VietnameseDecision No. 48/1999/QD-NHNN5 dated February 08, 1999 of the State Bank referring to the issuance of regulations on classifying assets, establishing and using reserved funds for covering losses suffered by credit institutions
ATTRIBUTE
Decision No. 48/1999/QD-NHNN5 dated February 08, 1999 of the State Bank referring to the issuance of regulations on classifying assets, establishing and using reserved funds for covering losses suffered by credit institutions
| Issuing body: | State Bank of Vietnam | Effective date: | Known Please log in to a subscriber account to use this function. Don’t have an account? Register here |
| Official number: | 48/1999/QD-NHNN5 | Signer: | Tran Minh Tuan |
| Type: | Decision | Expiry date: | Known Please log in to a subscriber account to use this function. Don’t have an account? Register here |
| Issuing date: | 08/02/1999 | Effect status: | Known Please log in to a subscriber account to use this function. Don’t have an account? Register here |
| Fields: | Finance - Banking |
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STATE BANK OF VIETNAM ------- | SOCIALIST REPUBLIC OF VIET NAM Independence - Freedom – Happiness ---------- |
No.48/1999/QD-NHNN5 | Hanoi, February 08, 1999 |
DECISION
REFERRING TO THE ISSUANCE OF REGULATIONS ON CLASSIFYING ASSETS, ESTABLISHING AND USING RESERVED FUNDS FOR COVERING LOSSES SUFFERED BY CREDIT INSTITUTIONS
STATE BANK OF VIETNAM GOVERNOR
Pursuant to State Bank Law No.01/1997/QH10 dated December 12, 1997 and Credit Institutions Law 02/1997 dated December 12, 1997;
Pursuant to Government Decree No.15/CP dated March 2, 1993 referring to duties, powers and State management responsibilities of ministries and bodies at the ministerial level;
Pursuant to a request from the head of the Department of Banks and Non-banking Credit Institutions;
Pursuant to an agreement with Minister of Finance,
DECIDES
Article 1: This Decision is enclosed with regulations on classifying assets, establishing and using reserved funds for covering losses suffered by credit institutions.
Article 2: This Decision is effective 15 days after the date of signing.
Article 3: Heads of member units of State Bank of Vietnam, directors of State Bank of Vietnam’s branches in different provinces and cities, chairmen of management boards and general directors (directors) of credit institutions are in charge of implementing this Decision.
PP STATE BANK OF VIETNAM GOVERNOR DEPUTY GOVERNOR Tran Minh Tuan |
REGULATION
ON CLASSIFYING ASSETS, ESTABLISHING AND USING RESERVED FUNDS FOR COVERING LOSSES SUFFERED BY CREDIT INSTITUTIONS
(This Regulation is attached to Decision No.48/1999/QD-NHNN5 of the State Bank of Vietnam dated February 16, 1999)
(This Regulation is attached to Decision No.48/1999/QD-NHNN5 of the State Bank of Vietnam dated February 16, 1999)
I. GENERAL PROVISIONS
Article 1: Credit institutions operating in Vietnam are required to classify assets, establish and use reserved funds for covering losses according to this regulation.
Article 2:
1. Risks can be seen by credit institutions (hereinafter called risks) are losses which can probably seen when implementing banking operations.
2. Funds reserved for covering losses are counted on operational expenditures through the establishment of reserved funds used for covering losses caused when assets which cannot be recovered.
Article 3: Within the first 25 working days of the year, credit institutions are required to classify assets and establish reserved funds used for covering losses. In 1999 alone, the 25 working days commence from when the decision attached to this regulation is effective.
Article 4: In regards to losses covered with reserved funds, credit institutions are required to oversee them and find measures to recover debts.
II. DETAILED PROVISIONS
1. Asset classification
Article 5: Credit institutions are required to classify assets according to the following stipulations:
1. Assets related to credit operations are classified as follows:
Group 1 includes:
- Loans which have not been required to be paid.
- Funds as discounts and re-discounts of commercial bonds and other short term valuable documentation which have not been required to be paid.
- Funds as financial leases which have not been required to be paid.
Group 2 includes:
- Guaranteed loans exceeding 180 days over the payment deadline and not guaranteed loans exceeding 90 days over the payment deadline.
- Funds as discounts and re-discounts of commercial bonds and other short term valuable documentation which exceed less than 30 days over the payment deadline.
- Funds paid for the guaranteed party which cannot be recovered within less than 30 days.
- Financial leases that the leasing party is not able to pay within less than 180 days.
Group 3 includes:
- Guaranteed loans which exceed 180 to 360 days over the payment deadline and non-guaranteed loans which exceed 90 to 180 days over the payment deadline.
