CIRCULAR

PRESCRIBING REFINANCING OF LOANS BASED ON SPECIAL BONDS OF 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 and the Law dated November 20, 2017 on amendments to the Law on Credit Institutions;

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

Pursuant to the Government’s Decree No. 53/2013/ND-CP dated May 18, 2013 on establishment, organization and operation of Vietnam Asset Management Company; the Government’s Decree No. 34/2015/ND-CP dated March 31, 2015 and the Government's Decree No. 18/2016/ND-CP dated March 18, 2016 providing amendments to the Government’s Decree No. 53/2013/ND-CP dated May 18, 2013 on establishment, organization and operation of Vietnam Asset Management Company (hereinafter referred to as “Decree No. 53/2013/ND-CP”);

At the request of the Director of the Monetary Policy Department;

The Governor of the State Bank of Vietnam promulgates a Circular prescribing the refinancing of loans based on special bonds of Vietnam Asset Management Company.

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GENERAL PROVISIONS

Article 1. Scope

This Circular provides for the refinancing of loans in VND granted by the State Bank of Vietnam (hereinafter referred to as “SBV”) to credit institutions based on special loans of Vietnam Asset Management Company (hereinafter referred to as “special bonds”) under the Decree No. 53/2013/ND-CP.

Article 2. Regulated entities

1. Vietnamese credit institutions that are defined in Clause 1 Article 4 of the Decree No. 53/2013/ND-CP and are the holders of special bonds (hereinafter referred to as “credit institutions”).

2. Other organizations involved in the refinancing of loans based on special bonds.

Article 3. Refinancing purposes

The SBV allows the refinancing of loans based on special bonds to support working capital of credit institutions during the settlement of bad debts under the Decree No. 53/2013/ND-CP.

Chapter II

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Article 4. Conditions of special bonds used as basis for refinancing and refinancing extension

Special bonds used as the basis for refinancing or refinancing extension must meet the following conditions:

1. Special bonds are under the legal ownership of a credit institution and deposited at the SBV’s Operations Center.

2. They are not special bonds of which the settlement is in progress.

3. They are not included in the list of special bonds whose term is to be extended by the SBV at the request of the credit institution in accordance with SBV’s regulations on purchase, sale and settlement of bad debts of Vietnam Asset Management Company (hereinafter referred to as “VAMC”).

4. On the date of compilation of the list of special bonds used as the basis for refinancing or refinancing extension and on the date of provision of updated list of special bonds as prescribed in Clause 5 Article 10 of this Circular, the remaining term to maturity of these special bonds is at least 06 months greater than the requested term or extended duration of the refinanced loan.

Article 5. Conditions for refinancing

The SBV shall consider issuing its decision on refinancing to a credit institution that fully meets the following conditions:

1. It is not being placed under special control or incurring penalties for violations as prescribed in Article 15 of this Circular.

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3. It has strictly complied with the prudential ratio requirement set out in Clause 1 Article 130 of the Law on Credit Institutions (as amended) and other SBV’s regulations for a period of 12 consecutive months before the date of the application for refinancing.

4. Special bonds used as the basis for refinancing meet all of the conditions set out in Article 4 of this Circular.

Article 6. Refinanced loan amounts

1. Refinanced loan amounts shall be calculated adopting the formula in Clause 2 of this Article and shall not exceed the amounts specified in applications for refinancing of credit institutions.

2. Formula for calculating a refinanced loan amount:

ST = TL x (MG - DPRR - TN)

Where:

ST: refinanced loan amount.

TL: refinancing rate which is determined according to the provisions of Appendix No. 01 enclosed herewith.

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DPRR: total balance on the risk provision for special bonds included in the list of special bonds used as the basis for refinancing.

TN: total amount of debts collected as specified in the list of special bonds used as the basis for refinancing.

Article 7. Conditions for refinancing extension

The SBV shall consider issuing its decision on refinancing extension to a credit institution that fully meets the following conditions:

1. It is not being placed under special control or incurring penalties for violations as prescribed in Article 15 of this Circular.

