When will the Deposit Insurance of Vietnam grant special loans to credit institutions placed under special control?
When will the Deposit Insurance of Vietnam grant special loans to credit institutions placed under special control?
Pursuant to Clause 2, Article 4 of Circular 08/2021/TT-NHNN regulating special lending cases of Vietnam Deposit Insurance as follows:
Special lending cases
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2. Deposit Insurance of Vietnam shall consider granting special loans to credit institutions placed under special control in the following cases:
a) A special loan shall be granted for supporting the liquidity of a credit institution that is in danger of becoming insolvent or has become insolvent and such insolvency threatens the stability of the system while the credit institution is placed under special control, even if the credit institution is implementing an approved restructuring plan or transfer plan;
b) The loan loss provision shall be used for granting a special loan with a preferential interest rate as low as 0% according to the SBV's decision to support the liquidity of a finance company, people's credit fund or microfinance institution that is in danger of becoming insolvent or has become insolvent and such insolvency threatens the stability of the system before the restructuring plan is given approval;
c) The loan loss provision shall be used for granting a special loan with a preferential interest rate as low as 0% to support the recovery of a finance company, people's credit fund or microfinance institution under an approved recovery plan.
Accordingly, Deposit Insurance of Vietnam shall consider granting special loans to credit institutions placed under special control in the following cases:
For supporting the liquidity of a credit institution that is in danger of becoming insolvent or has become insolvent and such insolvency threatens the stability of the system;
While the credit institution is placed under special control, even if the credit institution is implementing an approved restructuring plan or transfer plan.
When will the Deposit Insurance of Vietnam grant special loans to credit institutions placed under special control?
What is the application for special loan granted by the Deposit Insurance of Vietnam?
According to the provisions of Article 20 of Circular 08/2021/TT-NHNN, when the credit institution placed under special control wishes to apply for special loan, it shall prepare and send 04 sets of application to Deposit Insurance of Vietnam or Cooperative Bank of Vietnam or the lending credit institution.
* An application for special loan includes:
- Documents specified in Deposit Insurance of Vietnam or Cooperative Bank of Vietnam or the lending credit institution;
- The special control board’s document requesting Deposit Insurance of Vietnam or Cooperative Bank of Vietnam or the lending credit institution to consider granting special loan to the credit institution placed under special control, which indicates the following contents:
+ The operating status or solvency of the credit institution;
+ Specific opinions about the fact the credit institution is in danger of becoming insolvent or has become insolvent and such insolvency threatens the stability of the system.
Within a maximum duration of 05 working days from the receipt of an adequate application, if the application is approved, Deposit Insurance of Vietnam, or Cooperative Bank of Vietnam or the lending credit institution shall send the special control board’s document to SBV’s provincial branch (if the credit institution is subject to the microprudential supervision of SBV’s provincial branch) and SBV Banking Supervision Agency for their opinions about the following contents:
- Whether or not the credit institution is in danger of becoming insolvent or has become insolvent and whether or not such insolvency threatens the stability of the system;
- Contents concerning the special loan granted by Deposit Insurance of Vietnam or Cooperative Bank of Vietnam or the lending credit institution specified in the approved restructuring plan (if any).
Where necessary, SBV Banking Supervision Agency may get opinions from SBV’s provincial branch before giving its opinions to Deposit Insurance of Vietnam or Cooperative Bank of Vietnam or the lending credit institution.
Deposit Insurance of Vietnam shall consider issuing a decision on grant of special loan to the credit institution placed under special control.
What are the responsibilities of Deposit Insurance of Vietnam when granting special loans?
Pursuant to Article 24 of Circular 08/2021/TT-NHNN (amended by Clause 3, Article 2 of Circular 02/2022/TT-NHNN) stipulates the responsibilities of Deposit Insurance of Vietnam as follows:
- Consider issuing decisions on grant of special loans or extension of special loan to credit institutions in accordance with Circular 08/2021/TT-NHNN; submit reports to SBV’s Governor (via SBV Banking Supervision Agency) on approval or refusal of applications for special loans or extension of special loan.
- Issue internal regulations on grant of special loans to credit institution placed under special control, which include contents about consideration and issuance of decisions on grant of special loan, extension of special loan, disbursement, debt collection, collateral and disposition of collateral.
- Supervise the use of special loan by borrowers; expedite and request borrowers to repay special loan debts in accordance with regulations of Circular 08/2021/TT-NHNN, the approved restructuring plans or transfer plans, and the signed special loan agreements.
- Receive and dispose of collateral in accordance with regulations of Circular 08/2021/TT-NHNN and regulations of law on secured transactions.
- Within the first 07 working days of the month following the month in which outstanding debts occur or changes in the special loan occur at Deposit Insurance of Vietnam, Cooperative Bank of Vietnam or the lending credit institution, prepare a report thereof according to Appendix VI enclosed with Circular 08/2021/TT-NHNN and send it to SBV.
- Comply with other regulations herein and relevant laws.
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