Circular 32/2019/TT-NHNN amend Circular 19/2013/TT-NHNN providing the purchase, sale and settlement of bad debts by VAMC

CIRCULAR

Amending and supplementing a number of Articles of the Circular No. 19/2013/TT-NHNN dated September 06, 2013 of the State Bank of Vietnam’s Governor providing for the purchase, sale and settlement of bad debts by Vietnam Asset Management Company

Pursuant to the Law on the State Bank of Vietnam dated June 16, 2010;

Pursuant to the Law on Credit Institutions dated June 16, 2010; the Law Amending and Supplementing a Number of Articles of the Law on Credit Institutions dated November 20, 2017;

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

Pursuant to the National Assembly's Resolution No. 42/2017/QH14 dated June 21, 2017 on piloting settlement of bad debts of credit institutions;

Pursuant to the Government's Decree No. 53/2013/ND-CP dated May 18, 2013, defining the establishment, organization and operation of Vietnam Asset Management Company; Decree No. 34/2015/ND-CP dated March 31, 2015 and Decree No. 18/2016/ND-CP dated March 18, 2016 of the Government amending and supplementing a number of articles of Decree No. 53/2013/ND-CP;

Pursuant to the Government's Decree No. 16/2017/ND-CP dated February 17, 2017 defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;

At the proposal of the Chief of Banking Inspection and Supervision;

The Governor of the State Bank of Vietnam promulgates the Circular amending and supplementing a number of Articles of the Circular No. 19/2013/TT-NHNN dated September 6, 2013 of the State Bank of Vietnam’s Governor providing the purchase, sale and settlement of bad debts by Vietnam Asset Management Company.

Article 1. To amend and supplement a number of Articles of the Circular No. 19/2013/TT-NHNN dated September 06, 2013 of the State Bank of Vietnam’s Governor providing the purchase, sale and settlement of bad debts by Vietnam Asset Management Company (hereinafter referred to as Circular No. 19/2013/TT-NHNN)

1. To amend and supplement Clauses 2, 3 and 4 of Article 3 as follows:

"2. Debt restructuring means the debt scheduling, debt extension, partial reduction of or whole exemption from overdue interests, charges and fines for violations; or adjustment of interest rates of bad debts.

3. Debt scheduling means the acceptance to extend an additional period of partial or whole repayment of principal and/or interest of the agreed repayment term (including the case of no change in the number of agreed repayment term) within the repayment term agreed in the credit contract or debt agreement, credit-extension entrustment contract, corporate bond purchase contract or purchase entrustment contract without changing the debt repayment deadline.

4. Debt extension means the acceptance to extend an additional period of repayment of principal and/or interest beyond the debt repayment deadline agreed in the credit contract or debt agreement, credit-extension entrustment contract, corporate purchase contract or purchase entrustment contract."

2. To add Article 4a after Article 4 as follows:

“Article 4a. Regulations on foreign exchange management in debt purchase and sale of the Vietnam Asset Management Company

1. The Vietnam Asset Management Company, the credit institution in charge of debt sale, the debt purchaser of the Vietnam Asset Management Company, the borrowers and other related parties shall be responsible for observing the law on restricting the use of foreign exchange on the territory of Vietnam upon debt purchase and sale, and debt recovery.  

2. Debt purchase and sale with the Vietnam Asset Management Company:

a) If the currency used in the purchase and sale of debts is Vietnam dong, debt purchasers shall use payment accounts in Vietnam dong (VND) opened at commercial banks, foreign bank branches in Vietnam to make payment to the Vietnam Asset Management Company the debt-buying sum and related expenses under the debt purchase and sale contracts.

b) If the currency used in the purchase and sale of debts is foreign currency, debt purchasers being non-residents shall use foreign currency payment accounts that are opened at commercial banks, foreign bank branches licensed to conduct foreign exchange activities in the territory of Vietnam or foreign currency accounts of the debt purchasers in foreign countries to make payment to the Vietnam Asset Management Company the debt-buying sum and related expenses under the debt purchase and sale contracts.

