dated July 17, 2015, of the Governor of the State Bank of Vietnam, prescribing debt purchase and sale by credit institutions and foreign bank branches
Issuing body: State Bank of VietnamEffective date:
Known

Please log in to a subscriber account to use this function.

Don’t have an account? Register here

Official number:18/2022/TT-NHNNSigner:Dao Minh Tu
Type:CircularExpiry date:Updating
Issuing date:26/12/2022Effect status:
Known

Please log in to a subscriber account to use this function.

Don’t have an account? Register here

Fields:Finance - Banking
For more details, click here.
Download files here.
LuatVietnam.vn is the SOLE distributor of English translations of Official Gazette published by the Vietnam News Agency
Effect status: Known

THE STATE BANK OF VIETNAM

__________

No. 18/2022/TT-NHNN

THE SOCIALIST REPUBLIC OF VIETNAM

Independence - Freedom - Happiness
____________

Hanoi, December 26, 2022

 

CIRCULAR

Amending and supplementing a number of articles of Circular No. 09/2015/TT-NHNN dated July 17, 2015, of the Governor of the State Bank of Vietnam, prescribing debt purchase and sale by credit institutions and foreign bank branches

 

Pursuant to the Civil Code dated November 24, 2015;

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; the Law Amending and Supplementing a Number of Articles of the Law on Credit Institutions dated November 20, 2017;

Pursuant to the Government’s Decree No. 102/2022/ND-CP dated December 12, 2022, defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;

At the proposal of the Director of the Credit Department for Economic Sectors;

The Governor of the Vietnam State Bank promulgates the Circular amending and supplementing a number of articles of Circular No. 09/2015/TT-NHNN dated July 17, 2015, of the Governor of the State Bank of Vietnam, prescribing debt purchase and sale by credit institutions and foreign bank branches.

 

Article 1. Amending and supplementing a number of articles of Circular No. 09/2015/TT-NHNN dated July 17, 2015, of the Governor of the State Bank of Vietnam, prescribing debt purchase and sale by credit institutions and foreign bank branches

1. To amend Clause 2, Article 1 as follows:

"2. This Circular does not apply to non-performing loan purchase and sale between credit institutions and Vietnam Asset Management Company (VAMC); debt purchase and sale arising from loan agreements among credit institutions, foreign bank branches.”.

2. To amend Clause 4 and add Clause 7a, Article 3 as follows:

“4. Debt purchasers include the following organizations and individuals:

a) Credit institutions, foreign bank branches having obtained the State Bank of Vietnam’s approval (hereinafter referred to as the State Bank) of debt purchase activity;

b) Other organizations and individuals (including organizations, individuals who are residents and non-residents).”

 “7a. The on-balance sheet book value of the purchased, sold debt includes: the book value of outstanding principal and interest of the debt and other financial obligations related to the debt (if any) being accounted for on-balance sheet at the time of debt purchase, sale.”

3. To amend Clauses 3, 4, 6, and 7 and add Clauses 11, 12, Article 5 as follows:

“3. Credit institutions and foreign bank branches that are considered and approved by the State Bank for debt purchase must have the non-performing loan ratio under 3% according to the latest classification period pursuant to the State Bank's regulations on property classification, level of deduction, method of setting up risk provisions and use of provisions to deal with risks in the operation of credit institutions, foreign bank branches before the time of requesting for debt purchase’s approval, except for credit institutions under special control. Credit institutions and foreign bank branches are not required to obtain permission from the State Bank when they sell debts.

Credit institutions, foreign bank branches shall be only permitted to purchase debt when being approved on their establishment and operation licenses (for credit institutions), or establishment licenses (for foreign bank branches) (hereinafter referred to as the License) by the State Bank and having the non-performing loan ratio under 3% according to the latest classification period pursuant to the State Bank's regulations on property classification, level of deduction, method of setting up risk provisions and use of provisions to deal with risks in the operation of credit institutions, foreign bank branches before the time of signing debt purchase agreements, except for the cases specified in Clause 12 of this Article.

4. Before performing debt purchase and sale as prescribed in Clause 3 of this Article, credit institutions and foreign bank branches must issue internal regulations on debt purchase and sale (of which clearly state the distribution of competence under the principle of responsibility distribution among appraisal and decision on debt purchase, sale; method of debt purchase, sale; procedures of debt purchase, sale; process of assessment of debts; process of auction and risk management for debt purchase, sale).”

