Circular 02/2023/TT-NHNN: Is it correct that credit institutions and foreign branch banks (FBBs) may consider rescheduling debt until 30/06/2024 in Vietnam?
From 24/04/2023: Is it correct that credit institutions and foreign branch banks (FBBs) may consider rescheduling debt until 30/06/2024 in Vietnam? - Question from Ms. Ly (HCMC).
What are requirements for credit institutions and FBBs to consider rescheduling debt in Vietnam?
On 23/4/2023, the Governor of the State Bank of Vietnam (SBV) hereby promulgates Circular 02/2023/TT-NHNN providing instructions for credit institutions and foreign branch banks on debt rescheduling and retention of debt category to assist borrowers in difficulties.
Pursuant to Article 4 of the Circular 02/2023/TT-NHNN stipulating debt rescheduling as follows:
Debt rescheduling
A credit institution or FBB may consider rescheduling outstanding debt, including the principal and/or interest (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 (with amendments)) on the basis of borrowers’ requests, its financial capacity and compliance with the following regulations:
1. The outstanding debt is principal of a loan granted before the effective date of this Circular, and from lending and finance lease.
2. The principal and/or interest have to be paid within the period from the effective date of this Circular to June 30, 2024 inclusive.
3. The outstanding debt to be rescheduled is undue or up to 10 (ten) days overdue according to the loan/finance lease agreement.
4. The credit institution or FBB determines that the borrower is unable to repay the principal and/or interest on schedule under the signed agreement due to decrease in revenue or income compared to that specified in the principal and/or interest repayment plan under the signed agreement.
5. The credit institution or FBB 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 degree of difficulty facing the borrower and shall not exceed 12 months from the due date of the outstanding debt to be rescheduled.
8. Debt rescheduling under regulations of this Circular shall be carried out from the effective date of this Circular to June 30, 2024 inclusive.
As regulations above, requirements for credit institutions and FBBs to consider rescheduling debt in Vietnam are:
- The outstanding debt is principal of a loan granted before the effective date of Circular 02/2023/TT-NHNN, and from lending and finance lease.
- The principal and/or interest have to be paid within the period from the effective date of Circular 02/2023/TT-NHNN to June 30, 2024 inclusive.
- The outstanding debt to be rescheduled is undue or up to 10 (ten) days overdue according to the loan/finance lease agreement.
- The credit institution or FBB determines that the borrower is unable to repay the principal and/or interest on schedule under the signed agreement due to decrease in revenue or income compared to that specified in the principal and/or interest repayment plan under the signed agreement.
- The credit institution or FBB determines that the borrower is able to fully repay the principal and/or interest after the debt is rescheduled.
- Debts that violate regulations of law shall not be rescheduled.
- Rescheduling time (including repayment deadline extension) shall vary according to the degree of difficulty facing the borrower and shall not exceed 12 months from the due date of the outstanding debt to be rescheduled.
- Debt rescheduling under regulations of this Circular shall be carried out from the effective date of Circular 02/2023/TT-NHNN to June 30, 2024 inclusive.
What are regulations on retention of debt category and debt classification of credit institutions and FBBs in Vietnam?
Pursuant to Article 5 of the Circular 02/2023/TT-NHNN stipulating retention of debt category and debt classification of credit institutions and FBBs in Vietnam as follows:
1. Credit institutions and FBBs may retain the debt categories with respect to the debt whose principal and/or interest has been rescheduled (hereinafter referred to as “rescheduled debt”) under regulations of Circular 02/2023/TT-NHNN in the same manner as the debt categories that have been assigned in accordance with SBV Governor’s regulations on:
+ Classification of assets
+ Rates and methods of making loan loss provision
+ Use of loan loss provision for handling of risks arising from operations of credit institutions and FBBs at the nearest time before prior to the debt rescheduling according to regulation of Circular 02/2023/TT-NHNN.
2. After debt rescheduling and retention of debt categories are carried out as prescribed in Clause 1 of Article 5 of the Circular 02/2023/TT-NHNN within the time limit for rescheduling, credit institutions and FBBs are not required to put these debts into a higher-risk category according to SBV Governor’s regulations on classification of assets, rates and methods of making loan loss provision and use of loan loss provision for handling of risks arising from operations of credit institutions and FBBs.
3. If the outstanding debts after rescheduling and retention of debt categories prescribed in Clause 1 of Article 5 of the Circular 02/2023/TT-NHNN are not granted another debt rescheduling by the credit institution or FBB according to regulations of this Circular, the credit institution or FBB shall carry out debt classification in accordance with SBV Governor’s regulations on
+ Classification of assets,
+ Rates and methods of making loan loss provision
+ Use of loan loss provision for handling of risks arising from operations of credit institutions and FBBs.
4. From the rescheduling date, credit institutions and FBBs shall not record the interests on the outstanding debts that are rescheduled and debts that remain current non-performing loans (Category 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 on financial regimes applicable to credit institutions and FBBs.
Which entities are eligible for debt rescheduling and retention of debt category in Vietnam?
Pursuant to Article 5 of the Circular 02/2023/TT-NHNN stipulating retention of debt category and debt classification of credit institutions and FBBs in Vietnam as follows:
Regulated entities
1. Credit institutions (except policy banks) and FBBs.
2. Clients of credit institutions and FBBs (except clients that are credit institutions and FBBs themselves).
3. Other organizations and individuals relevant to debt rescheduling and retention of debt category to assist borrowers in difficulties.
As regulations above, entities eligible for debt rescheduling and retention of debt category in Vietnam are:
- Credit institutions (except policy banks) and FBBs.
- Clients of credit institutions and FBBs (except clients that are credit institutions and FBBs themselves).
- Other organizations and individuals relevant to debt rescheduling and retention of debt category to assist borrowers in difficulties.
Note: Circular 02/2023/TT-BKHĐT is effective from 01/7/2023.
Best regards!