3. Upon the recovery of debts purchased from the Vietnam Asset Management Company, the debt recovery amounts must be transferred to 01 (one) payment account in VND or 01 (one) payment account in foreign currency (in case of debts recovery in foreign currency) of the debt purchaser that are opened at commercial banks or foreign bank branches licensed to conduct foreign exchange activities on the territory of Vietnam.

4. In case of purchasing and selling debts arising from lending operations to foreign countries or debts arising from payment on behalf of the guarantee operation for the guaranteed parties being non-residents:

a) The debt seller (a credit institution selling debts upon debt sale to the Vietnam Asset Management Company or the Vietnam Asset Management Company upon debt sale) shall register the change of the loans abroad and the guarantee debt recovery amounts under the current regulations on foreign exchange management for lending abroad and recovering guarantee debt for non-residents;

b) The debt purchaser (the Vietnam Asset Management Company upon debt purchase or the debt purchaser from the Vietnam Asset Management Company being resident) shall register the debt recovery plan under the current regulations on foreign exchange management for the recovery of foreign debts arising from the debt purchase and sale operation.”

3. To amend and supplement Clause 2, Article 6 as follows:

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

a) For bad debts in US dollars (hereinafter abbreviated to USD), it is the central rate announced by the State Bank at the time of signing the debt purchase and sale contract;

b) For bad debts in a foreign currency other than USD, it is the exchange rate for such foreign currency into VND via USD with the exchange rate of USD to VND being the central rate announced by the State Bank and the exchange rate for such foreign currency into USD being the rate listed on the screen of Reuters or Bloomberg or other means for foreign currencies that are not displayed on the screen of Reuters or Bloomberg at the time of signing the debt purchase and sale contract.”

4. To amend and supplement Article 11 as follows:

“Article 11. Conditions and terms of bonds, special bonds

1. Par value of bonds and special bonds

a) The par value of bonds is equivalent to the price of bad debt purchase and sale. The par value of special bonds is equivalent to the purchase and sale price of the bad debts specified in Clause 1, Article 14 of Decree No. 53/2013/ND-CP;

b) For purchased or sold bad debts being the syndicated credit amount, the par value of bonds and special bonds issued to every credit institution participating in the syndicated credit extension shall have the corresponding value as follows:

(i) The carrying amount of the original debt balance of the bad debts after deducting the specific unused reserve amount for such bad debts is being monitored at the credit institution participating in the syndicated credit extension in case the Vietnam Asset Management Company purchases bad debts with special bonds.

(ii) The purchase price of bad debts is calculated according to the capital contribution ratio of each credit institution participating in the syndicated credit extension in case the Vietnam Asset Management Company purchases bad debts at the market value in bonds.

2. Bonds and special bonds may be issued in VND. Bonds may be transferred between the State Bank and credit institutions, and among credit institutions. Special bonds are not transferable.

3. Bonds and special bonds may be issued in the form of book entry or electronic data with identification or enrollment certificates. The Vietnam Asset Management Company shall decide on the form of bonds and special bonds.

4. Bonds and special bonds have the interest rate of 0%.

5. The term of bonds and special bonds is defined as follows:

a) The term of bonds shall be determined according to the agreement between the Vietnam Asset Management Company and the credit institution selling debts shall be at least 01 year. In case the amount of debt recovery is not enough to pay the bonds when the bonds are due, the Vietnam Asset Management Company shall decide to extend the term of the bonds, not exceeding 03 years. The extension of the bond term that exceeds 03 years must be approved by the bond owner. The Vietnam Asset Management Company may not extend the term of bonds being used to participate in the open market operation;

b) The maximum term of special bonds is 05 years. In case of issuing special bonds to purchase bad debts of credit institutions that are implementing restructuring plans or facing financial difficulties, the term of special bonds shall not exceed 10 years.

6. Bonds and special bonds must be deposited at the State Bank in accordance with the State Bank's regulations on deposit of valuable papers and may be used in the refinancing operations with the State Bank. Bonds may be used to participate in the open market operations in accordance with law.