2. It has set aside the risk provision for all special bonds under its ownership in accordance with regulations of law or written approval given by a competent authority within a period of 12 consecutive months before the date of the application for refinancing extension.

3. It is facing solvency problems.

4. Special bonds used as the basis for refinancing extension meet all of the conditions set out in Article 4 of this Circular.

5. Total face value of special bonds used as the basis for refinancing extension must meet the following requirement:

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Where:

MG: total face value of special bonds included in the list of special bonds used as the basis for refinancing extension.

ST: amount of refinanced loan to be extended at the request of the credit institution.

TL: refinancing extension rate which is determined according to the provisions of Appendix No. 01 enclosed herewith.

DPRR: total balance on the risk provision for special bonds included in the list of special bonds used as the basis for refinancing extension.

TN: total amount of debts collected as specified in the list of special bonds used as the basis for refinancing extension.

Article 8. Interest rate

1. Interest rate on special bonds-based refinancing or refinancing extension is the interest rate on the refinanced loan granted on the basis of special bonds which is decided by a competent authority according to Clause 4 Article 20 of the Decree No. 53/2013/ND-CP when the refinanced loan is disbursed or given extension.

2. The rate of interest on overdue principal of a refinanced loan is 150% of the interest rate on due payments of the refinanced loan that is determined when the refinanced loan becomes delinquent.

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Article 9. Duration of refinancing and refinancing extension

1. Duration of a refinanced loan granted on the basis of special bonds shall be subject to the SBV’s decision and shall exceed neither 12 months nor the shortest remaining term to maturity of the special bonds included in the list of special bonds used as the basis for refinancing.

2. The duration of each extension of a refinanced loan shall be subject to the SBV’s decision and shall exceed neither the duration of that refinanced loan nor the shortest remaining term to maturity of the special bonds included in the list of special bonds used as the basis for refinancing extension. Total duration of a refinanced loan plus its extensions shall not exceed 12 months.

Article 10. Application for refinancing and refinancing extension

1. An application for refinancing includes:

a) The application form made according to the provisions of Appendix No. 02 enclosed herewith;

b) The list of special bonds used as the basis for refinancing made according to Appendix No. 04 enclosed herewith (02 copies).

2. An application for refinancing extension includes:

a) The application form made according to the provisions of Appendix No. 03 enclosed herewith;

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c) The description of the request for refinancing extension, indicating the insolvency problems encountered by the credit institution, its satisfaction of the conditions set out in Article 7 of this Circular, and measures to be taken by the credit institution to overcome its insolvency problems and pay refinanced loan debts.

3. Every document included in the application must be prepared in Vietnamese and bear the signature of authorized representative of the credit institution. It may be the original or a copy from the master register or a certified true copy or a copy presented with its original for verification purpose.

4. The application which includes the required documents as prescribed in Clause 1 or 2 of this Article shall be sent to the SBV’s head office (via the application receipt and result return section) directly or by post. Upon receipt of an adequate application from the credit institution, the SBV shall follow procedures for receiving and handling administrative procedures in accordance with regulations on handling of administrative procedures of SBV.

5. If there are any changes in special bonds included in the submitted list of special bonds, the credit institution shall send the updated application to the SBV’s head office (via the application receipt and result return section) directly or by post. Upon receipt of the updated application, the SBV shall terminate the handling of current administrative procedures and follow procedures for handling new administrative procedures. The SBV may use any applications or updated applications previously submitted by the credit institution when handling new administrative procedures.

Article 11. Procedures for processing of applications for refinancing and refinancing extension

1. The credit institution that wishes to refinance a loan or extend a refinanced loan shall submit an application as prescribed in Article 10 of this Circular. In case of refinancing extension, the application must be submitted at least 45 business days before the payment due date. If the submitted application is inadequate, the SBV (the Financial Policy Department) shall, within 03 business days from the receipt of the application, request the credit institution in writing to complete its application.

