Circular No. 19/2013/TT-NHNN of September 6, 2013, providing the purchase, sale and handling of non-performing loans by the Asset Management Company of Vietnamese credit institutions

THE STATE BANK OF VIETNAM

Circular No. 19/2013/TT-NHNN of September 6, 2013, providing the purchase, sale and handling of non-performing loans by the Asset Management Company of Vietnamese credit institutions

Pursuant to June 16, 2010 Law No. 46/2010/QH10 on the State Bank of Vietnam;

Pursuant to June 16, 2010 Law No. 47/2010/QH12 on Credit Institutions;

Pursuant to November 29, 2005 Law No. 60/2005/QH11 on Enterprises;

Pursuant to the Government’s Decree No. 96/2008/ND-CP of August 26, 2008, defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;

Pursuant to the Government’s Decree No. 53/2013/ND-Cp of May 18, 2013, on the establishment, organization and operation of the Asset Management Company of Vietnamese credit institutions

At the proposal of the Chief of the Banking Supervision Agency;

The Governor of the State Bank of Vietnam promulgates the Circular providing the purchase, sale and handling of non-performing loans by the Asset Management Company of Vietnamese credit institutions.

Chapter I

GENERAL PROVISIONS

Article 1.Scope of regulation

This Circular provides the purchase, sale and handling of non-performing loans by the Asset Management Company of Vietnamese credit institutions (below referred to as Vietnam Asset Management Company); and the issuance, management and payment of special bonds.

Article 2.Subjects of application

1. Vietnam Asset Management Company.

2. Vietnamese credit institutions (below referred to as credit institutions).

3. Borrowers.

4. Guarantors.

5. Other organizations and individuals involved in the purchase, sale and handling of non-performing loans by Vietnam Asset Management Company; or the issuance, management and payment of special bonds.

Article 3.Interpretation of terms

In this Circular, the terms below are construed as follows:

1. Loan-selling credit institution means a credit institution that sells a non-performing loan to Vietnam Asset Management Company.

2. Loan restructuring means the loan rescheduling; loan extension; exemption from or reduction of overdue fine interests, charges and loan interests; or adjustment of interest rates of non-performing loans.

3. Loan rescheduling means the acceptance to change the repayment period of principal and interest within the repayment term agreed in the credit contract, entrustment contract or corporate bond purchase contract without changing the loan repayment deadline.

4. Loan extension means the acceptance to extend the repayment of principal and interest beyond the loan repayment deadline agreed in the credit contract, entrustment contract or corporate bond purchase contract.

5. Authorized credit institution means a loan-selling credit institution that is authorized by Vietnam Asset Management Company to conduct one or some of the operations of Vietnam Asset Management Company.

6. Book value of the outstanding principal of a non-performing loan at a credit institution is the outstanding principal of the non-performing loan accounted on the balance sheet of such credit institution. The book value of the outstanding principal of a non-performing loan at Vietnam Asset Management Company is the purchase price or the outstanding principal of the non-performing loan accounted on the balance sheet of Vietnam Asset Management Company.

7. Loanmeans an outstanding loan under a credit extension contract or agreement, an entrustment contract or a corporate bond contract of a credit institution.

8. Special bond means a fixed-term valuable paper issued by Vietnam Asset Management Company to purchase non-performing loans of credit institutions.

9. Date of issuance of special bonds means the date when special bonds become effective which serves as a basis for determining the date of payment of bonds.

Article 4.Issuance and publicization of management policies and internal regulations on the purchase, sale and handling of non-performing loans

1. Vietnam Asset Management Company shall issue and apply management policies and internal regulations on:

a/ Permitted operations specified in Clause 1, Article 12 of the Government’s Decree No. 53/2013/ND-CP of May 18, 2013, providing the establishment, organization and operation of Vietnam Asset Management Company (below referred to as Decree No. 53/2013/ND-CP);

b/ Issuance, management and payment of special bonds;

c/ Publicization and transparency of the purchase, sale and handling of non-performing loans;

d/ Restructuring of non-performing loans and financial supports for borrowers.

2. Within 5 working days after issuing, modifying, supplementing, annulling or replacing the management policies and internal regulations specified in Clause 1 of this Article, Vietnam Asset Management Company shall post the newly issued, modified, supplemented, annulling or replacing policies and regulations on its website and submit them directly or by post to the State Bank (the Banking Supervision Agency) for inspection, examination and supervision.

Chapter II

PURCHASE AND SALE OF NON-PERFORMING LOANS BETWEEN VIETNAM ASSET MANAGEMENT COMPANY AND CREDIT INSTITUTIONS

Section 1

GENERAL PROVISIONS

Article 5.Competence to purchase and sell non-performing loans

The competence to decide on the purchase and sale of non-performing loans; and to sign loan purchase and sale contracts of Vietnam Asset Management Company and credit institutions complies with law and charters and internal regulations of Vietnam Asset Management Company and credit institutions.

Article 6.Currency used in transactions

1. The currency used in the purchase and sale of non-performing loans between Vietnam Asset Management Company and credit institutions is Vietnam dong (VND).

2. In case Vietnam Asset Management Company uses special bonds to purchase foreign-currency non-performing loans of credit institutions, the exchange rate applied for converting foreign-currency loans into VND is as follows:

a/ For non-performing loans in US dollars (USD), it is the average interbank exchange rate announced by the State Bank at the time of signing the loan purchase and sale contract;

b/ For non-performing loans in a foreign currency other than USD, it is the exchange rate applied for calculating export duty announced by the State Bank at the time of signing the loan purchase and sale contract.

3. In case Vietnam Asset Management Company uses special bonds to purchase non-performing loans in gold of credit institutions, the conversion price is the purchase price of gold of Saigon Jewelry Company Limited at the time of signing the loan purchase and sale contract.

Article 7.Transfer of rights and interests related to non-performing loans

1. In the purchase and sale of loans between Vietnam Asset Management Company and credit institutions, all rights and interests associated with non-performing loans, collaterals and other security measures for non-performing loans must be kept unchanged and transferred to loan purchasers by loans sellers under loan purchase and sale contracts.

2. In case Vietnam Asset Management Company and a credit institution reach agreement on adjusting the security conditions for a non-performing loan, such agreement must be approved in writing by the borrower and guarantor.

Article 8.Principles of purchase and sale of non-performing loans

1. Publicity and transparency.

2. Compliance with laws and the loan purchase and sale contract.

3. Limitation of risks and expenses in the purchase and sale of non-performing loans.

4. The purchase and sale of non-performing loans is carried out for each loan or each borrower, for borrowers with more than one non-performing loan at a credit institution, or each group of borrowers, in case one asset is used as collateral for more than one non-performing loan of more than one borrower at a credit institution, or in other lawful forms as agreed between involved parties.

Article 9.Extension of credit to borrowers selling non-performing loans to Vietnam Asset Management Company

Borrowers that sell non-performing loans to Vietnam Asset Management Company and have effective production and business plans or investment projects may be considered for extension of credit by credit institutions or foreign bank branches as agreed and prescribed by law.

Section 2

ISSUANCE OF SPECIAL BONDS BY VIETNAM ASSET MANAGEMENT COMPANY

Article 10.Special bond issuer and purposes and principles of issuance of special bonds

1. The special bond issuer is Vietnam Asset Management Company, which shall authorize the State Bank’s Operation Center to organize the issuance of special bonds under this Circular.

2. Vietnam Asset Management Company shall issue special bonds to purchase non-performing loans of credit institutions.

3. Special bonds are issued separately according to actual demands and special bond issuance plans approved by the State Bank.

4. An issued special bond is equivalent to a purchased and sold non-performing loan. In case a purchased and sold non-performing loan is a syndicated credit, Vietnam Asset Management Company shall issue special bonds to every credit institution participating in the extension of the syndicated credit.