7. Bonds and special bonds are exempt from the depositing charge at the State Bank.

8. Credit institutions holding bonds are not required to form risk provisions for bonds.”

5. To amend and supplement Clause 1, Article 16 as follows:

“1. The Vietnam Asset Management Company may purchase bad debts with special bonds when the following conditions are fully satisfied:

a) Being bad debts as prescribed in Clause 7a, Article 3 of this Circular;

b) Being bad debts have collaterals;

c) Bad debts and collaterals of bad debts must be lawful and have valid dossiers and documents, which must ensure minimally the following requirements:

(i) The credit contracts or loan agreements, credit-granting entrustment contracts, debt purchase and sale contracts, corporate bond purchase contracts or purchase entrustment contracts, guarantee contracts must clearly indicate the creditor' rights of credit institutions, and responsibilities and obligations to repay debts of borrowers, guarantors and parties obliged to repay debts to credit institutions;

(ii) Bad debts are not yet used to ensure the fulfillment of the credit institutions' obligations;

(iii) Collaterals of bad debts are not disputed properties in the cases which have been accepted but not yet settled or are being settled in the competent Court; not subject to a provisional emergency measure; not being distrained or subject to judgment enforcement measures in accordance with law at the time of debt purchase and sale.

The Vietnam Asset Management Company shall base on the relevant provisions of law to identify bad debts and collaterals of lawful bad debts that have valid dossiers and papers.

d) The borrowers still exist;

dd) The book value of the outstanding principal of one or more than one bad debt of one borrower or more than one outstanding debt of a group of borrowers specified in Clause 4 Article 8 of this Circular at the time of selling debts is at least VND 03 billion, for groups of borrowers and institutional borrowers, or VND 01 billion, for individual borrowers, or other levels decided by the Governor of the State Bank.”

6. To amend and supplement Point d, Clause 1, Article 17 as follows:
“d) Copies of credit contracts or loan agreements, credit-granting entrustment contracts, debt purchase and sale contracts, purchase contracts, corporate bond purchase or entrustment contracts, guarantee contracts certified by the lawful representative of debt-selling credit institution;”

7. To amend and supplement Article 27 as follows:

“Article 27. Purchased debt restructuring principles

1. The restructuring of bad debts must comply with Decree No. 53/2013/ND-CP, this Circular and agreements in credit contracts, loan agreements, credit-granting entrustment contracts, purchase contracts, corporate bond purchase or entrustment contracts and debt purchase and sale contracts.

2. The Vietnam Asset Management Company shall review, decide and assume responsibility for restructuring the bad debts purchased with market value at the written request of borrowers.

3. The Vietnam Asset Management Company shall restructure bad debts purchased with special bonds at the written request of borrowers and in accordance with this Circular.

4. Organizations and individuals are strictly prohibited from taking advantage of the restructuring of bad debts to illegally benefit."

8. To amend and supplement Article 30 as follows:

“Article 30. Methods of restructuring debt repayment term of bad debts purchased with special bonds

1. The Vietnam Asset Management Company shall consider and reschedule loan repayments in the form of debt repayment term adjustment, debt extension for bad debts when borrowers satisfy the following conditions:

a) Borrowers have feasible debt payment plans;

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

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

d) The extended duration for bad debts must not exceed the remaining term of the corresponding special bonds.  In case the debt extension for a bad debt exceeds the remaining term of the corresponding special bonds, the Vietnam Asset Management Company must have a written agreement of the debt-selling credit institution before making decision.

2. When considering and rescheduling the repayment period of bad debts, the Vietnam Asset Management Company shall discuss with debt-selling credit institutions before making decision.

 Within 10 working days from the day on which the Vietnam Asset Management Company issues a written request for comments, the debt-selling credit institutions must reply in writing on the issues proposed by the Vietnam Asset Management Company. After such time limit, the Vietnam Asset Management Company shall decide and take responsibility for the rescheduling of debt repayment, except for the case specified at Point d, Clause 1 of this Article.

