CIRCULAR

AMENDMENTS TO SOME ARTICLES OF CIRCULAR NO. 01/2020/TT-NHNN DATED MARCH 13, 2020 OF THE GOVERNOR OF STATE BANK OF VIETNAM PROVIDING INSTRUCTIONS FOR CREDIT INSTITUTIONS AND FOREIGN BRANCH BANKS ON DEBT RESCHEDULING, EXEMPTION OR REDUCTION OF INTEREST AND FEES, RETENTION OF DEBT CATEGORY TO ASSIST BORROWERS AFFECTED BY COVID-19 PANDEMIC

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 and the Law dated November 20, 2017 on amendments the 2010’s Law on Credit Institutions;

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

After reaching a consensus with the Ministry of Finance;

At the request of the Chief Banking Inspector;

The Governor of the State bank of Vietnam (SBV) promulgates a Circular on amendments to some Articles of Circular No. 01/2020/TT-NHNN dated March 13, 2020 of the Governor of SBV providing instructions for credit institutions and foreign branch banks (FBB) on debt rescheduling, exemption or reduction of interest and fees, retention of debt category to assist borrowers affected by Covid-19 pandemic (hereinafter referred to as “Circular No. 01/2020/TT-NHNN").

Article 1. Amendments to some Article of Circular No. 01/2020/TT-NHNN

1. Amendments to Article 3:

“Article 3. Application of relevant legislative documents

Regulations of this Circular shall apply to debt rescheduling, exemption or reduction of interest and fees, retention of debt category, making of loan loss provision to assist borrowers affected by Covid-19 pandemic; debt rescheduling, exemption or reduction of interest and fees, debt classification, making of and use of loan loss provision in other cases not mentioned in this Circular shall comply with relevant legislative documents.”

2. Amendments to Article 4:

“Article 4. Debt rescheduling

Credit institutions and FBBs shall reschedule outstanding debt (including the debts regulated by the Government's Decree No. 55/2015/ND-CP dated June 09, 2015 on credit policies serving development of agriculture and rural areas (amended)) when all of the following conditions are fulfilled:

1. The debt is a loan or finance lease granted before 10/6/2020.

2. The principal and/or interest are incurred during the period from 23/01/2020 to 31/12/2021.

3. The outstanding debt may be rescheduled in the following cases:

a) The outstanding debt is undue or up to 10 days overdue according to the loan/finance lease agreement, except in the cases specified in Point b and Point c of this Clause.

b) The outstanding debt is incurred before 23/01/2020 and becomes overdue during the period from 23/01/2020 to 29/03/2020.

c) The outstanding debt is incurred from 23/01/2020 and becomes overdue before 17/5/2021.

4. The credit institution or FBB determines that the borrower is unable to repay the principal and/or interest on schedule under the agreement due to decrease in revenue or income caused by Covid-19 pandemic.

5. The borrower applies for debt rescheduling and the credit institution or FBB has determines that the borrower is able to fully repay the principal and/or interest after the debt is rescheduled.

6. Debts that violate regulations of law shall not be rescheduled.

7. Rescheduling time (including repayment deadline extension) shall vary according to the impact of Covid-19 on the borrower and shall not exceed 12 months from the day on which the debt is rescheduled by the credit institution or FBB.

8. Debt rescheduling shall be carried out until 31/12/2021.”

3. Amendments to Article 5:

“Article 5. Reduction and exemption of interest and/or fees

1. Credit institutions and FBBs shall, according to their own rules and regulations, decide reduction and exemption of interest and/or fees on debts incurred before 10/6/2020 from credit extension (except purchases of corporate bonds) that are due during the period from 23/01/2020 to 31/12/2021 and the borrowers are not able to repay the principal and/or interest by the deadline specified in the original agreement due to decrease in revenue or income caused by Covid-19.

2. Reduction and exemption of interest and/or fees prescribed by this Circular shall be carried out until 31/12/2021.”

4. Amendments to Article 6:

“Article 6. Retention of debt category and debt classification

1. Credit institutions and FBBs may retain the debt categories that have been assigned in accordance with regulations of SBV on classification of debts by credit institutions and FBBs at the nearest time before 23/01/2020 for outstanding debt that occur before 23/01/2020 as follows:

a) The outstanding debts that are rescheduled as prescribed in Article 4 of this Circular;

b) The outstanding debts on which interest is exempted or reduced as prescribed in Article 5 of this Circular;

c) The outstanding debts mentioned in Point a and Point b of this Clause, including the debts that have been rescheduled, granted interest reduction or exemption, or re-categorized as prescribed by SBV during the period from 23/01/2020 to 29/3/2020.