Article 11.Conditions and terms of special bonds

1. Par value of special bonds

a/ The par value of a special bond equals the purchase price of such non-performing loan as provided in Clause 1, Article 14 of Decree No. 53/2013/ND-CP, and Clause 4, Article 10 of this Circular;

b/ In case of purchasing and selling a non-performing loan being a syndicated credit, the par value of the special bond issued to each of credit institutions participating in the extension of such syndicated credit corresponds to the book value of the outstanding principal of such non-performing loan after deducting the unused risk provision amount already set aside for such non-performing loan which is being monitored by such credit institution.

2. Special bonds are issued in VND.

3. Forms of special bond

a/ Special bonds may be issued in the form of book entry or electronic data containing identity information;

b/ Special bonds may be issued in the form of registered certificate.

4. Vietnam Asset Management Company may decide on the form of special bond.

5. Special bonds must be deposited at the State Bank according to the State Bank’s regulations on deposit of valuable papers and may be used in refinancing operations with the State Bank.

6. Credit institutions holding special bonds are exempt from the depositing charge when depositing their special bonds at the State Bank.

Article 12.Special bond issuance plans

1. A special bond issuance plan is a collection of analyses, assessments and proposals on the issuance of special bonds by Vietnam Asset Management Company.

2. A special bond issuance plan contains the following details:

a/ Quantity and value of non-performing loans expected to be purchased and the loan-selling credit institution;

b/ Expected demand and schedule for issuance of special bonds;

c/ Expected structure of the term of special bonds;

d/ Assessment of Vietnam Asset Management Company’s capacity for purchasing, managing and handling non-performing loans;

dd/ Other contents as required by the State Bank.

Article 13.Procedures for requesting approval of special bond issuance plans

1. Vietnam Asset Management Company shall make 1 set of dossier of request for approval of a special bond issuance plan and submit it directly or by post to the State Bank (the Banking Supervision Agency). A dossier comprises:

a/ A request for approval of the special bond issuance plan, signed by the lawful representative of Vietnam Asset Management Company;

b/ The resolution of the Members’ Council of Vietnam Asset Management Company adopting the special bond issuance plan, enclosed with such plan as specified in Article 12 of this Circular.

2. Before December 15 every year, Vietnam Asset Management Company shall make a dossier as provided in Clause 1 of this Article to request the State Bank to approve the special bond issuance plan of the subsequent year, except the cases specified in Clause 3 of this Article.

3 The time for making the dossier of request for approval of the 2013 special bond issuance plan of Vietnam Asset Management Company shall be decided by the Members’ Council of Vietnam Asset Management Company.

4. Within 15 working days after receiving a complete dossier of request for approval of a special bond issuance plan as provided in Clause 1 of this Article, the State Bank shall consider and issue a document approving or disapproving the plan to Vietnam Asset Management Company. In case of disapproval, the document sent to Vietnam Asset Management Company must clearly state the reason.

5. Based on the special bond issuance plan approved by the State Bank, its capacity and the requirements for handling of non-performing loans of credit institutions, Vietnam Asset Management Company shall decide to issue special bonds to purchase non-performing loans of credit institutions.

6. The State Bank may, when necessary, consider amending, supplementing, replacing or annulling approved special bond issuance plans based on the objectives of administering the monetary policy, requirements for restructuring credit institutions and targets of handling non-performing loans in each period.

Article 14.Elements of special bonds

1. A special bond has at least the following details:

a/ Name, address and serial number of the establishment decision and business registration number of Vietnam Asset Management Company;

b/ Par value;

c/ Term;

d/ Date of issuance;

dd/ Information on the loan purchase and sale contract and the non-performing loans to be purchased with the special bond;

e/ Information on the credit institution holding the special bond: name, serial number of the establishment license or business registration certificate and address of the credit institution;

g/ A special bond which is issued in the form of certificate must contain the code and serial number of issuance, the signature of the lawful representative of Vietnam Asset Management Company, other signatures as provided by Vietnam Asset Management Company and be affixed with the seal of Vietnam Asset Management Company.

2. In addition to the contents specified in Clause 1 of this Article, Vietnam Asset Management Company may provide for other contents to be indicated on special bonds which, however, must be lawful.

Article 15.Responsibilities for management and use of special bonds

1. Responsibilities of Vietnam Asset Management Company

a/ To organize a system for managing and supervising issued special bonds;

b/ To exercise the rights and perform the obligations related to special bonds;

c/ To receive and pay special bonds in accordance with law.

d/ To report to the State Bank on the issuance and payment of special bonds.

2. Responsibilities of credit institutions holding special bonds

a/ To exercise the rights and perform the obligations related to special bonds;

b/ To transfer and pay for special bonds to Vietnam Asset Management Company in accordance with law;

c/ To apply the risk coefficient of 20% for special bonds when calculating their capital adequacy ratio;

d/ To use special bonds only for taking refinanced loans from the State Bank or redeeming non-performing loans already sold to Vietnam Asset Management Company under this Circular.

Section 3

PURCHASE OF NON-PERFORMING LOANS WITH SPECIAL BONDS BY VIETNAM ASSET MANAGEMENT COMPANY

Article 16.Conditions on non-performing loans to be purchased with special bonds by Vietnam Asset Management Company

1. Vietnam Asset Management Company may purchase non-performing loans with special bonds when the following conditions are fully satisfied:

a/ Scope of to-be-purchased non-performing loans:

(i) Non-performing loans arising in credit extension activities, including non-performing loans in lending, financing, financial lease and factoring, and other non-performing loans as provided by the State Bank;

(ii) Payments for purchase of corporate bonds issued by unlisted public companies and not yet listed on the securities market or not yet registered for trading (below referred to as unlisted corporate bonds) by loan-selling credit institutions, which, including both principal and interest, have become partially or wholly overdue for 90 days or more, or have not yet become overdue or have become overdue for fewer than 90 days but the bond issuers owe non-performing loans at such credit institutions;

(iii) Amounts for entrusted purchase of unlisted corporate bonds and entrusted extension of credit for which loan-selling credit institutions bear all risks and which, including both principal and interest, have become partially or wholly overdue for 90 days or more, or have not yet become overdue or have become overdue for fewer than 90 days but the bond issuers, entrustment-undertaking parties or entrustment beneficiaries owe non-performing loans at such credit institutions.

b/ Non-performing loans have collaterals;

c/  Non-performing loans and their collaterals are lawful and have valid dossiers and papers, specifically as follows:

(i) The credit contract, entrustment contract, corporate bond purchase contract or guarantee contract must clearly indicate the creditor’s rights of credit institutions and responsibilities and obligations to repay loans of borrowers, guarantors and parties obliged to repay loans;

(ii) Non-performing loans are not yet used to ensure the fulfillment of obligations of credit institutions; and there is no dispute over collaterals of non-performing loans at the time of loan purchase and sale.

d/ The borrowers still exist;

dd/ The book value of the outstanding principal of one or more than one non-performing loan of one borrower or more than one outstanding loan of a group of borrowers specified in Clause 4, Article 8 of this Circular at the time of selling loans is at least VND 3 billion, for groups of borrowers and institutional borrowers, or VND 1 billion, for individual borrowers, or other levels decided by the State Bank Governor.

2. Based on the conditions specified in Clause 1 of this Article, the special bond issuance plan approved by the State Bank, its capacity and market situation, Vietnam Asset Management Company shall decide on the scope of non-performing loans and each specific loan to be purchased in each period.

3. The State Bank shall consider and propose the Prime Minister to decide on Vietnam Asset Management Company’s purchase of credit institutions’ non-performing loans that fail to meet all the conditions specified in Clause 1 of this Article at the Company’s request so as to assure operation safety of credit institutions and quickly tackle non-performing loans.