3. Within 05 working days from the date of the decision to reschedule the debt repayment term, the Vietnam Asset Management Company shall notify in writing to the debt-selling credit institutions and the borrowers for information and coordination of implementation."

9. To amend and supplement Clause 3, Article 33 as follows:

"3. Borrowers who are in the process of dissolution, bankruptcy or revocation of operation licenses may not be considered by the Vietnam Asset Management Company for restructuring bad debts or financial support to borrowers."

10. To amend and supplement Article 36 as follows:

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

1. The Vietnam Asset Management Company may contribute charter capital and equity capital of borrowers being enterprises in the following forms:

a) Converting bad debts purchased with special bonds into charter capital and share capital of borrowers;

b) Using assets (except for bad debts purchased with special bonds), legal capital for charter capital contribution, share capital of borrowers (including the transfer of bad debts purchased according to market value into charter capital, share capital of borrowers).

2. The conversion of bad debts purchased with special bonds into charter capital and share capital of borrowers shall only be carried out in the following cases:

a) Borrowers are domestic enterprises operating out of the sectors of insurance, securities, remittances, foreign exchange, gold trading, factoring, credit card issuance, consumer credit, intermediary payment services, credit information;

b) The Vietnam Asset Management Company has the written approval of the debt-selling credit institutions to convert bad debts purchased with special bonds into charter capital and share capital of the borrowers before implementation.

c) The debt-selling credit institutions are commercial banks that satisfy the following requirements:

(i) Being entitled to contribute capital, purchase shares under the Establishment and Operation License;

(ii) Ensuring the minimum capital adequacy ratio as prescribed at Point b, Clause 1, Article 130 of the Law on Credit Institutions, the rate of capital contribution and share purchase in accordance with Article 129 of the Law on Credit Institutions, having the actual value of the charter capital not lower than the legal capital level (when calculating the ratio, the actual value of the above-mentioned charter capital must include the value of contributed capital and share capital transferred from bad debts purchased with special bonds) at the time of written issuance in accordance with provisions in Point b of this Clause;

(iii) Earning profitable business results according to the financial statements audited by an independent auditing organization in the year preceding the year of the written request as prescribed at Point b of this Clause;

(iv) Not being sanctioned for administrative violations in debt classification, setting up and using provisions to deal with risks, contributing capital and buying shares in the 12 months preceding the month in which the written notice is specified as prescribed at Point b this Clause;

(v) Having organizational structure, Board of Directors, Board of Members, Board of Controllers, General Director (Director) in accordance with the Law on Credit Institutions and regulations of the State Bank.

3. Within 05 working days from the date on which the bad debt purchased with special bonds is converted into charter capital, share capital of the borrowers, the Vietnam Asset Management Company shall resell the contributed charter capital and share capital to debt-selling credit institutions at the value of its charter capital and share capital contribution and special bond payment.

4. The debt recovery amount arising in the period from the time the Vietnam Asset Management Company purchases bad debts with special bonds to the conversion of such bad debts into charter capital and share capital shall be handled under  Clause 2, Article 43 of this Circular.

5. In case of charter capital or share capital contribution of borrowers being enterprises specified at Point b, Clause 1 of this Article, the Vietnam Asset Management Company must satisfy the following requirements:

a) The plans on charter and share capital contribution of the borrowers shall be feasible and approved by the State Bank, in which the plans must analyze and evaluate the efficiency of charter capital and share capital contribution, financial situation and operation of borrowers, capital sources for contribution, ability for contributed capital recovery, and propose measures to recover contributed capital and participate in restructuring borrowers;

b) The Vietnam Asset Management Company shall be entitled to participate in restructuring borrowers after contributing charter capital or share capital;

c) The contribution of charter capital and share capital shall not violate the limit of charter capital and share capital contribution of the Vietnam Asset Management Company under Clause 2, Article 33 of this Circular;

d) Borrowers have prospects of financial recovery and operation after the Vietnam Asset Management Company participates in contributing charter capital or share capital;

dd) Borrowers are not in the process of bankruptcy, dissolution or revocation of operation licenses.”