- Funds as discounts and re-discounts of commercial bonds and other short term valuable documentation which exceed 30 to 90 days over the payment deadline.
- Funds paid for the guaranteed party which have not been recovered within 30 to 90 days.
- Financial leases that the leasing party is not able to pay within 180 to 360 days.
Group 4 includes:
- Guaranteed loans which exceed more than 360 days over the payment deadline and not guaranteed loans which exceed more than 180 days over the payment deadline.
- Funds as discounts and re-discounts of commercial bonds and other valuable short term documentation which exceed more than 90 days over the payment deadline.
- Funds paid for the guaranteed party which have not been recovered within more than 90 days.
- Financial leases that the leasing party is not able to pay within more than 360 days.
2. Assets related to customers' payment services are listed into one group
2. Reserved fund establishment
Article 6: The rate of reserved funds which is applicable to assets
1. In regards to credit activities:
A zero per cent rate is subject to group 1
A 20 per cent rate is subject to group 2
A 50 per cent rate is subject to group 3
A 100 per cent rate is subject to group 4
A 0.1 per cent rate is subject to payment services.
2. Funds required to be reserved by credit institutions include:
- Funds reserved for credit activities which are calculated on the basis of the rate of reserved funds and assets stipulated in specific groups referring to different credit activities.
- Funds reserved for customers' payment services which are calculated on the basis of the rate of reserved funds and assets related to customers' payment services.
Article 7:
1. In cases where reserved funds are not enough for covering losses, the credit institution can inform the Ministry of Finance and the State Bank of Vietnam for consideration.
2. Credit institutions are required to return to their budgets reserved funds which have not been used as of December 31 every year.
Article 8: In cases where the establishment of reserved funds according to this regulation causes losses for a State-owned credit institution, the credit institution is then required to find a solution to cover the losses which is then submitted to the Ministry of Finance and the State Bank of Vietnam for consideration and approval.
3. Reserved fund utilisation.
Article 9: Credit institutions use reserved funds for covering losses caused during implementing banking activities after collecting relevant funds, request guaranteeing parties to complete their duties, liquidate assets as mortgages and loan securities (if any) and assume other measures to recover debts according to law.
Article 10: Losses involved in the following cases are considered:
1. Capital borrowers, loan guarantors, entities issuing commercial bonds and other short term valuable documentation, commercial bond guarantees, financial leasing parties, guaranteed entities and those enjoying payment services are disbanded or bankrupt organisations or those which are not able to complete their tasks due to uncontrollable reasons such as natural disasters, fires, diseases or changes in State policies and regulations.
2. Capital borrowers, loan guarantors, entities issuing commercial bonds and other short term valuable documentation, financial leasing parties, guaranteed entities and those enjoying payment services died or are sentenced for more than one year, or are not able to complete their tasks due to uncontrollable reasons such as natural disasters, fires, diseases and changes in State policies and regulations.
Article 11:
1. Credit institutions are required to establish their councils for dealing with losses which are chaired by management board chairmen (for credit institutions having management boards) and include required members as general directors (directors), heads of supervision departments, chief accountants, heads of credit departments and local auditing and inspection departments. Other members are decided by the council's chairman.
2. The council dealing with losses follows stipulations stated in this regulation, the Regulation on Credit Institutions and other regulations when dealing with losses stipulated in Article 10 of this regulation (legal documents stipulated in Article 12 of this regulation are required), and is responsible by law for its decision(s).
Article 12:
Legal documents used as a basis for dealing with losses include:
1. Document(s) related to granting loans, discounts and re-discounts of commercial bonds and other valuable short term documentation, guarantee, financial leasing, payment services, and other documents related to these losses are dealt with according to stipulations in Article 10 of this regulation.
2. Document(s) certifying financial capabilities of entities receiving credit funds and payment services from bodies issuing decisions to establish enterprises and financial management authorities.
3. Apart from the above documents, the following legal documents are required when dealing with specific cases:
a. For bankrupt or disbanded organisations:
- Copy(ies) of decision(s) including the statement to let enterprise(s) to go bankrupt by the court or decision(s) to disband enterprise(s) by State relevant management authorities which is (are) made according to law.
- Minute(s) to deal with assets of bankrupt enterprise(s) or minute(s) to liquidate assets of disbanded enterprise(s).
b. For cases where organisations and individuals are not able to pay debts due to uncontrollable reasons such as natural disasters, fires, diseases and changes in State policies and regulations:
- State relevant authorities' affirmation that these organisations and individuals are not able to pay debts due to uncontrollable reasons such as natural disasters, fires, diseases and changes in State policies and regulations.