2. Within 02 business days from the receipt of adequate application from the credit institution, the Financial Policy Department shall send request for opinions to the SBV Banking Supervision Agency, SBV’s Operations Center and VAMC.

3. Within 05 business days from the receipt of the request for opinions from the Financial Policy Department as prescribed in Clause 2 of this Article:

a) The SBV’s Operations Center shall assess whether or not the credit institution meets the conditions set out in Clause 4 Article 5 of this Circular (except the case of application for refinancing) or Clause 4 Article 7 of this Circular (except the case of application for refinancing extension); make certification on the statement of total balance on the credit institution’s special bonds deposited at the SBV's Operations Center and used as the basis for refinancing or refinancing extension according to Appendix 05 enclosed herewith, and send it to the Financial Policy Department and SBV Banking Supervision Agency;

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4. Within 07 business days from the receipt of adequate opinions from the SBV’s Operations Center and VAMC as prescribed in Clause 3 of this Article, the SBV Banking Supervision Agency shall give its opinions to the Financial Policy Department about the following issues:

a) Whether or not the credit institution meets the conditions set out in Clauses 1, 2, 3 Article 5 of this Circular (except the case of application for refinancing) or Clauses 1, 2, 3 Article 7 of this Circular (except the case of application for refinancing extension);

b) Specific opinions about the refinancing rate or the refinancing extension rate which is determined according to the provisions of Appendix No. 01 enclosed herewith.

5. Within a maximum duration of 07 business days from the receipt of adequate opinions from the agencies specified in Clauses 3, 4 of this Article, the Financial Policy Department shall consolidate received opinions and, based on objectives of monetary policies, propose the processing of the application for refinancing or refinancing extension as follows:

a) If an application is approved, the Financial Policy Department shall send written request for opinions, accompanied with the draft decision to refinance a loan or the draft decision to extend a refinanced loan, to the SBV Banking Supervision Agency, the SBV's Operations Center and VAMC.

b) If an application is refused, the Financial Policy Department shall comply with the provisions of Clause 8 of this Article.

6. Within 05 business days from the receipt of the request for opinions from the Financial Policy Department as prescribed in Point a Clause 5 of this Article, the SBV Banking Supervision Agency, the SBV's Operations Center and VAMC shall give their opinions to the Financial Policy Department as follows:

a) The SBV Banking Supervision Agency shall give its opinions about the processing result proposed by the Financial Policy Department and the draft decision to refinance a loan or the draft decision to extend a refinanced loan;

b) The SBV’s Operations Center shall provide the newest statement of total balance on the credit institution’s special bonds deposited at the SBV's Operations Center and used as the basis for refinancing or refinancing extension according to Appendix 05 enclosed herewith; give its opinions about the draft decision to refinance a loan or the draft decision to extend a refinanced loan;

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7. Within 03 business days from the receipt of the updated application as prescribed in Clause 5 Article 10 of this Circular, the Financial Policy Department shall send the updated application to the SBV Banking Supervision Agency, the SBV's Operations Center and VAMC for getting their opinions according to Clause 3, 4 or 6 of this Article.

8. Within 07 business days from the receipt of adequate opinions from the agencies mentioned in Clause 4 or Clause 6 of this Article, the Financial Policy Department shall propose and request the SBV’s Governor to consider issuing a decision to approve or refuse the application for refinancing or refinancing extension submitted by the credit institution.

9. Within 60 days from the receipt of adequate application or updated application from the credit institution as prescribed in Article 10 of this Circular, the SBV shall issue a decision to refinance a loan or a decision to extend a refinanced loan (accompanied with the list of special bonds used as the basis for refinancing or refinancing extension) to the credit institution if its application is approved, or give its written reasons for refusal to the credit institution, if its application is refused.

Article 12. Repayment of refinanced loan debts

1. Credit institutions shall pay outstanding principal and interests to the SBV when their refinanced loans become due. If the payment due date falls on a day off or public holiday, it will be extended to the next business day.