Article 17.Dossiers of request for purchase of non-performing loans with special bonds

1. Credit institutions shall review non-performing loans that meet the conditions specified in Clause 1, Article 16 of this Circular and make and send dossiers of request for purchase of non-performing loans to Vietnam Asset Management Company. A dossier comprises:

a/ A loan purchase request, made according to the form provided by Vietnam Asset Management Company;

b/ A list of and information on non-performing loans as required by Vietnam Asset Management Company; assessment of the actual state of each loan proposed for sale to Vietnam Asset Management Company and the concerned borrower (overdue duration, the financial state and operational situation of borrowers and guarantors, collaterals and capital recoverability); and proposed term of the special bond for each non-performing loan;

c/ A written commitment that non-performing loans are not yet used to secure the fulfillment of obligations of the loan-selling credit institution and there is no dispute over collaterals of such loans at the time of loan sale and purchase;

d/ Copies of credit contracts, entrustment contracts, corporate bond purchase contracts and asset security contracts, certified by the lawful representative of the loan-selling credit institution;

dd/ Copies of dossiers and papers related to non-performing loans, collaterals, borrowers, guarantors and parties obliged to repay loans, certified by the lawful representative of the loan-selling credit institution as required by Vietnam Asset Management Company.

2. The documents specified at Points a, b and c, Clause 1 of this Article must be signed by the lawful representative of the loan-selling credit institution. The documents specified at Points d and dd, Clause 1 of this Article must be signed by lawful representatives of involved parties and notarized, certified or registered as prescribed by law (if any).

3. In case Vietnam Asset Management Company does not authorize loan-selling credit institutions to conduct some operations specified in Clause 2, Article 12 of Decree No. 53/2013/ND-CP, loan-selling credit institutions shall transfer the originals of the documents specified at Point d and dd, Clause 1 of this Article to Vietnam Asset Management Company.

4. Loan-selling credit institutions shall take responsibility for the completeness, accuracy and truthfulness of dossiers and documents related to collaterals, borrowers, guarantors, parties obliged to repay loans, and non-performing loans sold to Vietnam Asset Management Company.

Article 18.Order and procedures for purchase of non-performing loans with special bonds

1. Within 5 working days after receiving a dossier of request for purchase of non-performing loan from a credit institution, Vietnam Asset Management Company shall examine the dossier and request the loan-selling credit institution to supplement the dossier when necessary.

2. Within 10 working days after receiving a complete and valid dossier as provided in Article 17 of this Circular, Vietnam Asset Management Company shall consider and appraise the completeness and validity of the dossier and issue a written notice of its acceptance or refusal to purchase non-performing loans. In case of refusal, such notice must clearly state the reason.

3. Within 5 working days after receiving Vietnam Asset Management Company’s written notice of acceptance to purchase non-performing loans, the credit institution and Vietnam Asset Management Company shall conclude a loan purchase and sale contract.

4. Within 10 working days after concluding the loan purchase and sale contract, the loan-selling credit institution shall notify borrowers, parties obliged to repay loans and guarantors of the sale of loans for information and performance of obligations toward Vietnam Asset Management Company.

5. After concluding the loan purchase and sale contract, Vietnam Asset Management Company shall further examine and collect information on and evaluate borrowers and non-performing loans as well as the accuracy and truthfulness of dossiers and documents related to such loans and collaterals.

Article 19.Vietnam Asset Management Company’s rights to unilaterally terminate loan purchase and sale contracts

1. Vietnam Asset Management Company may unilaterally terminate loan purchase and sale contracts in the following cases:

a/ There are grounds to believe that the purchased non-performing loans do not satisfy all the conditions specified in Clause 1, Article 16 of this Circular, except the cases provided in Clause 3, Article 16 of this Circular;

b/ Loan-selling credit institutions violate the provisions of Clause 2, Article 21, Points a and b, Clause 3, and Clause 4 of Decree No. 53/2013/ND-CP.

2. A loan sale and purchase contract is unilaterally terminated by Vietnam Asset Management Company in the following sequence:

a/ Vietnam Asset Management Company sends to the loan-selling credit institution a written notice clearly stating the reason for unilateral termination of the contract;

b/ The loan-selling credit institution repays the refinanced loan to the State Bank and has the special bond unblocked by the State Bank (the Operation Center) according to regulations within 5 working days after receiving Vietnam Asset Management Company’s written notice. The loan-selling credit institution returns the special bond to Vietnam Asset Management Company and receives back its non-performing loans.

c/ After receiving non-performing loans from Vietnam Asset Management Company, the loan-selling credit institution accounts and classifies such loans into a  group of non-performing loans with a risk level not lower than that of the group of such loans at the time they were sold to Vietnam Asset Management Company.

3. The proceeds from the recovery of loans arising during the period from the time when Vietnam Asset Management Company purchases non-performing loans to the time it returns such loans to the loan-selling credit institution are handled under Clause 2, Article 43 of this Circular.

Article 20.Contracts on purchase and sale of non-performing loans with special bonds

1. A loan purchase and sale contract must be made in writing and signed by Vietnam Asset Management Company, the credit institution and related parties (if any). A loan sale and purchase contract has at least the following details:

a/ Names and addresses of the loan purchaser and seller;

b/ Names and addresses of the borrower, guarantor and parties (if any) related to the non-performing loans to be sold;

c/ Book value of the outstanding principal of the to-be-purchased loans;

d/ Loan selling price and method of payment;

dd/ Form of security and value of collaterals of non-performing loans valued by the credit institution or a licensed independent valuation organization at the nearest time before the time of requesting the loan purchase;

e/ Effect of the loan purchase and sale contract;

g/ Payment of special bonds, handling of proceeds from loan recovery and redemption of non-performing loans already sold to Vietnam Asset Management Company;

h/ Provision stipulating that Vietnam Asset Management Company shall, on behalf of the loan-selling credit institution, use the proceeds from the recovery of non-performing loans purchased with special bonds which the loan-selling credit institution is entitled to receive to repay refinanced loans based on special bonds under Point b, Article 43, and Clause 3, Article 44 of this Circular and the State Bank’s regulations on grant of refinanced loans based on special bonds.

i/ Rights and obligations of involved parties, including Vietnam Asset Management Company’s rights to restructure the non-performing loans and unilaterally terminate the loan sale and purchase contract; the loan-selling credit institution’s obligation to accept the restructuring of the non-performing loans and redeem the loans upon repayment of special bonds under this Circular; the loan-selling credit institution’s obligation to pay Vietnam Asset Management Company the amount specified at Point a, Clause 2, Article 43 of this Circular and other amounts as prescribed by law;

k/ Method and time of completion of, and procedures for, the transfer of the non-performing loans, collaterals and dossiers and documents related to the non-performing loans, collaterals, borrowers, guarantors and parties obliged to repay  loans.

2. In case the sold and purchased non-performing loan is a syndicated credit, Vietnam Asset Management Company shall work with the credit institution having arranged such syndicated credit; the loan sale and purchase contract must be signed between Vietnam Asset Management Company and all credit institutions participating in the extension of the syndicated credit or the credit institution having arranged such syndicated credit which is authorized in writing by other credit institutions participating in the extension of the syndicated credit to sign the loan purchase and sale contract with Vietnam Asset Management Company.

Article 21.Sale of non-performing loans at the request of the State Bank

1. Credit institutions with a ratio of non-performing loans to total outstanding loans of 3% or more shall sell their loans to Vietnam Asset Management Company. If they do not sell their loans to Vietnam Asset Management Company, the State Bank shall consider applying the measures specified in Clause 5, Article 14 of Decree No. 53/2013/ND-CP.

On the basis of the results of examination, valuation and independent audit, the State Bank shall request credit institutions to sell their loans to Vietnam Asset Management Company in order to keep credit institutions’ rate of non-performing loans at a safe level and apply handling measures in accordance with law.

2. Within 5 working days after receiving the State Bank Governor’s written request for sale of non-performing loans to Vietnam Asset Management Company, a credit institution shall send to Vietnam Asset Management Company a dossier of proposal for purchase of non-performing loans specified in Article 17 of this Circular.