“6. Redemption of sold debts of a credit institution:

a) The debt seller shall not redeem the debt that has been sold, except for the following cases:

(i) The credit institution redeems the debt that has been sold to a credit institution under special control as prescribed at Point a, Clause 12 of this Article;

(ii) The credit institution assists in the redemption of debts sold to a credit institution under special control according to the approved plan for the rehabilitation of the credit institution under special control as prescribed in Clause 6, Article 148dd of the Law on Credit Institutions;

(iii) The credit institution takes the compulsory transfer for redemption of the debt that has been sold to a commercial bank subject to the compulsory transfer as prescribed at Point c, Clause 12 of this Article.

b) The credit institution redeems the sold debt specified at Points a(ii), a(iii) of this Clause according to its commitment to redeem the debt in the restructuring plan approved by the competent authority.

(i) The redeemed debt is being used by a credit institution under special control as a guaranteed property for a special loan at the State Bank but is no longer classified as a qualified debt according to the State Bank’s regulations and sold to replace with other qualified debt.

(ii) When the special loan is due, the credit institution under special control has not yet had enough money to repay the special loan to the State Bank according to the special loan repayment plan.

7. A credit institution shall not sell debts to its own sub-companies, except for the following cases:

a) Selling debt to a debt management and property exploitation company according to the restructuring plan approved by the competent authority;

b) Taking over the compulsory transfer for sale of the qualified debt to the commercial bank subject to the compulsory transfer according to the approved compulsory transfer plan.”

“11. Credit institutions, foreign bank branches are not allowed to grant credit to customers to purchase debt owned by those credit institutions or foreign bank branches.

12. Credit institutions are not required to have a non-performing loan ratio under 3% when purchasing debts in the following cases:

a) The credit institution under special control purchases qualified debts as prescribed in Clause 2, Article 146a of the Law on Credit Institutions;

b) The credit institution under special control purchases qualified debts from the supporting credit institution according to the approved plan for the rehabilitation of the credit institution under special control as prescribed in Clause 1 of this Article 148b of the Law on Credit Institutions;

c) The commercial bank subject to the compulsory transfer for purchase of qualified debts from the credit institution takes the compulsory transfer according to the compulsory transfer plan approved by the competent authority;

d) Cases of debt purchase specified at Points a(ii), a(iii) Clause 6 of this Article.”

4. To amend Clause 1, Article 7 as follows:

"1. Credit institutions, foreign bank branches that wish to be approved for debt purchase shall make 01 (one) dossier as prescribed in Article 6 of this Circular and send it by post or submit directly to the head office of the State Bank (Single-window section)”.

5. To amend Clause 2, Article 10 as follows:

"2. Auction: The debt seller signs a property auction service contract with a property auction organization in accordance with the law on property auction.”.

6. To add Article 10a as follows:

“Article 10a. Debt purchase and sale in case the debt purchaser has not fully paid the debt purchase amount

In case the debt purchaser and the debt seller have an agreement that the debt purchaser will be paid for debt purchase (partial or full amount of the debt purchase) after the debt purchaser has taken the ownership transfer of the debt from the debt seller, the parties must ensure the following requirements:

1. The time limit for completing payment of debt purchase and sale amounts from the debt purchaser to the debt seller is 60 days, counting from the effective date of the debt purchase and sale agreement.

2. Except for the case specified in Clause 4 of this Article, the amount that the debt purchaser has not fully paid to the debt seller under the debt purchase and sale agreement must be guaranteed 100% of its solvency by property with high liquidity, including:

a) Deposits, certificates of deposit, promissory notes, bills in Vietnamese dong, foreign currencies issued by credit institutions, foreign bank branches;

b) Gold bars in accordance with the law provisions on gold business;

c) Government bonds, Government-guaranteed bonds;

d) Corporate bonds rated AA- or higher (according to the Standard & Poor's or Fitch Ratings) or Aa3 or higher (according to Moody's) and listed on the securities market;

dd) Stocks listed on the Ho Chi Minh Stock Exchange and the Hanoi Stock Exchange (except: stocks that are warned, controlled, temporarily paused, suspended or restricted from trading in accordance with the law provisions and regulations of the Vietnam Exchange at the time of signing the guarantee agreement and stocks with trading volume of less than 300,000 stocks/day calculated in 10 consecutive trading days before the signing date of the guarantee agreement).

3. The value of property used as a guarantee for the debt purchase amount to be paid later as prescribed in Clause 2 of this Article is determined according to the principle of determining the value of guaranteed property for deduction when making risks provision at the time of signing the guarantee agreement.

4. In case of a credit institution under special control, the commercial bank subject to the compulsory transfer is required to purchase the debt according to the provisions of Points b and c, Clause 12, Article 5 of this Circular and use this purchased debt as a guaranteed property for the special loan at the State Bank, the guarantee for the debt purchase amount that the debt purchaser is paid after the debt purchaser has taken the ownership transfer of the debt purchased from the debt seller (if any) as agreed by the parties in accordance with the law provisions.”.