2. Credit institutions may repay partial or entire refinanced loan debts before the maturity date.

3. A credit institution is required to repay its refinanced loan debts before the maturity date in the following cases:

a) Within the first 05 business days of the next quarter, VAMC, pursuant to the debt repayment agreements between VAMC and the credit institution specified in the contract for purchase of debts with special bonds, uses the collected amounts to be enjoyed by the credit institution in the quarter from the bad debts purchased with special bonds which are used as the basis for refinancing or refinancing extension for repaying the outstanding principal of the credit institution’s refinanced loan to the SBV. In this case, VAMC shall give written notification indicating debt repayments sorted by special bonds to the SBV’s Operations Center and the credit institution;

b) Within 05 business days from the day on which special bonds which are used as the basis for refinancing or refinancing extension reach maturity according to SBV’s regulations on purchase, sale and settlement of bad debts of VAMC, the credit institution shall repay refinanced loan debts (both principal and interests) to the SBV before the maturity date. The principal amount payable on each special bond is calculated adopting the following formula:

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Where:

PT_i: principal amount of the refinanced loan payable on the special bond i;

MG_i: face value of the special bond that remains after deduction of contribution to the risk provision and debt amount collected (corresponding to the special bond i included in the list of special bonds enclosed with the decision to refinance a loan or the decision to extend a refinanced loan);

ĐT_i: principal amount of the refinanced loan repaid before maturity date as prescribed in Point a of this Clause in respect of the special bond i.

c) Within 07 business days from the day on which special bonds are found to no longer meet the conditions set out in Clause 3 Article 4 of this Circular, the credit institution shall repay refinanced loan debts (both principal and interests) to the SBV before the maturity date. The principal amount of the refinanced loan payable shall be calculated adopting the formula in Point b of this Clause;

d) In case a credit institution wishes to remove the blockade of special bonds used as the basis for refinancing or refinancing extension, it shall repay refinanced loan debts (both principal and interests) to the SBV before the maturity date. The principal amount of the refinanced loan payable shall be calculated adopting the formula in Point b of this Clause;

dd) Within 05 business days from the receipt of VAMC’s written notification of unilateral termination of the contract for purchase of debts with special bonds which are used as the basis for refinancing or refinancing extension according to SBV’s regulations on purchase, sale and settlement of bad debts of VAMC, the credit institution shall fully repay debts (both principal and interests) of the refinanced loan granted on the basis of special bonds which are subject to the unilaterally terminated contract;

e) If a credit institution is found to commit any violation as prescribed in Article 15 of this Circular, it shall fully repay debts (both principal and interests) of the refinanced loan involving that violation to the SBV within 10 business days from the receipt of the written notification of violation given according to Point c Clause 2 or Point a Clause 4 Article 18 of this Circular.

Article 13. Actions taken in case credit institutions fail to pay debts by due dates

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a) The SBV shall write the refinanced loan off as an overdue debt in accordance with the SBV’s regulations on methods of calculating and accounting for receivables and interest payments arising from deposit reception and lending transactions between the SBV and credit institutions; apply the overdue interest rate on the principal of the refinanced loan in accordance with Clause 2 Article 8 of this Circular;

b) The SBV shall take out money from the credit institution's account opened at the SBV from the working day following the day on which the credit institution's refinanced loan debt is recorded as an overdue debt until all debts (both principal and interests) are collected in full, and must give a written notification thereof to the defaulting credit institution;

c) VAMC shall use the collected amounts to be enjoyed by the credit institution from the bad debts purchased with special bonds for repaying the credit institution’s refinanced loan debt to the SBV;

d) The SBV shall request the defaulting credit institution to pay debts using its other funding sources (if any).