11. To amend and supplement Clause 4, Article 42 as follows:

“4. Fines for violation (if any).”

12. To add Article 43a after Article 43 as follows:

"Article 43a. Handling of the recovered amount of bad debts purchased at market price with bonds

1. In case a bond-holding credit institution does not make refinanced loans with bonds issued to buy such bad debts or bonds currently used in the definite-term co-purchasing contract of valuable papers between the State Bank and such credit institution which are not mature, within 05 working days when the amount of money and assets are recovered from bad debts, Vietnam Asset Management Company shall deposit the amount of money equal to the amount of money or assets recovered from bad debts (with maximum value equal to the value of bonds) at the bond-holding credit institution as interest-free deposits and shall not withdraw them before the time of bond repayment, unless otherwise prescribed in Clauses 2 and 3 of this Article.

2. In case a bond-holding credit institution makes refinanced loans with bonds issued to buy such bad debts (including the mature refinanced loans which are not fully paid by such credit institution), Vietnam Asset Management Company shall:

a) Within 03 working days from the receipt of the State Bank's notice of current use of bonds as refinanced loans at the State Bank, Vietnam Asset Management Company shall use the amount of money equal to the recovered amount and accumulated assets from bad debts purchased at market price with bonds (up to the face value of bonds) to repay the refinanced loans based on such bonds;

b) Within 05 working days from the day when the amount of money or assets are recovered from the bad debts, Vietnam Asset Management Company shall use the amount of money equal to the recovered amount of bad debts purchased at the market price with bonds (up to the face value of bonds) to repay the refinanced loans based on such bonds;

c) The State Bank shall only stop freezing the bonds currently pledged for refinanced loans after the refinanced amount equal to such bonds has been repaid in full;

d) Vietnam Asset Management Company shall deduct the amounts specified at Points a and b of this Clause from the total amount payable by Vietnam Asset Management Company to the bond-holding credit institution when paying the bonds.

3. In case the State Bank owns the bonds (except for bonds used in the definite-term co-purchasing contract of valuable papers between the State Bank and credit institutions that which are not mature), Vietnam Asset Management Company shall:

a) Within 03 working days from the day on which the State Bank's notice of the State Bank's purchase of all bonds or that the credit institution fails to pay or do not fully pay the amount for repurchasing bonds in the definite-term co-purchasing contract of valuable papers between the State Bank and credit institutions, Vietnam Asset Management Company shall use the amount of money equal to the recovered amount and accumulated assets from bad debts purchased at market price with bonds (up to the face value of bonds) to pay the outstanding amount of the credit institution's payment obligations in the definite-term co-purchasing contract of valuable papers between the State Bank and credit institutions or to pay debt obligations in bond-issuance contract with the State Bank;

b) Within 05 working days from the day when the amount of money or assets are recovered from bad debts, Vietnam Asset Management Company shall use the amount of money equal to the recovered amount and accumulated assets from bad debts purchased at market price with bonds (up to the face value of bonds) to pay the outstanding amount of the credit institution's payment obligations in the definite-term co-purchasing contract of valuable papers between the State Bank and credit institutions or to pay debt obligations in bond-issuance contract with the State Bank;

d) Vietnam Asset Management Company shall deduct the amounts specified at Points a and b of this Clause from the total amount payable by Vietnam Asset Management Company to the bond-holding credit institution when paying the bonds.

4. If the amount of money recovered from the bad debts is not lower than the face value of the bonds, Vietnam Asset Management Company and the bond-holding credit institutions shall make payment of bonds in accordance with Article 44a of this Circular.”