7. To amend Article 11 as follows:

Article 11. Debt purchase and sale council

Credit institutions, foreign bank branches must establish a Debt purchase and sale council in accordance with the law provisions, charter and internal regulations on debt purchase and sale. The components, tasks and powers shall be prescribed by the credit institutions and foreign bank branches.”.

8. To amend Article 12 as follows:

“Article 12. Assessment of debts

Credit institutions, foreign bank branches that purchase and sell debts must perform assessment of debts to determine the starting price in case of debt purchase and sale by auction method or the negotiation price in case of purchase and sale of debt by the negotiation method. Credit institutions, foreign bank branches shall consider and choose the assessment of debts according to the following methods:

1. Credit institutions, foreign bank branches shall determine the debt price by themselves according to one or the following bases:

a) The book value of the debts, the interest payable by the debtor at the time of assessment, classification of debt groups, guarantee properties (if any), the financial situation of the borrowers and other factors affecting the debt value (if any) at the time of assessment;

b) Regulations and guidance of the Ministry of Finance on assessment of debts standards.

2. Credit institutions, foreign bank branches have the right to hire price appraisal enterprises to conduct assessment of purchased and sold debts.”.

9. To amend Clause 1, Article 14 as follows:

"1. The debt purchaser shall inherit all the debt seller's rights and obligations over the purchased and sold debt from the time the debt purchaser takes the ownership transfer of the debt from the debt seller in the debt purchase and sale agreement”.

10. To add Article 15a as follows:

“Article 15a. The management and monitoring in case of selling part of a debt or selling a debt to more than one purchaser

The management and monitoring in the case of selling part of a debt or selling a debt to more than one purchaser as prescribed in Clause 9, Article 5 of this Circular shall be carried out according to the following principles:

1. In case the debt seller still owns a part of the purchased or sold debt, the debt seller must continue to act as the focal point in managing dossiers, documents, guarantee measures and other related issues of the debt. For the unsold debt, the debt seller shall continue to manage, monitor and classify debts and set up risk provisions in accordance with the law provisions.

In case, the debt seller no longer owns the purchased and sold debt and has received the full amount of debt purchase, the transfer of dossiers, documents, guarantee measures of the debt and other related issues to the debt of the debt seller to the debt purchasers shall be made according to the agreement of the debt purchasers in accordance with the law provisions.

2. Rights and obligations of the parties and the handling of arising problems in case the debt seller acts as the focal point in managing dossiers, documents, guarantee measures and other related issues of the debt specified in Clause 1 of this Article shall be performed according to the agreement of the parties in accordance with the law provisions.

3. In the case of selling part of a debt or selling a debt to more than one purchaser, the financial handling and other related issues to the purchased and sold debt of the debt purchaser and seller shall be handled according to the regulations applied to the debt purchaser and seller and the provisions of Clauses 1, 2 of this Article.”.

11. To amend Point b, Clause 1, and add Clause 2a, Article 20 as follows:

“b) The classification of debts, setting up and use of provisions to deal with risks of debt purchase amount, credit institutions, foreign bank branches shall comply with the law provisions.”

"2a. In case debts have been sold but have not yet been fully collected, to deal with the uncollected amount of sold debt, credit institutions, foreign bank branches that sell debts shall classify, set up and use risk provisions according to the law provisions.".

12. To amend Article 21 as follows:

“Article 21. Financial handling and accounting of purchased and sold debts

1. The debt sale of credit institutions, foreign bank branches

a) For the debt with the loan principal being accounted on the balance sheet

(i) Debt recovery is handled according to the principle: recovering the loan principal first, debt interest later;

(ii) In case the debt selling price is higher than or equal to the on-balance sheet book value of the purchased and sold debt:

After recovering the loan principal and interest of the sold debt, if there is any difference between the selling price of the debt and the on-balance sheet book value of the sold debt, credit institutions, foreign bank branches shall record in their incomes;

(iii) In case the debt selling price is lower than the on-balance sheet book value of the purchased and sold debt, in addition to the proceeds from the debt sale, credit institutions or foreign bank branches selling the debt shall use the money paid for compensation (in case of property loss due to subjective causes and must pay compensation according to regulations on the financial regime for credit institutions, foreign bank branches), insurance sum (if any) to recover debt. After using up all the proceeds from debt sale, if the amount of compensation and insurance mentioned above is not enough to recover debts, credit institutions, foreign bank branches shall do as follows:

For uncollected loan principal: Credit institutions, foreign bank branches shall use the provisions in expenses, in case of shortage, it shall be compensated by the financial reserve fund of the credit institutions and foreign bank branches. if the financial reserve fund is not enough, the shortfall shall be accounted in other expenses in the period. After completing the above financial handling, the credit institutions, foreign bank branches shall put the uncollected loan principal out of the balance sheet.