2. If a credit institution fails to make payments as prescribed in Points b, c Clause 3 Article 12 of this Circular, the SBV and VAMC shall take the following actions:

a) The SBV shall impose an interest rate which is 150% of that imposed on the refinanced loan on the principal amount which is not paid by the due date for a period commencing on the day following that due date until that outstanding principal amount is paid in full;

b) The SBV shall take out money from the credit institution's account opened at the SBV from the working day following the prescribed payment due dated until the payment is made in full, and must give a written notification thereof to the defaulting credit institution;

c) VAMC shall use the collected amounts to be enjoyed by the credit institution from the bad debts purchased with special bonds for repaying the credit institution’s refinanced loan debt to the SBV;

d) The SBV shall request the defaulting credit institution to pay debts using its other funding sources (if any).

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The conversion of refinanced loans granted on the basis of special bonds into special loans shall comply with SBV’s regulations on grant of special loans to place credit institutions placed under special control.

Article 15. Actions against violations

Upon receipt of the notification from a competent authority or during inspection, a credit institution is found to have provided inaccurate information and data in its application for refinancing or refinancing extension based on special bonds, the SBV shall have the right to refuse all applications for refinancing or refinancing extension based on special bonds submitted by that credit institution in the next 01 year after sending a written notification of violation as prescribed in Point c Clause 2, Point a Clause 4 Article 18 of this Circular, and suspend the disbursement according to all decisions to refinance loan based on special bonds issued to that credit institution (if any).

Chapter III

RESPONSIBILITIES OF CREDIT INSTITUTIONS AND RELEVANT ENTITIES

Article 16. Responsibilities of credit institutions

1. Provide the SBV, in an adequate, timely and accurate manner, with documents and materials about the refinancing or refinancing extension granted on the basis of special bonds. Assume legal responsibility for the accuracy and legitimacy of documents and materials provided.

2. During the processing of its application for refinancing or refinancing extension, if a credit institution no longer has demand for refinancing or refinancing extension, it shall send a timely report to the SBV (via the application receipt and result return section) for suspending the application processing.

3. Conclude refinancing contracts with the SBV’s Operations Center according to decisions to refinance loan based on special bonds issued by the SBV’s Governor.

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5. Within 03 working days from the day on which refinanced loan debts are repaid before maturity date as prescribed in Points b, c, d Clause 3 Article 12 of this Circular, submit reports which are made according to Appendix No. 07 enclosed herewith to the SBV.

6. Comply with the provisions of this Circular and relevant laws.

Article 17. Responsibilities of VAMC

1. Give opinions about refinancing and refinancing extension based on special bonds according to the provisions of this Circular.

2. Monitor special bonds used as the basis for refinancing or refinancing extension included in the list of special bonds provided by the SBV’s Operations Center as prescribed in Point dd Clause 3 Article 18 of this Circular; provide the SBV’s Operations Center with information necessary for monitoring cases in which refinanced loan debts must be repaid before maturity date as prescribed in Points b, c, d, dd Clause 3 Article 12 of this Circular.

3. Comply with the provisions of Point a Clause 3 Article 12 and Point c Clauses 1 and Point c Clause 2 Article 13 of this Circular.

4. Act as a contact point tasked with cooperating with credit institutions and relevant agencies in implementing measures for settling bad debts purchased with special bonds and their collateral for repaying refinanced loan debts owed by credit institutions to the SBV.

5. Give a written notification to the SBV’s Operations Center and SBV Banking Supervision Agency within 03 working days from the occurrence of one of the following events: VAMC unilaterally terminates the contract for purchase of debts with special bonds which are used as the basis for refinancing or refinancing extension; special bonds which are used as the basis for refinancing or refinancing extension reach maturity or no longer meet the conditions set out in Clause 3 Article 4 of this Circular.

Article 18. Responsibilities of SBV’s affiliated units

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a) Act as a contact point tasked with requesting the SBV's Governor to consider issuing decisions to refinance loan or decisions to extend refinanced loans based on special bonds in accordance with the provisions of this Circular;

b) Act as a contact point tasked with settling difficulties that may arise during the implementation of this Circular;

c) Cooperate with relevant units in providing advice for the SBV’s Governor about the interest rate on refinanced loan granted on the basis of special bonds which shall be reported to competent authorities for decision according to Clause 4 Article 20 of the Decree No. 53/2013/ND-CP.