13. To amend and supplement Clause 2, Article 44 as follows:

“2. Within 05 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 bad debts have not yet been fully recovered (including principals, interests and other financial obligations related to the debts) according to the credit contracts or loan agreements, credit entrustment contracts, debt purchase and sale contracts, corporate bond purchase contracts and corporate bond purchase entrustment contracts, the loan-selling credit institution shall use the corresponding special bonds to repurchase the bad debts 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 recorded in the balance sheet of Vietnam Asset Management Company in case part of the bad debts is converted into the charter capital or share capital of the borrower (if any); 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 bad debts have been fully recovered (including principals, interests and other financial obligations related to the debts) according to the credit contracts or loan agreements, credit entrustment contracts, debt purchase and sale contracts, corporate bond purchase contracts and corporate bond purchase entrustment contracts (even in case the whole bad debts have been sold to an organization or individual), the loan-selling credit institution shall use the corresponding special bonds to repurchase the contributed capital amount or share capital amount at the borrower recorded in the balance sheet of Vietnam Asset Management Company in case part of the bad debts are converted into charter capital or share capital of the borrower (if any); 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 bad debts are converted into charter capital or share capital of the borrower being an enterprise, the loan-selling credit institution shall use the corresponding special bonds  to repurchase the contributed capital amount or share capital amount at the borrower recorded in the balance sheet of Vietnam Asset Management Company and return to Vietnam Asset Management Company the recovered loan amount which it is entitled to under Point a, Clause 2, Article 43 of this Circular;

14. To add Article 44a after Article 44 as follows:

"Article 44a. Bond payment

1. Bonds (except bonds used in the definite-term co-purchasing contract of valuable papers between the State Bank and credit institutions which are not mature) shall be repaid in the following cases:

a) The recovered amount of assets from bad debts is not lower than the bonds’ face value;

b) Vietnam Asset Management Company sells bad debts, converting part or all of the bad debts into charter capital or share capital;

c) Vietnam Asset Management Company has paid all of the bonds’ value;

d) Mature bonds.

2. Within 05 working days from the date the bonds must be paid according to Clause 1 of this Article, Vietnam Asset Management Company shall:

a) In case the bond owner is a credit institution and does not make refinanced loans with such bonds, Vietnam Asset Management Company shall pay the amount equal to the face value of such bonds to the bond-holding credit institution and the credit institution shall return the bonds to Vietnam Asset Management Company;

b) In case the bond holder is a credit institution and is making refinanced loans with bonds, Vietnam Asset Management Company on behalf of the credit institution shall repay the refinanced loans made with such bonds (up to the bonds’ face value) to the State Bank; for the remaining bond payment amount (if any), Vietnam Asset Management Company shall pay to the bond-holding credit institution; Vietnam Asset Management Company receives such bonds from the bond-holding credit institution;

c) In case the bond holder is the State Bank, Vietnam Asset Management Company shall pay the whole face value of such bonds to the State Bank and the State Bank shall return the bonds to Vietnam Asset Management Company.

3. In case bonds used in the definite-term co-purchasing contract of valuable papers between the State Bank and credit institutions which are not mature falls into one of the cases mentioned at Points a, b, c of Clause 1 of this Article, if they are mature, Vietnam Asset Management Company shall:

a) In case credit institutions make full payment for the repurchase of valuable papers in the definite-term co-purchasing contract of valuable papers between the State Bank and bond-using credit institutions, within 05 working days from the date of maturity, Vietnam Asset Management Company shall pay the amount of money equal to the bonds’ value to the credit institutions and the credit institutions return the bonds to Vietnam Asset Management Company;

b) In case credit institutions fails to make payment or does not fully pay the repurchase of valuable papers in the definite-term co-purchasing contract of valuable papers between the State Bank and bond-using credit institutions, within 05 working days from the date of maturity, Vietnam Asset Management Company shall make payment to the State Bank of the outstanding amount of the credit institution in the definite-term co-purchasing contract of valuable papers between the State Bank and bond-using credit institutions (if any) and Vietnam Asset Management Company shall pay to the bond-using credit institution the remaining bonds; Vietnam Asset Management Company shall receive the bonds from bond-holding credit institutions.”

