Management of debts, off-balance sheet commitments, setting up and use of risk provisions of credit institutions in Vietnam

Management of debts, off-balance sheet commitments, setting up and use of risk provisions of credit institutions in Vietnam specified in Article 20 of Circular 11/2021/TT-NHNN, specifically as follows:

1. Credit institutions, foreign bank branches must set up departments (others having similar functions) for management of debts and off-balance sheet commitments  at the head offices of credit institutions, the offices of the foreign bank branches to supervise the classification of debts, off-balance sheet commitments, setting up and use of risk provisions throughout their entire systems.

2. Responsibilities of departments for management of debts and off-balance sheet commitments:

a) Formulate and advise the General Director (Director) to make representation to the Governing Board, the Board of Directors (for credit institutions) or to the General Director (Director) (for foreign bank branches) to adopt:(i) Internal credit rating systems, supplements or amendments to internal credit rating systems; rules and regulations on management and operation of internal credit rating systems, collection and update of borrowers’ data and information;

(ii) Risk provisioning policies, amendments or supplements thereto.

b) Manage and operate intracorporate credit rating systems;

c) Send comprehensive reports to the Risk Management Committees on the results of classification of debts and off-balance sheet commitments, setting up and use of risk provisions and recovery of debts after using provisions to control risks in the previous month in the entire system; give the Risk Management Committees recommendations about classification of debts and off-balance sheet commitments, setting up and use of risk provisions, measures for management of nonperforming loans, and thorough collection of debts;

d) Manage and supervise conformance of entities and individuals to regulations laid down in point dd of clause 3 of Article 6 herein;

dd) Provide information and cooperate with functional units in head offices in formulating and advising the General Director (Director) to make representation to the Governing Board, the Board of Directors (for credit institutions) or to the General Director (Director) (for foreign bank branches) to adopt, amend or supplement internal rules and regulations on credit extension and debt management of credit institutions and foreign bank branches;

e) Perform other duties regulated by credit institutions and foreign bank branches.

Best Regards!