3. Vietnam Asset Management Company and loan-selling credit institutions shall comply with the loan purchase and sale order and procedures specified in Article 18 of this Circular.

Article 22. Coordination and exchange of information relating to non-performing loans purchased with special bonds

1. Vietnam Asset Management Company shall assume the prime responsibility for, and coordinate with loan-selling credit institutions and authorized credit institutions in, setting up databases and information technology systems serving the management and handling of non-performing loans, payment of special bonds and redemption of non-performing loans.

2. Authorized credit institutions shall coordinate with, and report in writing to, Vietnam Asset Management Company on:

a/ Measures taken to recover non-performing loans;

b/ Cases in which borrowers wish to convert loans into capital contributions, share capital or investments, apply for financing, change loan repayment conditions or restructure non-performing loans and request Vietnam Asset Management Company to provide guarantee;

c/ Other contents as required by Vietnam Asset Management Company.

Section 4

VIETNAM ASSET MANAGEMENT COMPANY’S PURCHASE OF NON-PERFORMING LOANS AT MARKET PRICES

Article 23.Conditions on non-performing loans to be purchased at market prices by Vietnam Asset Management Company

1. Vietnam Asset Management Company may purchase a non-performing loan at market price when the following conditions are fully satisfied:

a/ The loan meets the conditions specified in Clause 1, Article 16 of this Circular;

b/ The amount payable for the purchase of the loan is assessed as fully recoverable;

c/ The loan’s collateral is saleable;

d/ The borrower shows prospect of repaying the loan or has a feasible loan repayment plan.

2. When purchasing non-performing loans at market prices, Vietnam Asset Management Company may value by itself or hire independent valuation organizations to value non-performing loans.

Article 24.Plans on purchase of loans at market prices

1. A plan on purchase of loans at market prices is a collection of analyses, evaluations and proposals on the purchase, sale and handling of non-performing loans according to market principles.

2. A plan on purchase of loans at market prices contains at least the following details:

a/ Scope of non-performing loans to be purchased at market prices (classified based on groups of borrowers, sectors and types of collateral);

b/ Total non-performing loans to be purchased, capital sources and financial conditions of Vietnam Asset Management Company for purchase of non-performing loans at market prices;

c/ Analyses and assessments of the effectiveness, risks and possibility to recover amounts paid for non-performing loans at market prices;

d/ Measures of selling and handling non-performing loans and collaterals.

Article 25.Procedures of request for approval of plans on purchase of loans at market prices

1. Vietnam Asset Management Company shall make 1 set of dossier of request for approval of a plan on purchase of loans at market prices and submit it directly or by post to the State Bank (the Banking Supervision Agency). A dossier comprises:

a/ A written request for approval of a plan on purchase of loans at market prices, signed by the lawful representative of Vietnam Asset Management Company;

b/ The resolution of the Members’ Council of Vietnam Asset Management Company adopting the plan on purchase of loans at market prices, enclosed with the plan specified in Article 24 of this Circular.

2. Before December 15 every year, Vietnam Asset Management Company shall make a dossier as provided in Clause 1 of this Article to request the State Bank to approve the plan on purchase of loans at market prices of the subsequent year.

3. Within 15 working days after receiving a complete dossier of request for approval of a plan on purchase of loans at market prices as provided in Clause 1 of this Article, the State Bank shall consider and issue a document approving or disapproving the plan to Vietnam Asset Management Company. In case of disapproval, this document must clearly state the reason.

4. When necessary, based on the objectives of administering the monetary policy, requirements for restructuring credit institutions and targets of handling non-performing loans in each period, the State Bank may consider amending, supplementing, replacing or annulling approved plans on purchase of loans at market prices.

Article 26.Purchase of non-performing loans at market prices

1. Based on the plan on purchase of loans at market prices approved by the State Bank, its financial capacity, economic efficiency and market situation, Vietnam Asset Management Company shall decide to purchase non-performing loans at market prices and take responsibility for its decision after performing the following:

a/ Assessing non-performing loans as satisfying the conditions specified in Clause 1, Article 24 of this Circular;

b/ Determining the market value of non-performing loans, including collaterals thereof;

c/ Assessing economic efficiency, risks and possibility to recover amounts payable for the purchase of non-performing loans;

d/ Analyzing and evaluating the actual state and prospect of non-performing loans, borrowers, guarantors, parties obliged to repay loans and loan purchase conditions and agreements with loan-selling credit institutions;

dd/ Measures to be taken to handle non-performing loans and collaterals thereof.

2. The purchase and sale of loans at market prices between Vietnam Asset Management Company and credit institutions comply with the State Bank’s regulations on loan purchase and sale applicable to credit institutions.

Chapter III

HANDLING OF NON-PERFORMING LOANS AND COLLATERALS BY VIETNAM ASSET MANAGEMENT COMPANY

Section 1

LOAN RESTRUCTURING AND SUPPORT FOR BORROWERS

Article 27.Loan restructuring principles applicable to purchased non-performing loans

1. Vietnam Asset Management Company shall consider and restructure purchased non-performing loans at borrowers’ request when the conditions provided in this Circular are fully satisfied.

2. Vietnam Asset Management Company shall consult loan-selling credit institutions before making decision to restructure non-performing loans in the cases specified in Clause 4, Article 28; and Clause 2, Article 30 of this Circular.

3. The restructuring of non-performing loans must comply with Decree No. 53/2013/ND-CP and this Circular and conform with specific conditions of the loans, borrowers, Vietnam Asset Management Company and loan-selling credit institutions; the situation of the monetary market, requirements for handling non-performing loans in each period and agreements in credit contracts, entrustment contracts, corporate bond purchase contracts and loan purchase and sale contracts.

Article 28.Adjustment of interest rates of non-performing loans purchased by Vietnam Asset Management Company

1. Vietnam Asset Management Company shall consider adjusting the interest rates currently applied to purchased non-performing loans to reasonable levels suitable to the loan repayment ability of borrowers and market interest rates in each period and in line with agreements in credit contracts, loan acknowledgment agreements, entrustment contracts, corporate bond purchase contracts and loan purchase and sale contracts.

2. Quarterly, Vietnam Asset Management Company shall publicize the reasonable interest rates provided in Clause 1 of this Article.

3. Vietnam Asset Management Company may consider reducing interest rates under Clause 1 of this Article if non-performing loans and borrowers meet the following conditions:

a/ Borrowers properly cooperate with Vietnam Asset Management Company and authorized credit institutions;

b/ Borrowers have feasible loan repayment plans or feasible financial and operational restructuring plans

c/ Borrowers encounter temporary financial difficulties and the reduction of interest rates of non-performing loans may help them lessen their financial difficulties and restore production and business;

d/ Non-performing loans do not violate Article 126 of the Law on Credit Institutions at the time of signing credit contracts.

4. In case of considering the adjustment of the interest rates of non-performing loans purchased with special bonds under Clause 1 of this Article, Vietnam Asset Management Company shall consult loan-selling credit institutions before making decision. Within 5 working days after receiving Vietnam Asset Management Company’s request, loan-selling credit institutions shall reply Vietnam Asset Management Company in writting.

5. Within 5 working days after adjusting the interest rate of a non-performing loan, Vietnam Asset Management Company shall notify such to the borrower for information and compliance and to the loan-selling credit institution (for non-performing loans purchased with special bonds).

Article 29.Exemption from and reduction of overdue fine interests, charges and loan interests

1. Vietnam Asset Management Company shall consider reducing or exempting overdue fine interests, charges and loan interests of purchased non-performing loans when non-performing loans and borrowers satisfy the following conditions:

a/ They fully meet the conditions specified in Clause 3, Article 28 of this Circular;

b/ Borrowers repay or commit to repay within 60 days at least 5% of the outstanding principal of loans not yet paid at the time of considering the exemption from or reduction of overdue fine interests, charges and  loan interests.

