Central Bank revises regulations on non-performing loan trading and handling

The State Bank of Vietnam (SBV) has issued Circular 3/2024/TT-NHNN providing the trading and handling of non-performing loans by the Vietnam Asset Management Company (VAMC) of credit institutions.

The new circular that amends and supplements a number of articles of Circular 19/2013/TT-NHNN will take effect on July 1 this year.

Under Circular 3/2024/TT-NHNN, the VAMC - a wholly State-owned entity under the SBV’s management and supervision - can buy only non-performing loans (NPLs) after assessing that those loans can be fully recovered and the collateral can be sold or the borrowers of the NPLs have the prospect of recovering their ability to repay the NPLs.

Accordingly, VAMC is only allowed to buy a bad debt from credit institutions and foreign banks at the market price after it hires qualified price appraisal organizations to determine the market price of the debt, besides evaluating economic efficiency, risks and ability to recover capital from the bad debt purchase.

VAMC must plan feasible measures to handle the debt and collateral before the purchase.

By: VLLF