For uncollected loan interest: In case the loan interest is recorded on the balance sheet has been accounted into the income, credit institutions, foreign bank branches shall reduce income or account it in expenses according to regulations on the financial regime for credit institutions, foreign bank branches. In case, debt interest is recorded off-balance sheet, credit institutions, foreign bank branches shall put the loan interest amount of the sold debt out of the balance sheet;

b) For the debt being accounted off-balance sheet

Credit institutions, foreign bank branches shall put the sold debts out of the off-balance sheet and record the proceeds of debt sales (according to the debt selling price) into the income of the credit institutions or foreign bank branches;

c) For debts already left off the off-balance sheet

The debt sale amount is recorded into the income of credit institutions, foreign bank branches.

2. The debt purchase of credit institutions, foreign bank branches

a) The debt purchase price is less than or equal to the outstanding principal of the purchased debt

The amount of loan principal recovered under the credit agreement of the purchased debt, the credit institutions or foreign bank branches purchasing the debt shall record that amount into the purchased amount. In case the debt purchase amount has been fully recovered, the remaining loan principal (the remaining difference between the loan principal amount of the purchased debt and the debt purchase amount) is recorded in the income.

The amount of loan interest collected under the credit agreement of the purchased debt, the credit institutions or foreign bank branches purchasing the debt shall record in the income;

b) In case the debt purchase price is higher than the outstanding principal of the purchased debt

The amount of loan principal and interest recovered under the credit agreement of the purchased debt, the credit institutions or foreign bank branches purchasing debt shall record that amount into the purchased debt amount. When the remaining amount of purchased debt is less than or equal to the outstanding principal of the purchased debt at that time, the amount of loan principal and interest recovered under the credit agreement of the purchased debt, the credit institutions, foreign bank branches that purchase debt shall handle according to the provisions at Point a, Clause 2 of this Article.

If the debt purchase cannot be fully recovered, the credit institutions or foreign bank branches shall handle the unrecovered amount according to regulations on financial regime of the credit institutions or foreign bank branches and relevant law provisions.

3. The accounting in debt purchase and sale; the handling of the arising amounts due to exchange rate differences when purchasing, selling, recovering debts of purchased debts; the handling of property loss, credit institutions, foreign bank branches shall comply with regulations on financial regime and accounting of credit institutions, foreign bank branches and other relevant law provisions.

4. Credit institutions, foreign bank branches selling debts must monitor and archive information of debt sales specified at Point a(iii), Clause 1 and Point b, Clause 1 of this Article to serve the checking and inspection when required.

5. The debt purchaser which is not a credit institution or foreign bank branch shall perform the financial handling and accounting of the purchased debt in accordance with the law provisions.”.

Article 2. Replacing some phrases, clauses and articles of Circular No. 09/2015/TT-NHNN

1. To replace the phrase "have been accounted out of balance sheet" in Clauses 2 and 7 of Article 3 with the phrase "have been accounted out of the off-balance sheet".

2. To replace the phrase “guarantee transactions” in the paragraph “the registration of change of the secured party must comply with the law on secured transactions” in Clause 2, Article 14 with the phrase “registration of guarantee measures”.

Article 3. Transitional provisions

Debt purchase and sale agreements formed before the effective date of this Circular, debt purchasers, sellers and related parties may continue to perform in accordance with signed agreements and regulations of Circular No. 09/2015/TT-NHNN. If the parties agree on the amendment and supplementation of the debt purchase and sale agreement, the amendment and supplement must comply with the provisions of this Circular.

Article 4. Implementation organization

The Chief of Office, the Director of the Credit Department for Economic Sectors, the heads of units under the State Bank of Vietnam, credit institutions and foreign bank branches shall implement this Circular.

Article 5: Effect

This Circular takes effect from February 9, 2023.

 

 

FOR THE GOVERNOR

THE DEPUTY GOVERNOR

 

 

 

Dao Minh Tu

 

Please log in to a subscriber account to see the full text. Don’t have an account? Register here
Please log in to a subscriber account to see the full text. Don’t have an account? Register here
Processing, please wait...
LuatVietnam.vn is the SOLE distributor of English translations of Official Gazette published by the Vietnam News Agency

ENGLISH DOCUMENTS

LuatVietnam's translation
Circular 18/2022/TT-NHNN DOC (Word)

This utility is available to subscribers only. Please log in to a subscriber account to download. Don’t have an account? Register here

Circular 18/2022/TT-NHNN PDF

This utility is available to subscribers only. Please log in to a subscriber account to download. Don’t have an account? Register here

* Note: To view documents downloaded from LuatVietnam.vn, please install DOC, DOCX and PDF file readers
For further support, please call 19006192

related news

SAME CATEGORY

loading