Circular 53/2024/TT-NHNN on debt restructuring for customers facing difficulties due to the impact of Storm No. 3

CIRCULAR

On debt restructuring by credit institutions and foreign bank branches for customers facing difficulties due to the impact and damage of Storm No. 3, flooding and landslides after Storm No. 3

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

Pursuant to the Law on Credit Institutions dated January 18, 2024;

Pursuant to the Government's Decree No. 102/2022/ND-CP dated December 12, 2022 defining the functions, duties, powers and organizational structure of the State Bank of Vietnam;

Pursuant to the Government's Resolution No. 143/NQ-CP dated September 17, 2024 on key tasks and solutions to urgently overcome the consequences of Storm No. 3 (Yagi), quickly stabilize the people's situation, promote the restoration of production and business, actively promote economic growth, and better control inflation;

Pursuant to the Prime Minister’s Decision No. 1510/QD-TTg dated December 4, 2024 on classification of assets, levels of provisions, methods for setting aside provisions, the use of provisions to handle risks with respect to debts of customers facing difficulties due to the impact and damage of Storm No. 3;

At the proposal of the Director of the Department of Credit for Economic Sectors;

The Governor of the State Bank of Vietnam issues the Circular on debt restructuring by credit institutions and foreign bank branches for customers facing difficulties due to the impact and damage of Storm No. 3, flooding and landslides after Storm No. 3.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

This Circular prescribes the debt restructuring by credit institutions and foreign bank branches for customers facing difficulties due to the impact and damage of Storm No. 3, flooding and landslides after Storm No. 3 (hereinafter collectively referred to as Storm No. 3).

Article 2. Subjects of application

1. Credit institutions (other than policy banks), foreign bank branches.

2. Customers of credit institutions and foreign bank branches as prescribed in Clause 1, Article 4 of this Circular.

3. Other organizations and individuals related to debt restructuring for customers facing difficulties due to the impact and damage of Storm No. 3.

Article 3. Application of related legal documents

1. The debt restructuring for customers facing difficulties in debt repayment due to the impact and damage of Storm No. 3 shall be implemented in accordance with this Circular; for other issues related to debt restructuring not prescribed in this Circular, credit institutions and foreign bank branches shall comply with other relevant legal documents.

2. A debt that has been restructured in accordance with other law regulations, if it is compliant with this Circular, may be considered and restructured by the credit institution or foreign bank branch in accordance with this Circular.

Chapter II

SPECIFIC PROVISIONS

Article 4. Debt restructuring

The credit institution or foreign bank branch is allowed to consider and decide to restructure the outstanding principal and interest balance of a debt based on the customer's request and its own financial capacity and in compliance with the following regulations:

1. Customers of credit institutions and foreign bank branches in the provinces and municipalities: Ha Giang, Cao Bang, Lang Son, Bac Giang, Phu Tho, Thai Nguyen, Bac Kan, Tuyen Quang, Lao Cai, Yen Bai, Lai Chau, Son La, Dien Bien, Hoa Binh, Hanoi, Hai Phong, Hai Duong, Hung Yen, Vinh Phuc, Bac Ninh, Thai Binh, Nam Dinh, Ha Nam, Ninh Binh, Quang Ninh, Thanh Hoa (hereinafter referred to as 26 provinces and municipalities) facing difficulties due to the impact and damage of Storm No. 3, including:

a) Customers who are individuals currently residing or working or running production and business establishments or making investments, conducting construction, production and business activities in 26 provinces and municipalities;

b) Customers that are organizations (other than credit institutions or foreign bank branches) having their headquarters, branches, representative offices or production and business establishments located in or making investments, or conducting construction, production and business activities in 26 provinces and municipalities.

2. The outstanding principal balances have been incurred before September 7, 2024 and from lending and financial leasing.

3. The obligations to repay principal and interest arise from September 7, 2024 to December 31, 2025.

4. The outstanding balance of the restructured debt which remains due or is overdue for up to 10 (ten) days from the agreed payment/repayment due date. Credit institutions and foreign bank branches are allowed to restructure the outstanding balance of the debts that are overdue for more than 10 (ten) days and from September 7, 2024 to December 16, 2024 while restructuring debts for the first time in accordance with this Circular.

5. Customers are assessed by credit institutions and foreign bank branches as facing difficulties in repaying the principal and interest on time in accordance with the agreed contracts due to the impact and damage of Storm No. 3 but they are capable of repaying such principal and interest in full under the restructured repayment term.

6. Credit institutions and foreign bank branches shall not restructure the debts that violate law regulations.

7. The consideration for debt restructuring shall be implemented from the effective date of this Circular until the end of December 31, 2025, with no limit on the number of restructuring instances.

8. The final repayment date of the outstanding balance under the restructured debt shall be determined in accordance with the extent of the customer's difficulties but shall not exceed December 31, 2027.