2. In case of considering the exemption from or reduction of overdue fine interests, charges and loan interests arising after the time of signing contracts on purchase and sale of non-performing loans with special bonds, Vietnam Asset Management Company shall consult loan-selling credit institutions before making decision. Within 5 working days after receiving Vietnam Asset Management Company’s request, loan-selling credit institutions shall give written replies on consulted matters to Vietnam Asset Management Company.

3. Within 5 working days after making decision to exempt or reduce overdue fine interests, charges and  loan interests, Vietnam Asset Management Company shall notify such to the borrowers for information and compliance and to the loan-selling credit institution (for non-performing loans purchased with special bonds).

Article 30.Methods of restructuring loan repayment terms

1. Vietnam Asset Management Company shall consider restructuring loan repayment terms in the form of loan rescheduling or loan extension when borrowers meet the following conditions:

a/ Borrowers have feasible loan repayment plans;

b/ Borrowers are incapable of repaying loan principals and/or interests within the loan repayment term agreed in credit contracts, entrustment contracts or corporate bond purchase contracts and are appraised by Vietnam Asset Management Company as capable of repaying loans in the subsequent periods after having the loan repayment terms rescheduled, in case of rescheduling the repayment of loan principals and/or interests;

c/ Borrowers are incapable of fully repaying loan principals and/or interests within the loan repayment term agreed in credit contracts, entrustment contracts or corporate bond purchase contracts and are appraised by Vietnam Asset Management Company as capable of fully repaying loans within a certain period of time after the agreed loan repayment term, in case of loan extension;

d/ For non-performing loans purchased with special bonds, the extended duration must not exceed the remaining term of the corresponding special bonds .

2. In case of considering the restructuring of repayment terms of loans purchased with special bonds, Vietnam Asset Management Company shall consult loan-selling credit institutions before making decision. Within 5 working days after receiving Vietnam Asset Management Company’s request, loan-selling credit institutions shall give written replies on consulted matters to Vietnam Asset Management Company.

3. Within 5 working days after restructuring loan repayment terms, Vietnam Asset Management Company shall notify such to borrowers for information and compliance and to loan-selling credit institutions (for non-performing loans purchased with special bonds).

Article 31.Financial support measures for borrowers

1. Vietnam Asset Management Company shall consider taking one or some financial support measures for borrowers below:

a/ Guarantee for borrowers of credit institutions;

b/ Investment or financing in the form of giving loans or purchasing corporate bonds;

c/ Other forms of investment and financing after being approved by the State Bank Governor.

Vietnam Asset Management Company shall use assets (excluding non-performing loans purchased with special bonds) and lawful capital sources to take the financial support measures provided at Points b and c, Clause 1 of this Article.

2. Vietnam Asset Management Company shall consider making investment or financing when borrowers satisfy the following conditions:

a/ They are highly capable of recovery or have effective production and business plans or investment projects;

b/ They have appropriate measures to ensure the recovery for investment or financing amounts;

c/ Their investment or financing plans ensure safety and feasibility, which must analyze and assess risk levels and efficiency of investment, financing or guarantee; and specify capital sources for implementation; possibility of capital recovery; capital recovery measures; and measures to ensure capital safety and handle arising risks;

d/ They satisfy other conditions set by Vietnam Asset Management Company.

3. Vietnam Asset Management Company will consider providing guarantee for borrowers to take loans from credit institutions when the borrowers satisfy the following conditions:

a/ They are highly capable of recovery or have effective production and business plans or investment projects;

b/ They have lawful collateral for loan guarantee;

c/ The plan on guarantee for borrowers to take loans from credit institutions ensure safety and feasibility, which must analyze and assess risk levels and efficiency of investment, financing or guarantee; and specify capital sources for implementation; possibility of capital recovery; capital recovery measures; and measures to ensure capital safety and handle arising risks;

d/ They satisfy other conditions set by Vietnam Asset Management Company.

4. Based on the conditions specified in Clauses 2 and 3 of this Article and its capital sources and financial capacity, Vietnam Asset Management Company shall propose the State Bank Governor to consider and approve its investment, financing or guarantee for borrowers before implementation.

Article 32.Procedures for requesting approval of plans on financial support for borrowers

1. Vietnam Asset Management Company shall make one set of dossier of request for approval of a plan on investment, financing or guarantee for a borrower to take loan from a credit institution (below referred to as plan on financial support for borrower) and send it directly or by post to the State Bank (the Banking Supervision Agency). A dossier comprises:

a/ A written request for approval of a plan on financial support for a borrower and capital contribution or share purchase, signed by the lawful representative of Vietnam Asset Management Company;

b/ The resolution approving the plan on financial support for a borrower adopted by the Members’ Council of Vietnam Asset Management Company together with this plan as provided at Point c, Clause 2 and Point c, Clause 3, Article 31 of this Circular.

2. Within 15 working days after receiving a dossier of request for approval of a plan on financial support for a borrower provided in Clause 1 of this Article, the State Bank shall consider and send a written approval or disapproval to Vietnam Asset Management Company. In case of disapproval, it shall clearly state the reason.

Article 33.Safety limits and risk control in operations of Vietnam Asset Management Company

1. The total investment, financing and ensure level of Vietnam Asset Management Company for a borrower must not exceed 50% of the charter capital of Vietnam Asset Management Company.

2. The total value of charter capital or share capital contribution provided at Point b, Clause 1, Article 36 of this Circular must not exceed the charter capital of Vietnam Asset Management Company.

3. A borrower currently in the process of dissolution or bankruptcy or having its operation license revoked may not be considered by Vietnam Asset Management Company for adjustment of lending interests, exemption or reduction of fine interests, charges and overdue loan payment interests, loan repayment rescheduling or financial support.

Section 2

HANDLING OF NON-PERFORMING LOANS AND COLLATERAL

Article 34.Vietnam Asset Management Company’s sale of purchased non-performing loans

1. Vietnam Asset Management Company may sell non-performing loans purchased from credit institutions to organizations and individuals at market prices to recover capital.

2. Vietnam Asset Management Company shall sell non-performing loans according to the following principles:

a/ Assuring publicity and transparency;

b/ Assuring consensus and voluntariness;

c/ Selling non-performing loans through auction or competitive offering with the participation of at least 3 purchasers other than related purchasers as prescribed by law. If unable to sell non-performing loans through auction or competitive offering, Vietnam Asset Management Company may sell non-performing loans as directly agreed with loan purchasers;

d/ The sale price of a non-performing loan is the most reasonable price compared to prices offered for that loan or prices of non-performing loans of equivalent quality, or the value of the loan determined by Vietnam Asset Management Company or a licensed independent valuation organization in order to reduce loss in the handling of non-performing loans.

3. The sale of a non-performing loan must be made under a contract.

4. Vietnam Asset Management Company may authorize credit institutions to sell non-performing loans according to its requirements and conditions.

Article 35.Sale of non-performing loans purchased with special bonds

1. Vietnam Asset Management Company may reach agreement with loan-selling credit institutions on conditions for selling non-performing loans, including the reserve price (in case of auction) and the sale price (in case of direct agreement with loan purchasers).

2. Within 5 working days after signing a loan sale contract, Vietnam Asset Management Company shall send one copy of this contract to the loan-selling credit institution and notify the latter of the sum of money receivable by the credit institution.

3. In case special bonds are not yet mature, Vietnam Asset Management Company may sell a non-performing loan purchased with special bonds to the credit institution selling that loan to Vietnam Asset Management Company on the principle of agreement on conditions and prices for the loan purchase and sale.

Article 36.Contribution to charter capital and share capital of borrowers being enterprises

1. Vietnam Asset Management Company may:

a/ Convert non-performing loans purchased with special bonds into charter capital or share capital of borrowers being enterprises in accordance with law;

b/ Use assets (excluding non-performing loans purchased with special bonds) and lawful capital sources to contribute to charter capital or share capital of borrowers being enterprises in accordance with law after being approved by the State Bank.