- Minute(s) to check and affirm funds as losses which are stamped by relevant People's Committee(s) according to law.
c. For capital borrowers, loan guarantors, financial leasing parties and people enjoying payment services which died or are affirmed by the court as dead (according to stipulations in Article 91 of the Civil Code) and do not have any assets for paying debts:
- Copy(ies) of dead certificate(s) stamped by local relevant authorities according to law or decision(s) certifying the dead by the court according to law.
- Document(s) in which commune or ward People's Committee(s) affirms (affirm) that the interested individual(s) does (do) not have any assets for paying debts.
d. For capital borrowers, loan guarantors, financial leasing parties and people enjoying payment services which are missed individuals as stipulated in Article 88 of the Civil Code and do not have any assets for paying debts (the cases where assets of the missed people were checked according to stipulations in Article 89 of the Civil Code):
- Copy(ies) of decision(s) in which the court states that the interested individual(s) is (are) missed.
- Document(s) in which commune and ward People's Committee(s) affirms (affirm) that the interested individual(s) does (do) not have any assets for paying debts.
e. For capital borrowers, loan guarantors, financial leasing parties and people enjoying payment services which are sentenced over tone year by the court:
- Copy(ies) of sentence(s) or quote(s) from the sentences.
- Document(s) in which the judgement execution body and People's Committee(s) located in commune(s) or ward(s) where the interested individual(s) lives (live).
Article 13: Every fund recovered from losses which are covered with reserved funds (after deducting required expenses and tax, if any) is counted on extraordinary incomes reaped by credit institutions.
4. Accounting, reporting and dealing with relevant violations
Article 14: Credit institutions are required to account expenditures needed for the establishment and use of reserved funds, and funds recovered after using reserved funds according to stipulations by the State Bank of Vietnam.
Article 15:
1. Reports on classifying assets and establishing and using reserved funds used for covering banking operations' losses:
a. Credit institutions are required to send relevant reports to the State Bank of Vietnam and the Ministry of Finance before the 30th day of the first month every year (according to Form 1A attached to this regulation).
- Credit institutions are required to send relevant reports to the State Bank of Vietnam (State bank of Vietnam's inspectors) and the Ministry of Finance.
- JV credit institutions, non-banking credit institutions as JVs with foreign partners and 100 per cent foreign capitalised entities and foreign bank branches operating in Vietnam are required to send relevant reports to the State Bank of Vietnam (State Bank of Vietnam's inspectors), the Ministry of Finance, State Bank of Vietnam's branches and financial bodies located in provinces and cities where the interested credit institutions are headquartered.
- Other credit institutions are required to send relevant reports to the State Bank of Vietnam's branches and financial bodies located in provinces and cities where the interested credit institutions are headquartered.
b. State Bank of Vietnam's provincial and municipal branches summarise reports by credit institutions as stipulated in a, 1 of this article and then send the summarisation to State Bank of Vietnam (State Bank of Vietnam's inspectors) and Ministry of Finance according to Form 1B attached to this regulation before the fifth day of the second month every year.
2. Reports on reserved funds used for covering banking operations' losses:
a. Credit institutions are required to send reports on reserved funds used for covering banking operations' losses to State Bank of Vietnam and Ministry of Finance (according to Form 2A attached to this regulation) before the tenth day of the first month of the interested quarter.
State-owned credit institutions are required to send relevant reports to State Bank of Vietnam (Sate Bank of Vietnam's inspectors).
JV credit institutions and non-banking credit institutions as JVs with foreign partners and 100 per cent foreign capitalised entities and foreign bank branches operating in Vietnam are required to send relevant reports to the State Bank of Vietnam (State Bank of Vietnam's inspectors), the Ministry of Finance, the State Bank of Vietnam's branches located in provinces and cities where the interested credit institutions are headquartered.
Other credit institutions are required to send relevant reports to State Bank of Vietnam's branches and financial bodies located in provinces and cities where the interested credit institutions are headquartered.
b. The State Bank of Vietnam's provincial and municipal branches are in charge of summarising reports by credit institutions as stipulated in a, clause 2 of this article and then sending the summarisation to the State Bank of Vietnam (Sate Bank of Vietnam's inspectors) and Ministry of Finance according to Form 2B attached to this regulation.
Article 16:
1. State Bank of Vietnam (State Bank of Vietnam's inspectors) and Ministry of Finance are in charge of overseeing the establishment and use of reserved funds for covering banking operations' losses suffered by credit institutions.
2. Credit institutions and individuals which violate stipulations of this regulation are administratively punished or prosecuted according to the violation's nature.
III. IMPLEMENTATION PROVISIONS
Article 17: The amendment and addition to stipulations stated in this regulation are decided by State Bank of Vietnam’s Governor through an agreement with Minister of Finance.
PP STATE BANK OF VIETNAM GOVERNOR DEPUTY GOVERNOR Tran Minh Tuan |
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