Article 5. Classification of debts, setting aside risk provisions and monitoring of interest receivable

1. Credit institutions and foreign bank branches shall classify debts and set aside risk provisions for restructured debts under this Circular in accordance with the Prime Minister's Decision on classification of assets, levels of provisions, methods for setting aside provisions, the use of provisions to handle risks with respect to debts of customers facing difficulties due to the impact and damage of Storm No. 3 (hereinafter referred to as the Prime Minister's Decision).

2. For interest receivable on restructured debts under this Circular that remain classified as qualified (Group 1) under the Prime Minister's Decision, from the date of restructuring, credit institutions and foreign bank branches are not required to record them in the income account (accrued receivables) but shall perform off-balance-sheet monitoring for collection follow-up; they shall be recorded in the income account when received in accordance with the law regulations on the financial regime for credit institutions and foreign bank branches.

Article 6. Responsibilities of credit institutions and foreign bank branches

1. Credit institutions and foreign bank branches shall take accountability for their decision to restructure the debts in accordance with this Circular, and conduct internal inspection and controls to ensure close monitoring, safety, prevention and suppression of taking advantage of debt restructuring for personal gain.

2. They shall issue internal regulations on debt restructuring in accordance with this Circular for uniform implementation throughout the system, which shall include the following:

a) Criteria for determining customers and outstanding balances that are eligible for debt restructuring as prescribed in this Circular;

b) The order, procedures, delegation, decentralization, tasks and responsibilities of each individual and department in implementing debt restructuring as prescribed in this Circular, provided that the individual or department deciding on debt restructuring is not the same individual or department approving credit extension, unless otherwise the credit extension is approved by the Board of Directors, Members’ Council, Chief Executive Officer or Director, or parent bank (of a foreign bank branch). In cases where the credit extension and debt restructuring are reviewed and decided by a council, the Chairperson of the Debt Restructuring Review Council shall not be the Chairperson of the Credit Extension Review Council, and at least two-thirds (2/3) of the members of the Debt Restructuring Review Council must not be members of the Credit Extension Review Council;

c) Frequency of reviewing and assessing the customer’s repayment ability after debt restructuring; monitoring, inspection, control, and supervision of debt restructuring in accordance with this Circular.

3. A credit institution or foreign bank branch shall send 01 (one) set of its internal regulations as prescribed in Clause 2 of this Article to the State Bank (the Banking Supervision Agency, the State Bank branch in the respective province or municipality where its head office is located) in accordance with the law regulations.

4. Credit institutions and foreign bank branches shall send reports to the State Bank of Vietnam on the implementation of debt restructuring in accordance with Appendix 01 and debt classification and setting aside risk provisions in accordance with Appendix 02 to this Circular.

Article 7. Responsibilities of subordinates of the State Bank of Vietnam

1. The Department of Credit for Economic Sectors shall:

a) Monitor and inspect the implementation of debt restructuring in accordance with this Circular in line with its functions and tasks; summarize reports on the implementation of debt restructuring in accordance with Clause 4, Article 6 of this Circular;

b) Monitor, urge, check and approve report forms of credit institutions (other than people's credit funds) and foreign bank branches as prescribed in Appendix 01 to this Circular;

c) Assume the prime responsibility for and coordinate with the Monetary Policy Department, the Banking Supervision Agency and relevant units in advising the Governor of the State Bank of Vietnam to address issues arising during the implementation thereof.

2. The Banking Supervision Agency shall:

a) Conduct inspections, examinations and supervision of credit institutions and foreign bank branches' implementation of this Circular in line with its functions and tasks;

b) Monitor, urge, check and approve report forms of credit institutions (other than people's credit funds) and foreign bank branches as prescribed in Appendix 02 to this Circular.

3. State Bank branches shall:

a) Monitor, urge, check and approve report forms of people's credit funds as prescribed in Appendix 01 and Appendix 02 to this Circular; monitor, check and approve report forms of credit institution branches in their respective localities as prescribed in Appendix 01 and Appendix 02 to this Circular;

b) Conduct inspections, examinations and supervision of credit institutions and foreign bank branches' implementation of this Circular in line with its functions and tasks.

Chapter III

IMPLEMENTATION PROVISIONS

Article 8. Effect

This Circular takes effect from December 04, 2024.

Article 9. Organization of implementation

The Chief of Office, Director of the Department of Credit for Economic Sectors, Chief of the Banking Supervision Agency, heads of units affiliated with the State Bank of Vietnam, directors of the State Bank's branches in provinces and municipalities, credit institutions and foreign bank branches shall be responsibility for implementing this Circular./.

Appendix 01

Name of the reporting entity:…..

REPORT ON THE IMPLEMENTATION OF DEBT RESTRUCTURING IN ACCORDANCE WITH CIRCULAR NO. .../2024/TT-NHNN

(month ... year ...)