15. To amend and supplement Clause 2, Article 48 as follows:

“2. Operation Center:

a) Issue, pay and cancel bonds and special bonds at the request of Vietnam Asset Management Company; extend the term of special bonds according to the State Bank's written approval;

b) Guide the process of issuing, paying, canceling, depositing special bonds and special bonds and extending the special bonds on the electronic transaction system of the State Bank;

c) Blockade bonds and special bonds related to refinanced amounts when credit institutions own refinanced bonds and special bonds; stop the blockade of bonds and special bonds in case refinanced amounts corresponding to such bonds and special bonds of credit institutions are fully repaid;

d) Confirm the special bonds corresponding to bad debts are not blockaded at the State Bank at the request of Vietnam Asset Management Company as Management Company Asset converts the bad debts purchased with special into bad debts purchased at market price;

dd) Assume the prime responsibility and cooperate with the Monetary Policy Department to monitor the use of bonds by credit institutions to participate in the open market operation, the use of bonds and special bonds to refinance loans at State bank;

e) Within 03 working days from the day when the bonds are used for refinancing loans or participating in open market operations with the State Bank; or the refinanced loans with bond mortgage is mature but the credit institution has not fully paid the loans on time; or the credit institution fails to pay or incompletely pays the repurchase of valuable papers in the definite-term co-purchasing contract of valuable papers between the State Bank and bond-using credit institutions, the Operation Center shall send a written notice to Vietnam Asset Management Company so that Vietnam Asset Management Company shall performs the responsibilities as prescribed in this Circular;

g) Coordinate with Vietnam Asset Management Company in handling the recovered amount of debts and payment of bonds if the bonds are used for refinancing loans or participating in open market operations with the State Bank as prescribed in Articles 43a and 44a of this Circular.”

16. To amend and supplement Clause 5, Article 48 as follows:

“5. The Department of Information Technology shall support units of the State Bank and Vietnam Asset Management Company to gather, exchange, provide, exploit information and make statistics on purchasing, selling and handling bad debts.”

17. To add Clause 6a after Clause 6, Article 48 as follows:

“6a. The Monetary Policy Department shall coordinate with the Transaction Office in monitoring the use of bonds by credit institutions to participate in the open market operations, the use of bonds as well as special bonds for financing loans at the State Bank.”

18. To add Clauses 9, 10 into Article 49 as follows:

 “9. On a monthly basis, no latter than 10th of the reporting month, to provide information on purchased bad debts and fluctuations of such bad debts to Vietnam National Credit Information Center in electronic data via the web portal of Vietnam National Credit Information Center.

10. To cooperate with the Transaction Office in dealing with the debt recovery amount and making payment of bonds if the bonds are used for refinancing loans and participating in open market operations with the State Bank.”

19. To add Points dd and e, Clause 4, Article 50 as follows:

"dd) Debt-selling credit institutions that receive special bonds shall not receive dividends in cash until special bonds are paid, except for the cases specified at Point e of this Clause;

e) Debt-selling credit institutions that receive special bonds with a term of more than 05 years or credit institutions that are approved by the State Bank to extend the term of special bonds shall not receive dividends to create sources for handling of bad debts until special bonds with a term of more than 05 years or extended special bonds are settled."

Article 2. Implementation organization

The Chief of Office, Chief of Banking Inspection and Supervisor, Heads of the units affiliated to the State Bank of Vietnam, Directors of the State Bank branches in provinces and centrally-run cities, Chairpersons of the Executive Boards, the Board of members/partners, General Directors (Directors) of Vietnamese credit institutions, the President of the Board of members and General Director of Vietnamese Vietnam Asset Management Company shall assume responsibility for the implementation of this Circular.

Article 3. Implementation provisions

1. This Circular takes effect on February, 14, 2020.

2. This Circular annuls:

a) Clauses 6, 9, 26, 27 and 38 Article 1 of the Circular No. 14/2015/TT-NHNN dated August 28, 2015 of the Governor of the State Bank of Vietnam amending and supplementing a number of Articles of Circular No. 19/2013/TT-NHNN;

b) Clauses 4, 7, 13, 17 and 18 of Article 1 of Circular No. 08/2016/TT-NHNN dated June 16, 2016 of the Governor of the State Bank of Vietnam amending and supplementing a number of Articles of the Circular No. 19/2013/TT-NHNN./.

For the Governor

The Deputy Governor

Nguyen Thi Hong