2. Vietnam Asset Management Company shall make charter capital or share capital contribution to participate in the restructuring of borrowers.

3. Vietnam Asset Management Company shall elaborate plans on contribution to charter capital or share capital of borrowers, which must analyze and assess the efficiency of the charter capital or share capital contribution, financial state and operations of borrowers, capital sources for capital contribution, possibility of capital recovery and propose measures for recovering the contributed capital and participating in the restructuring of borrowers.

4. Vietnam Asset Management Company may contribute to charter capital or share capital of a borrower when the following conditions are fully met:

a/ The plan on contribution to charter capital or share capital of the borrower is feasible. In case of charter capital or share capital contribution under Point b, Clause 1 of this Article, such plan must be approved by the State Bank;

b/ Vietnam Asset Management Company has the right to participate in the restructuring of the borrower;

c/ The charter capital or share capital contribution does not violate the limit on charter capital or share capital contribution of Vietnam Asset Management Company as prescribed in Clause 2, Article 33 of this Circular;

d/ The borrower is highly capable of financially and operationally recovering after having its charter capital or share capital contributed by Vietnam Asset Management Company;

dd/ The borrower is not in the process of bankruptcy, dissolution or having its operation license revoked.

5. In case of converting non-performing loans purchased with special bonds into charter capital or share capital of a borrower:

a/ Before converting a non-performing loan purchased with special bonds into the charter capital or share capital of a borrower, Vietnam Asset Management Company shall reach agreement with the loan-selling credit institution on such conversion;

b/ Within 5 working days after converting the whole non-performing loan into the charter capital or share capital of the borrower, Vietnam Asset Management Company shall re-sell the contributed charter capital or share capital amount to the loan-selling credit institution at the value of such amount and make payment for special bonds.

6. The recovered loan amount arising from the time Vietnam Asset Management Company purchases a non-performing loan to the time it converts that loan into charter capital or share capital is handled under Clause 2, Article 43 of this Circular.

Article 37.Procedures for requesting approval of plans on contribution to charter capital or share capital of borrowers being enterprises

1. Vietnam Asset Management Company shall make one set of dossier of request for approval of a plan on contribution to charter capital or share capital of a borrower under Point a, Clause 4, Article 36, and send it directly or by post to the State Bank (the Banking Supervision Agency). A dossier comprises:

a/ A written request for approval of a plan on contribution to charter capital or share capital of a borrower signed by the lawful representative of Vietnam Asset Management Company;

b/ The resolution approving the plan on contribution to charter capital or share capital of a borrower adopted by the Members’ Council of Vietnam Asset Management Company together with that plan as prescribed in Clause 3, Article 36 of this Circular.

2. Within 15 working days after receiving a complete and valid dossier provided in Clause 1 of this Article, the State Bank shall consider and send a written approval or disapproval to Vietnam Asset Management Company. In case of disapproval, it shall clearly state the reason.

Article 38.Handling and sale of collateral for purchased non-performing loans

1. Vietnam Asset Management Company shall coordinate with related agencies and organizations in completing legal procedures and dossiers of collateral for purchased non-performing loans.

2. Vietnam Asset Management Company shall handle collateral for purchased non-performing loans in accordance with Article 18 of Decree No. 53/2013/ND-CP and other related laws.

3. For collateral for a non-performing loan purchased with special bonds, Vietnam Asset Management Company shall reach agreement with the loan-selling credit institution on:

a/ The sale price of collateral, in case of sale as agreed with the purchaser, or the reserve price of collateral, in case of auction;

b/ The value of collateral, in case Vietnam Asset Management Company receives collateral in replacement of the guarantor’s fulfillment of obligations.

4. In case Vietnam Asset Management Company receives collateral in replacement of the guarantor’s fulfillment of obligations, it shall itself determine or hire a licensed independent valuation organization to determine the market prices of collateral as a basis for clearing the loan repayment obligation of the borrower or an obliged party.

Section 3

VIETNAM ASSET MANAGEMENT COMPANY AUTHORIZING, INSPECTING AND SUPERVISING IMPLEMENTATION OF AUTHORIZED OPERATIONS

Article 39.Authorization contents and methods

1. Vietnam Asset Management Company may consider authorizing loan-selling credit institutions to conduct one or some of the operations specified in Clause 2, Article 12 of Decree No. 53/2013/ND-CP.

2. The authorization provided in Clause 1 of this Article must be made under a contract. An authorization contract must contain at least the following details:

a/ Names and addresses of the authorizing and authorized parties;

b/ Scope and contents of authorization;

c/ Authorization duration;

d/ Rights and obligations of the parties.

3. Vietnam Asset Management Company may choose to authorize some or all of the operations provided in Clause 1 of this Article to loan-selling credit institutions in accordance with this Circular and other relevant laws.

4. Within 10 working days after signing an authorization contract, the authorized credit institution shall notify the borrower, the party obliged for loan repayment, the guarantor and involved parties of the contents and operations authorized by Vietnam Asset Management Company to the loan-selling credit institution for implementation.

Article 40.Inspection and supervision of authorized operations

1. Vietnam Asset Management Company shall develop a database and an information technology system as well as contents and requirements for reporting and information exchange with authorized credit institutions to supervise the latter in conducting authorized operations provided in Clause 1, Article 39 of this Circular.

2. Vietnam Asset Management Company shall regularly inspect and supervise authorized credit institutions in conducting operations authorized by Vietnam Asset Management Company under authorization contracts.

Article 41.Rights and responsibilities of Vietnam Asset Management Company and authorized credit institutions

1. Rights and responsibilities of Vietnam Asset Management Company:

a/ To request authorized credit institutions to report on and provide information and documents related to authorized operations;

b/ To request authorized credit institutions to conduct authorized operations under authorization contracts and in accordance with law;

c/ To request authorized credit institutions to remedy, redress and compensate for the loss caused by violations of authorization contracts or law in the course of conducting authorized operations; to terminate authorization contracts, to initiate lawsuits in accordance with law against authorized credit institutions breaching authorization contracts;

d/ To promptly report violations committed by authorized credit institutions to the State Bank (the Banking Supervision Agency);

dd/ For non-performing loans purchased at market prices, to reach agreement with authorized credit institutions on expenses for effecting the authorization and contents related to those expenses under authorization contracts;

e/ To have other rights and responsibilities under authorization contracts and in accordance with law.

2. Rights and responsibilities of authorized credit institutions:

a/ To truthfully, fully and promptly report and provide information and documents at the request of Vietnam Asset Management Company; to take responsibility for the accuracy of information, documents and reports provided to Vietnam Asset Management Company;

b/ To cooperate with and submit to the inspection and supervision by Vietnam Asset Management Company in the course of conducting authorized operations;

c/ To implement recommendations and requests of Vietnam Asset Management Company in order to secure the safety of assets, remedy violations and compensate for the loss caused to Vietnam Asset Management Company for violating authorization contracts or violating law in the course of conducting authorized operations;

d/ To promptly notify Vietnam Asset Management Company of recovered loan amounts;

dd/ For non-performing loans purchased at market prices, to have expenses for conducting authorized operations paid by Vietnam Asset Management Company under authorization contracts;

e/ To have rights and responsibilities under authorization contracts, Clause 4, Article 31 of Decree No. 53/2013/ND-CP and other related laws.