Unit: billion VND, customers/instances

REPORTING INSTRUCTIONS:

1. Subjects of application: Credit institutions (other than policy banks), foreign bank branches (collectively referred to as credit institutions).

2. Reporting deadline: no later than the 10^th day of the month.

3. Requirements for reporting data:

- The head office of the credit institution shall send the report via the Centralized Statistical Reporting System of the State Bank of Vietnam, including:

+ Data of the entire system

+ Data of each branch in the system of the credit institution (if any).

- Data format: numerical, maximum 12 digits, maximum 3 decimal places after the "."; column (16) is integer type, maximum 3 digits.

- The credit institution shall not insert data into gray cells.

4. Report recipient: Department of Credit for Economic Sectors, State Bank branch in the respective province or municipality.

5. Specific instructions:

- The credit institution shall report data up to the last day of the month immediately preceding the monthly reporting date.

- Column (3): Accumulated from the effective date of the Circular to the end of the reporting month (notes: only the outstanding principal balance that has been restructured per instance in accordance with this Circular is reported, not the total outstanding balance of the debt).

- Column (4): The interest, which is restructured in accordance with this Circular, accumulated from the effective date of the Circular to the end of the reporting month.

- Column (5): The outstanding principal balance (not the total outstanding balance of the debt), which is restructured in accordance with this Circular, at the end of the reporting month (In cases where the restructured term has ended but the customer has not paid all the restructured outstanding balance, the credit institution shall report the actual remaining restructured outstanding balance at the end of the reporting month).

- Column (6): The interest, which is restructured in accordance with this Circular, at the end of the reporting month (In cases where the restructured term has ended but the customer has not paid all the restructured interest, the credit institution shall report the actual remaining restructured interest at the end of the reporting month).

- Column (7): The number of customers with outstanding balances that have been restructured in accordance with this Circular at the end of the reporting month (corresponding to the data in columns 5 and 6).

- Column (8): Total outstanding balances (principal and interest) of customers with outstanding balances that have been restructured in accordance with this Circular at the end of the reporting month (corresponding to the customers stated in column 7).

- Column (9): The interest receivable monitored off balance sheet of restructured debts under this Circular but remain in the qualified debt group due to the implementation of the Prime Minister's Decision on classification of assets, levels of provisions, methods for setting aside provisions, the use of provisions to handle risks with respect to debts of customers facing difficulties due to the impact and damage of Storm No. 3.

- Column (10): The total number of instances of customers requesting the credit institution to consider restructuring their debts under this Circular, accumulated from the effective date of the Circular to the end of the reporting month.

- Column (11): The total number of instances of customers having their debts restructured in accordance with this Circular, accumulated from the effective date of the Circular to the end of the reporting month (one customer may be subject to multiple instances of debt restructuring).

- Column (12): The total number of instances of customers having their debts not approved for debt restructuring under this Circular, accrued from the effective date of the Circular to the end of the reporting month.

- Column (13): The total number of instances of customers requesting debt restructuring during the reporting month.

- Column (14): The total number of instances of customers having their debts restructured in accordance with this Circular arising during the reporting month by the end of the reporting month.

- Column (15): The total number of instances of customers not approved by the credit institution for debt restructuring arising during the reporting month by the end of the reporting month.

- Column (16): The reasons why the credit institution does not accept a customer’s request for debt restructuring, as follows:

+ The reason is that the customer fails to comply with Clause 1, Article 4 of the Circular: Insert “1”

+ The reason is that the customer fails to comply with Clause 2, Article 4 of the Circular: Insert “2”

+ The reason is that the customer fails to comply with Clause 3, Article 4 of the Circular: Insert “3”

+ The reason is that the customer fails to comply with Clause 4, Article 4 of the Circular: Insert “4”

+ The reason is that the customer fails to comply with Clause 5, Article 4 of the Circular: Insert “5”

Note: Only list a maximum of 3 main reasons in order of decreasing proportion from largest to smallest. E.g.: 512

6. Formula for data reconciliation:

- Formula for on-balance-sheet reconciliation (Allowable tolerance of VND 1 billion):

+ Line I = Lines 1 + 2 + 3 + 4 (Section I), excluding the value in column (16).

+ Line II = Lines 1 + 2 (Section II), excluding the sum of the highlighted cells.

+ Line III = Line 1 + 2 + 3 + 4 + 5 +... + 21 (Section III), excluding the sum of the highlighted cells

+ Line I = Line II = Line III (excluding the values in columns 7 thru 16).

+ Column (10) = Column (11) + Column (12)

+ Column (13) = Column (14) + Column (15)

+ Column (3) >= Column (5)

+ Column (4) >= Column (6)

- Formula for reconciliation of the entire column data in columns (3), (4), (5), (6): They are equal to the respective total data of branches in the respective columns (allowable tolerance of VND 50 billion, except for reports of microfinance institutions for which the tolerance is VND 0.1 billion)