2. Credit institutions and FBBs may retain the debt categories that have been assigned in accordance with regulations of SBV on classification of debts by credit institutions and FBBs for the debts that are incurred from 23/01/2020 to before 10/6/2020 if the outstanding debts have been rescheduled, granted interest reduction or exemption as prescribed in Article 4 and Article 5 of this Circular. To be specific:

a) Retain debt categories that are assigned at the nearest time before the date of first rescheduling of the outstanding debts specified in Point a Clause 3 Article 4 of this Circular;

b) Retain debt categories that are assigned at the nearest time before the date the outstanding debts specified in Point c Clause 3 Article 4 of this Circular are categorized as overdue debts;

c) Retain debt categories that are assigned at the nearest time before the date of first exemption or reduction of interest on the outstanding debts specified Article 5 of this Circular.

3. After debt rescheduling and retention of debt categories are carried out as prescribed in Clause 1 and Clause 2 of this Article within the time limit for rescheduling, credit institutions and FBBs are not required to put these debts into a higher-risk category according to regulations of SBV on debt classification by credit institutions and FBBs.

4. If the outstanding debts after rescheduling and retention of debt categories prescribed in Clause 1 and Clause 2 of this Article are not granted another debt rescheduling by the credit institution or FBB, the credit institution or FBB shall carry out debt classification in accordance with regulations of SBV on debt classification by credit institutions and FBBs.

5. From the rescheduling date, credit institutions and FBBs shall not record the interests on the outstanding debts that are rescheduled, debts on which interest is reduced or exempted, debts that remain current non-performing loans (Group 1) as prescribed in this Circular as revenue (estimated). Instead, they shall be monitored off-balance sheet and recorded as revenue when they are collected in accordance with regulations of law.

6. From 01/01/2024, pursuant to regulations of SBV on classification of debts by credit institutions and FBBs, credit institutions and FBBs shall classify all outstanding debts and OBS commitments of their customers, including the outstanding debts that are rescheduled, granted interest exemption, interest reduction or debt category retention prescribed by this Circular.”

5. Addition of Article 6a below after Article 6:

“Article 6a. Making or loan loss provision

Credit institutions and FBBs shall make loan loss provisions for borrowers whose debts are rescheduled or granted interest exemption or reduction as prescribed by this Circular as follows:

1. Pursuant to regulations of SBV on making of loan loss provision by credit institutions and FBBs, provision shall be made for all the outstanding debts of borrowers according to the results of debt classification prescribed in Article 6 of this Circular for debts eligible for debt category retention and outstanding debts of borrowers in accordance with regulations of SBV on debt classification by credit institutions and FBBs.

2. Credit institutions and FBBs shall determine the specific provision for all the outstanding debts of borrowers according to the results of debt classification in accordance with regulations of SBV on debt classification by credit institutions and FBBs (without debt category retention mentioned in Article 6 of this Circular).

3. Specific provision shall be determined as follows:

Additional provision = A - B

Where:

- A: Specific provision to be made according to Clause 2 of this Article.

- B. Specific provision made according to Clause 1 of this Article.

4. If the provision determined according to Clause 3 of this Article is a positive number, the credit institution or FBB shall make additional provision as follows:

a) By 31/12/2021: At least 30% of the additional provision;

b) By 31/12/2022: At least 60% of the additional provision;

c) By 31/12/2023: 100% of the additional provision.

5. From 01/01/2024, pursuant to regulations of SBV, credit institutions and FBBs shall make loan loss provision for all the outstanding debts and OBS commitments of their customers, including the outstanding debts that are rescheduled, granted interest exemption, interest reduction or debt category retention prescribed by this Circular.”

6. The Appendix enclosed with Circular No. 01/2020/TT-NHNN is replaced with the Appendix enclosed with this Circular.

Article 2. Transition clauses

Credit institutions and FBBs shall keep executing the contracts and agreements on debt rescheduling that are concluded before the effective date of this Circular in accordance with Circular No. 01/2020/TT-NHNN. Revisions to these contracts and agreements (if any) shall comply with regulations of law and relevant regulations of this Circular.

Article 3. Organization of implementation

Chief of Office, Chief Banking Inspector, heads of SBV units, Directors of SBV branches, credit institutions and FBBs are responsible for the implementation of this Circular.

Article 4. Implementation clause

This Circular comes into force from May 17, 2021./.

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