Circular No. 57/2019/TT-BTC on August 26, 2019 of the Ministry of Finance on providing guidelines on risk handling mechanisms of credit guarantee funds for small and medium enterprises

CIRCULAR

Providing guidelines on risk handling mechanisms of credit guarantee funds for small and medium enterprises

Pursuant to the Law on State Budget dated June 25, 2015;

Pursuant to the Law on Credit Institutions dated June 16, 2010 and the Law dated November 20, 2017 amending and supplementing a number of articles of the Law on Credit Institutions;

Pursuant to the Law on Enterprises dated November 26, 2014;

Pursuant to the Law on Support for Small and Medium Enterprises dated June 12, 2017;

Pursuant to the Government's Decree No.87/2017/ND-CP dated July 26, 2017 defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

Pursuant to the Government's Decree No.34/2018/ND-CP dated March 8, 2018 on establishment, organization and operation of credit guarantee funds for small and medium-sized enterprises;

At the request of the Director of the Department of Banking and Financial Institutions;

The Minister of Finance promulgates a Circular providing guidelines on the risk handling mechanisms of credit guarantee funds for small and medium-sized enterprises.

Chapter I

GENERAL RULES

Article 1. Scope of regulation

This Circular provides guidelines on the risk handling mechanisms of credit guarantee funds for small and medium-sized enterprises (hereinafter referred to as credit guarantee funds) for debts of the guaranteed parties at the credit guarantee funds after they fulfill the guarantee obligations as specified in Government’s Decree No.34/2018/ND-CP dated March 08, 2018 on the establishment, organization and operation of credit guarantee funds (hereinafter referred to as Government’s Decree No.34/2018/ND-CP).

Article 2. Subjects of application

1. Credit guarantee funds.     

2. The guaranteed party has been guaranteed by the Credit Guarantee Fund in accordance with the provisions of Government’s Decree No.34/2018/ND-CP and relevant law provisions (hereinafter referred to as customers).     

3. Lending organizations as specified in Government’s Decree No.34/2018/ND-CP.     

4. Relevant organizations and individuals in the process of implementing this Circular.      

Article 3. Interpretation of terms

In this Circular, in addition to the terms specified in the Government's Decree No.34/2018/ND-CP, the following terms are construed as follows:

1. Mandatory repayment is a contract signed between the credit guarantee fund and its customer after the credit guarantee fund fulfills its debt repayment obligation on behalf of the guaranteed party at the lending institutions according to the provisions of Government’s Decree No.34/2018/ND-CP of the.    

2. Principal is a debt of a customer at a credit guarantee fund, including principal, interest or both principal and interest at the lending institution that the Credit guarantee fund has paid on its behalf as specified in the Credit guarantee contract in accordance with the provisions of Government’s Decree No.34/2018/ND-CP.     

3. Interest debt (interest) is the amount of interest that a customer has not paid to a Credit Guarantee Fund, calculated on the principal debt and the interest rate specified in the Mandatory repayment.     

4. Guarantor is a third party whose assets are used to secure principal debts of its customers.

5. Guarantee contract of mandatory repayment is a contract made between a credit guarantee fund and a guarantor at the same time a compulsory debt reception contract is made between the credit guarantee fund and its customers.     

6. Credit risk is the possibility of a loss in the operation of a credit guarantee fund due to a client's failure or inability to perform a part or the whole of debt repayment obligations (principals or interests).     

7. Risk handling means the application of measures to handle debts of customers at risk that lead to the credit guarantee fund’s inability to fully and timely recover debts (principals or interests).

8. Debt restructuring means the adjustment of debt repayment term or debt rescheduling for debts (principals or interests) of its customers.