Chapter IV

HANDLING OF RECOVERED LOAN AMOUNTS, PAYMENT OF SPECIAL BONDS AND RE-PURCHASE OF NON-PERFORMING LOANS

Article 42.Order of priority for payment of non-performing loans purchased with special bonds

Vietnam Asset Management Company shall pay all amounts in money and assets collected from the recovery, handling and sale of loans and collateral after subtracting expenses related to such sale; preservation, repair and upgrading of collateral in the following priority order:

1. Outstanding principal loans;

2. Due payment interests;

3. Overdue payment interests;

4. Fine interests (if any);

5. Refund of surplus amounts to borrowers, guarantors and parties obliged to repay the loan (if any).

Article 43.Handling of recovered amounts of non-performing loans purchased with special bonds

1. Recovered amounts of non-performing loans purchased with special bonds which credit institutions may receive under Point b, Clause 2 of this Article are handled as follows:

a/ If loan-selling credit institutions do not take refinanced loans based on special bonds, Vietnam Asset Management Company shall deposit these amounts at loan-selling credit institutions and may not withdraw them before the time of payment of special bonds except the case provided in Article 19 of this Circular;

b/ If loan-selling credit institutions take refinanced loans based on special bonds, within the first 5 working days of the following quarter, Vietnam Asset Management Company shall use recovered loan amounts receivable by credit institutions in the quarter to repay refinanced loans based on those special bonds and deduct these amounts from the total recovered loan amounts receivable by credit institutions upon payment of special bonds.

2. Recovered amounts of non-performing loans purchased with special bonds are handled as follows:

a/ Vietnam Asset Management Company may enjoy a portion of the recovered loan amounts according to regulations of the State Bank after reaching agreement with the Ministry of Finance;

b/ Loan-selling credit institutions may enjoy the remaining recovered loan amounts after subtracting the amount enjoyed by Vietnam Asset Management Company under Point a, Clause 2 of this Article.

Article 44.Payment of special bonds

1. Special bonds become mature in the following cases:

a/ The risk provision amount for special bonds is not lower than the book value of the outstanding principal of the related non-performing loan currently monitored by Vietnam Asset Management Company on its books, including the following cases:

(i) Vietnam Asset Management Company sells the non-performing loan to an organization or individual, including re-sale of the non-performing loan purchased with special bonds to the loan-selling credit institution at the market or agreed price;

(ii) Vietnam Asset Management Company converts the whole purchased non-performing loan into charter capital or share capital of a borrower being an enterprise.

b/ Special bonds become mature.

2. Within 5 working days after special bonds become mature under Clause 1 of this Article, a loan-selling credit institution shall fully repay the refinanced loan on the basis of corresponding special bonds (if any), have special bonds unblockaded by the State Bank (Operation Center) under regulations, and coordinate with Vietnam Asset Management Company in paying special bonds as follows:

a/ In case the book value of the outstanding principal of the non-performing loan has not been fully recovered, the loan-selling credit institution shall repurchase the non-performing loan from Vietnam Asset Management Company at the book value of the outstanding principal loan recorded in books of Vietnam Asset Management Company, and contributed capital amount or share capital amount at the borrower in case part of the non-performing loan is converted into the charter capital or share capital of the borrower (if any); return special bonds related to that non-performing loan to Vietnam Asset Management Company and receive the portion of the recovered loan amount which it is entitled to under Point b, Clause 2, Article 43 of this Circular (if any) from Vietnam Asset Management Company;

b/ In case the book value of the outstanding principal of the non-performing loan has been fully recovered (even in case the whole non-performing loan has been sold to an organization or individual), the loan-selling credit institution shall repurchase the contributed capital amount or share capital amount at the borrower in case part of the non-performing loan is converted into charter capital or share capital of the borrower (if any); return special bonds to Vietnam Asset Management Company and receive the recovered loan amount which it is entitled to under Point b, Clause 2, Article 43 of this Circular from Vietnam Asset Management Company;

c/ In case the whole non-performing loan is converted into charter capital or share capital of the borrower being an enterprise, the loan-selling credit institution shall return special bonds to Vietnam Asset Management Company and repurchase the contributed capital amount or share capital amount at the borrower, and concurrently pay the portion of the recovered loan amount provided at Point a, Clause 2, Article 43 of this Circular to Vietnam Asset Management Company.

3. Within 5 working days after special bonds become mature under Clause 1 of this Article, if the loan-selling credit institution fails to fully repay the State Bank the refinanced loan based on special bonds, Vietnam Asset Management Company will not pay the recovered loan amount (if any), the non-performing loan (if left) to the loan-selling credit institution. Vietnam Asset Management Company shall use the recovered amount of the non-performing loan purchased with special bonds which the loan-selling credit institution is entitled to under Point b, Clause 2, Article 43 of this Circular to repay the refinanced loan taken by the loan-selling credit institution at the State Bank and receive back special bonds when the outstanding refinanced loan based on these bonds has been fully paid to the State Bank.

Article 45.Repurchase of non-performing loans upon payment of special bonds

1. When repurchasing a non-performing loan provided at Point a, Clause 2, Article 44 of this Circular, a loan-selling credit institution shall fully pay Vietnam Asset Management Company the amounts which the latter is entitled to under Point a, Clause 2, Article 43 of this Circular and Vietnam Asset Management Company shall provide the loan-selling credit institution with information and documents on the outstanding principal loan, loan interest, fine interest and charges due but not yet paid by the borrower, and other information and documents related to the loan, the borrower, the guarantor and the party obliged to repay the loan.

2. A loan-selling credit institution may repurchase a non-performing loan from Vietnam Asset Management Company without consent of the borrower, the party obliged to repay the loan and the guarantor.

3. Within 10 working days after signing a loan purchase and sale contract, a loan-selling credit institution that repurchases a non-performing loan shall notify such repurchase from Vietnam Asset Management Company to the borrower, the guarantor and the party obliged to repay the loan for them to perform their obligations toward the credit institution.

Chapter V

FORMATION AND USE OF RISK PROVISIONS

Article 46.Formation of risk provisions for special bonds and use of risk provisions to handle risks related to non-performing loans

1. Within the term of special bonds, a loan-selling credit institution shall set aside funds to form risk provisions for special bonds and include them into its operational expenses.

2. Annually, within 5 working days preceding the date of maturity of special bonds, a loan-selling credit institution shall set aside a minimum provision amount specific to each special bond according to the following formula:

In which the term of special bond is calculated in years.

3. A loan-selling credit institution is not required to form general risk provisions for special bonds.

4. A loan-selling credit institution’s risk provisions for special bonds are used as follows:

a/ To offset the deficit difference between the recovered loan amount and the par value of special bonds in case the whole non-performing loan is sold to an organization or individual (excluding the case provided at Point a, Clause 2, Article 44 of this Circular) or is used for contribution to charter capital or share capital of the borrower;

b/ To handle risks for the non-performing loan repurchased under Point a, Clause 2, Article 44 of this Circular, in case the book value of the outstanding principal of the non-performing loan has not yet fully recovered.

5. A loan-selling credit institution shall re-convert the remaining amount of risk provisions for special bonds after handling risks under Clause 4 of this Article or set aside additional funds for risk provisions in case the risk provision amount for special bonds is not enough for handling risks under Clause 4 of this Article.

6. After handling a non-performing loan with risk provisions, the loan-selling credit institution shall account that loan off the balance sheet, continue monitoring it and adopt loan recovery measures in accordance with law and agreements with the borrower.

7. The removal of a loan handled with risk provisions off the balance sheet complies with the State Bank’s regulations on classification of credit assets, levels and methods of formation of risk provisions and use of provisions for handling risks in the operations of credit institutions and foreign bank branches.

Article 47.Classification, formation and use of risk provisions for handling risks for non-performing loans purchased at market prices

1. Vietnam Asset Management Company shall classify, form and use risk provisions for handling amounts paid for the purchase of non-performing loans according to the State Bank’s regulations on classification of credit assets, levels and methods of formation of risk provisions and use of provisions for handling risks in the operations of credit institutions and foreign bank branches.

2. Vietnam Asset Management Company shall classify amounts paid for the purchase of non-performing loans into a group at a risk level not lower than that of the group of those non-performing loans classified at the loan-selling credit institution at the time of purchase of such loans.

