Circular No. 20/2013/TT-NHNN dated September 09, 2013 of the State Bank of Vietnam regulating on refinancing loans on the basis of special bonds of Asset Management Company for Vietnamese Credit Institutions

THE STATE BANK OF VIETNAM

Circular No. 20/2013/TT-NHNN dated September 09, 2013 of the State Bank of Vietnam regulating on refinancing loans on the basis of special bonds of Asset Management Company for Vietnamese Credit Institutions

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

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

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

Pursuant to the Decision No. 53/2013/ND-CP dated May 18, 2013 of the Government on the establishment, organization and operation of Vietnam Asset Management Company;

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

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

Chapter 1

GENERAL PROVISIONS

Article 1. Scope of regulation

This Circular regulates on refinancing loans in Vietnamese dong of the Vietnam State Bank for credit institutions on the basis of special bonds of Asset Management Company for Vietnamese Credit Institutions (hereinafter referred as special bonds) according to the Decree No. 53/2013/ND-CP dated May 18, 2013 of the Government on the establishment, organization and operation of Asset Management Company for Vietnamese Credit Institutions (hereinafter referred as the Decree No. 53/2013/ND-CP).

Article 2. Subject of application

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

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

Chapter II

SPECIFIC REGULATIONS

Article 3. Purpose

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

Article 4. Conditions for refinancing

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

1. Being credit institutions as stipulated under Clause 1 Article 2 of this Circular, and not being under the special control.

2. Having legal ownership of special bonds unpaid by Asset Management Company for Vietnamese Credit Institutions (hereinafter referred as Asset Management Company).

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

Article 5. Refinancing level

Refinancing level for credit institutions on the basis of special bonds is decided by the State Bank Governor and it is based on the objectives of monetary policy, results of risk provision for special bonds and results of handling bad debts but it shall not exceed 70% of the value of special bonds.

Article 6. Refinancing interest rate

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

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

Article 7. Time for refinancing

Time for financing is under 12 months but it must not exceed the remaining time of special bonds.

Article 8. Extension of refinancing

1. The State Bank shall consider and decide the extension of refinancing for credit institutions complying with regulations under Article 4, Article 5, Article 6 and Article 7 of this Circular.

2. Extension time for each time shall not exceed the time of the first refinancing of that refinancing account.

Article 9. Orders for considering refinancing or extension of refinancing

1. When having demand for refinancing loans or extension of refinancing, credit institutions need to send 04 dossiers directly or by post to the State Bank (Monetary Policy Department). In the case of refinancing extension, credit institutions need to send dossiers to the State Bank at least 30 days before the due date of paying refinancing loan.

Dossier includes:

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

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

2. Within 2 working days since the day of receiving the valid and complete dossier of credit institution, Monetary Policy Department shall conduct to take opinions of related units.

3. Within 15 working days since the day of receiving the document on taking opinions from Monetary Policy Department, units must give opinions and send to Monetary Policy Department.

4. Within 15 working days since the day of receiving the opinions from units, Monetary Policy Department must summarize and submit to the State Bank Governor for consideration and decision.

5. Based on the decision of the State Bank Governor, the State Bank operation centers shall sign the credit contract, disburse the capital or extend refinancing for credit institutions.

Article 10. Paying refinancing loan

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

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

a) Bad debt collected by cash during the time of refinancing loan that credit institution is enjoyed from bad debts bought by special bonds as the basis for refinancing loan at the State Bank. The amount used to pay is equivalent to the amount of refinancing on the basis of that special bond. Every quarter, based on the contract of buying, selling debts by special bonds, Asset Management Company shall pay refinancing loans before the maturity date as stipulated under the regulations on buying, selling and handling bad debt of Asset Management Company of the State Bank; time for paying is within the first five working days of the next quarter.

b) The amount of risk provision that have been set up for special bond is not lower than the book value of principal balance of bad debtsbought by special bonds as stipulated under Clause 1, Article 22 of the Decree No. 53/2013/ND-CP and guidelines of the State Bank on buying, selling and handling bad debts of Asset Management Company. The due time is within 5 working days since the day that the amount of risk provision have been set up for special bond is not lower than the book value of principal balance of bad debtsbought by special bonds; the amount of money used to pay debt is the amount of refinancing money borrowed from the State Bank on the basis of that special bond.

c) Asset Management Company unilaterally terminates the contract of buying, selling debt by special bonds. Within 5 working days since the day of receiving the document of Asset Management Company on unilaterally terminating the contract of buying, selling debt by special bond, credit institutions must pay refinancing loan, which borrows from the State Bank on the basis of that special bond.

Article 11. Handling the acts of paying debt late

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

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

2. Conduct measures to collect debts:

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

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

c) Collect debts from other sources of credit institutions.

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

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

Chapter III

ORGANIZATION OF IMPLEMENTATION AND PROVISIONS OF IMPLEMENTATION

Article12. Responsibilities of credit institution

1. Provide the State Bank with dossiers, documents fully and promptly as stipulated under this Circular and take responsible before the Law for accuracy, legality of these dossiers, documents.

2. Use the capital in accordance with the purpose and pay refinancing loans as stipulated under this Circular.

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

4. Report to the State Bank (Banking inspection and supervision agency, Monetary Policy Department, State Bank Operation Center) on using money from refinancing loan and data according to the Appendix 02 promulgated together with this Circular.

5. Transfer the ownership of valuable papers used to transact with the State Bank, which is under the ownership of credit institutions to fulfill the paying obligation for the State Bank in the case of failing to pay refinancing loan.

6. Implement other responsibilities as stipulated by the Law.

Article 13.Responsibilities of Asset Management Company

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

2. Use the money collected from bad debts bought by special bonds to pay refinancing loan of credit institutions at the State Bank as stipulated under Point a Clause 2 Article 10 and Point b Clause 2 Article 11 of this Circular.

3. Notify the State Bank operation center about the amount of money used to pay for refinancing loan as stipulated under Point a Clause 2 Article 10 of this Circular for each special bond.

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

Article14. Responsibilities of units under the management of the State Bank

1. Monetary Policy Department

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

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

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

2. Banking Inspection & Supervision Agency

a) Provide Monetary Policy Department with judgments on meeting refinancing conditions of credit institutions as stipulated under Article 4 of this Circular.

b) Having opinions on the proposal of refinancing, refinancing extension of credit institutions at the proposal of Monetary Policy Department

c) Inspect, supervise and handle violations of credit institutions on complying with regulations under this Circular.

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

3. Credit Department: co-ordinate with Monetary Policy Department to consider and submit to the State Bank Governor for making decision on refinancing, refinancing extension for credit institution.

4. The State Bank Operations Center

a) Co-ordinate with Monetary Policy Department to consider and submit to the State Bank Governor for making decision on refinancing, refinancing extension for credit institution.

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

c) Notify Asset Management Company about the list of special bonds as the basis to refinance, extend refinancing after the disbursement of refinancing, extension of refinancing for credit institution.

d) Report to the State Bank Governor on lending, collecting debt, collecting refinancing debt before due date from credit institution every month, and at the same time, send to Monetary Policy Department,Banking Inspection & Supervision Agency, Credit Department.

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

6. The branches of the State Bank at cities, provinces: inspect, supervise and handle violations for credit institutions, which have the head office in the area in complying with these regulations under this Circular.

Article15.Implementation provisions

1. This Circular takes effect on September 15, 2013.

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

For the State Bank Governor

Deputy Governor

Dang Thanh Binh