2. SBV Banking Supervision Agency shall:

a) Give opinions about refinancing and refinancing extension based on special bonds according to the provisions of this Circular;

b) Act as a contact point tasked with cooperating with relevant units in requesting the SBV’s Governor in implementing the provisions of Point d Clause 1, Point d Clause 2 Article 13 of this Circular;

c) If a credit institution is subject to the microprudential supervision of the SBV Banking Supervision Agency as prescribed in Article 15 of this Circular as notified by a competent authority or detected through an inspection, the SBV Banking Supervision Agency shall give a written notification of violation to the credit institution, the Financial Policy Department, SBV’s Operations Center and VAMC. Such notification must provide required contents about the violation and measures to be taken by the SBV according to the provisions of this Circular;

d) Supervise, inspect and, within its competence, take actions against violations committed by credit institutions that are subject to the microprudential supervision of the SBV Banking Supervision Agency during the implementation of this Circular.

3. SBV’s Operations Center shall:

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b) Conclude refinancing contracts, and carry out blockade of special bonds which are used as the basis for refinancing or refinancing extension, disbursement, extension and collection of refinanced loan debts according to the provisions of this Circular, decisions issued by the SBV’s Governor to refinance loan or extend refinanced loans of credit institutions, and relevant law provisions;

c) Implement the provisions of Points a, b Clause 1 and Points a, b Clause 2 Article 13 of this Circular;

d) Remove the blockade of all special bonds included in the list of special bonds enclosed with the decision to refinance loan or decision to extend refinanced loan after the relevant credit institution has fully paid the refinanced loan debts (both principal and interest). Remove the blockade of corresponding special bonds after the relevant credit institution has fully paid the refinanced loan debts (both principal and interest) concerning the special bonds prescribed in Points b, c, d Clause 3 Article 12 of this Circular;

dd) Provide VAMC with the list of blockaded or released special bonds within 03 working days from the date of blockade or release of special bonds; give written notification to VAMC of a credit institution’s failure to repay refinanced loan debts according to Points b, c, dd, e Clause 3 Article 12 of this Circular for implementing the provisions of Point c Clause 1, Point c Clause 2 Article 13 of this Circular;

e) Within the first 07 working days of the month following the month in which outstanding debts arise or there are changes in the refinanced loan granted on the basis of special bonds, the SBV’s Operations Center shall submit report on that refinanced loan, which is made according to Appendix No. 08 enclosed herewith, to the SBV Banking Supervision Agency and the Financial Policy Department.

4. Each SBV’s provincial branch shall:

a) If a credit institution is subject to the microprudential supervision of the SBV’s provincial branch as prescribed in Article 15 of this Circular as notified by a competent authority or detected through an inspection, that SBV’s provincial branch shall give a written notification of violation to the credit institution, the Financial Policy Department, SBV’s Operations Center and VAMC. Such notification must provide required contents about the violation and measures to be taken by the SBV according to the provisions of this Circular;

b) Supervise, inspect and, within its competence, take actions against violations committed by credit institutions that are subject to the microprudential supervision of the SBV's provincial branch during the implementation of this Circular.

5. The Information Technology Department shall:

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b) Provide instructions for credit institutions to make internet connection to the SBV in order to performance special bonds-based refinancing transactions.

Chapter IV

IMPLEMENTATION

Article 19. Effect

1. This Circular comes into force from January 17, 2023.

2. The Circular No. 18/2015/TT-NHNN dated October 22, 2015 of the Governor of the State Bank of Vietnam prescribing refinancing loans based on special bonds of Vietnam Asset Management Company shall cease to have effect from the date of entry into force of this Circular.

Article 20. Implementation organization

The Chief of Office, the Director of the Financial Policy Department, heads of SBV’s affiliated units, VAMC, and credit institutions are responsible for the implementation of this Circular./.

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PP. GOVERNOR
DEPUTY GOVERNOR




Pham Thanh Ha