Chapter VI

RESPONSIBILITIES OF RELATED ORGANIZATIONS AND INDIVIDUALS

Article 48.Responsibilities of units of the State Bank

1. The Banking Supervision Agency:

a/ To assume the prime responsibility for, and coordinate with related units in, considering and proposing the State Bank Governor to submit to the Prime Minister for decision the purchase of non-performing loans of credit institutions under Clause 3, Article 16 of this Circular;

b/ To assume the prime responsibility for, and coordinate with related units in, appraising and proposing the State Bank Governor to approve or disapprove plans on special bond issue, plans on purchase of non-performing loans at market prices, plan on financial support for borrowers and plans on contribution to charter capital or share capital of borrowers according to the following order:

(i) Within 2 working days after receiving Vietnam Asset Management Company’s complete and valid dossier of request for approval of a plan on special bond issue, plan on purchase of a non-performing loan at the market price, plan on financial support for a borrower or plan on contribution to charter capital or share capital of a borrower, the Banking Supervision Agency shall consult the State Bank’s related units in writing.

(ii) Within 3 working days after receiving a written request from the Banking Supervision Agency, consulted units shall send their written opinions to the former for summarization and submission to the State Bank Governor for consideration and approval or disapproval of a plan on special bond issue, plan on purchase of a non-performing loan at the market price, plan on financial support for a borrower or plan on contribution to charter capital or share capital of a borrower.

c/ To assume the prime responsibility for, and coordinate with related units in, appraising and proposing the State Bank Governor to decide on the contents specified in Clauses 4 and 6, Article 13; Point dd, Clause 1, and Clause 3, Article 16; Clauses 3 and 4, Article 25; Clause 2, Article 32; and Clause 2, Article 37, of this Circular;

d/ To supervise, examine and inspect credit institutions and Vietnam Asset Management Company in observing the law on purchase, sale and handling of non-performing loans and handle their violations;

dd/ To assume the prime responsibility for, and coordinate with related units in, advising and assisting the State Bank Governor in making reports on operations of Vietnam Asset Management Company;

e/ To assume the prime responsibility for, and coordinate with related units in, advising and assisting the State Bank Governor in guiding and organizing the implementation of this Circular.

2. The Operation Center:

a/ To guide and organize the issue of special bonds under the authorization of Vietnam Asset Management Company in accordance with this Circular;

b/ To guide and organize the depository of special bonds by Vietnam Asset Management Company;

c/ To blockade special bonds related to refinanced amounts when credit institutions own refinanced special bonds; to stop the blockade of special bonds in case refinanced amounts of credit institutions are fully repaid.

3. The Finance-Accounting Department shall assume the prime responsibility for, and coordinate with the Banking Supervision Agency and related units in, elaborating and proposing the State Bank Governor to issue regulations on accounting of non-performing loan purchase, sale and handling operations and operations related to the purchase, sale and handling of non-performing loans by Vietnam Asset Management Company and credit institutions.

4. The Monetary Forecast and Statistics Department shall assume the prime responsibility for, and coordinate with the Banking Information Technology Agency and related units in, elaborating and proposing the State Bank Governor to issue regulations on statistical reporting and publicity and transparency of operations of Vietnam Asset Management Company; and collect, summarize and make statistics on purchase, sale and handling of non-performing loans.

5. The Banking Information Technology Agency shall assist units of the State Bank, Vietnam Asset Management Company and credit institutions in coordinating, exchanging, providing and exploiting information and statistics on purchase, sale and handling of non-performing loans.

6. The Credit Information Center shall provide information relating to non-performing loans and borrowers at the request of Vietnam Asset Management Company to serve the handling of non-performing loans.

7. Provincial-level State Bank branches shall supervise, examine and inspect credit institutions, organizations and individuals in their localities in observing the law on purchase, sale and handling of non-performing loans and handle their violations.

8. Related units:

a/ To coordinate with the Banking Supervision Agency in advising and assisting the State Bank Governor in organizing the implementation of this Circular;

b/ To coordinate with the Banking Supervision Agency in appraising and proposing the State Bank Governor to decide on the contents specified in Clauses 4 and 6, Article 13; Point dd, Clause 1, and Clause 3, Article 16; Clauses 3 and 4, Article 25; Clause 2, Article 32; and Clause 2, Article 37, of this Circular;

c/ To coordinate with  the Banking Supervision Agency in advising and assisting the State Bank Governor in making reports on operations of Vietnam Asset Management Company;

d/ To create favorable conditions for operations of Vietnam Asset Management Company according to their assigned functions and tasks and the State Bank Governor’s direction.

Article 49.Responsibilities of Vietnam Asset Management Company

1. To promptly purchase, sell and handle non-performing loans in accordance with law; to guide credit institutions in making and sending lists of non-performing loans eligible for sale to Vietnam Asset Management Company under Clause 1, Article 16 of this Circular.

2. To report to the State Bank on the purchase, sale, handling and recovery of purchased non-performing loans; to issue, use and pay special bonds and other operations according to the State Bank’s regulations.

3. To use recovered amounts of non-performing loans receivable by credit institutions to pay loan-selling credit institutions’ refinanced loans based on special bonds at the State Bank.

4. To propose the State Bank Governor to decide on the contents specified in Clauses 4 and 6, Article 13; Point dd, Clause 1, and Clause 3, Article 16; Clauses 3 and 4, Article 25; Clause 2, Article 32; and Clause 2, Article 37, of this Circular.

5. To assume the prime responsibility for, and coordinate with credit institutions and related units in, taking measures to handle loans and collateral of non-performing loans purchased with special bonds for repayment of refinanced loans to the State Bank.

6. To perform responsibilities under this Circular and other responsibilities as prescribed by law.

Article 50.Responsibilities of credit institutions

1. To assess and identify eligible non-performing loans for proactive sale to Vietnam Asset Management Company and take responsibility for their assessment.

2. To report to the State Bank on the purchase, sale and handling of non-performing loans according to the State Bank’s regulations.

3. Loan-selling credit institutions shall perform the responsibilities specified in Clause 3, Article 31 of Decree No. 53/2013/ND-CP.

4. Credit institutions selling loans and receiving special bonds shall:

a/ Perform all the obligations specified in Clause 2, Article 21 of Decree No. 53/2013/ND-CP;

b/ Use specific risk provisions for non-performing loans to handle the difference between the book value of outstanding principal loans and sale prices of those non-performing loans upon sale of non-performing loans to Vietnam Asset Management Company;

c/ Pay Vietnam Asset Management Company the amount provided at Point a, Clause 2, Article 43 of this Circular and other amounts as prescribed by law;

d/ Perform the responsibilities specified in Clause 4, Article 31 of Decree No. 53/2013/ND-CP.

5. Closely coordinate with Vietnam Asset Management Company in purchasing, selling and handling non-performing loans; fully, accurately and promptly provide information at the request of Vietnam Asset Management Company.

6. To perform responsibilities under this Circular and other responsibilities as prescribed by law.

Article 51.Responsibilities of borrowers and parties obliged to repay loans

1. To perform the responsibilities specified in Article 32 of Decree No. 53/2013/ND-CP.

2. To perform responsibilities under this Circular and other responsibilities as prescribed by law.

Article 52.Responsibilities of guarantors

1. To perform the responsibilities specified in Article 33 of Decree No. 53/2013/ND-CP.

2. To perform responsibilities under this Circular and other responsibilities as prescribed by law.

Chapter VII

ORGANIZATION OF IMPLEMENTATION

Article 53.Effect

This Circular takes effect on September 15, 2013.

Article 54.Organization of implementation

The Chief of the Office, the Chief of the Banking Supervision Agency, heads of units of the State Bank, directors of provincial-level State Bank branches, chairpersons of the Boards of Directors and Members’ Councils and general directors (directors) of Vietnamese credit institutions; the chairperson of the Members’ Council and general director of Vietnam Asset Management Company and related organizations and persons shall implement this Circular.-

For the State Bank Governor
Deputy Governor
DANG THANH BINH