Monitoring of debts to which risks are treated by using provisions and charge-off of debts from off-balance sheet commitments of credit institutions in Vietnam
Please ask, what are regulations on monitoring of debts to which risks are treated by using provisions and charge-off of debts from off-balance sheet commitments of credit institutions in Vietnam? Please advice.
Monitoring of debts to which risks are treated by using provisions and charge-off of debts from off-balance sheet commitments of credit institutions in Vietnam specified in Article 17 of Circular 11/2021/TT-NHNN, specifically as follows:
1. After a minimum period of 5 (five) years, from the date of use of risk provisions, and after taking all possible measures to recover debts, in case of failure to recover these debts, credit institutions and foreign bank branches may decide to remove debts already subject to risk controls from the group of off-balance sheet commitments.
Debts that are charged off from the group of off-balance sheet commitments must be monitored in the management systems of credit institutions and foreign bank branches in accordance with regulations on setting up and disposal of provisions for devaluation of inventories and losses of investments, bad debts and warranties for products, goods and construction services at enterprises for a minimum period of 10 (ten) years from the date of decision on charge-off of debts already subject risk controls from the group of off-balance sheet commitments, except for those debts owed by borrowing entities that are bankrupt or dissolved in accordance with law; those debts still outstanding after liquidation or disposal of all assets; or those debts owed by borrowing individuals that have died, declared missing according to the court's decision, and after their estates and obligations have completely disposed of in accordance with law.
2. For state-owned commercial banks and joint-stock commercial banks of which more than 50% of charter capital is owned by the State, the charge-off of debts from the group of off-balance sheet commitments as specified in Clause 1 of this Article can be carried out only when the conditions mentioned hereunder are satisfied:
a) They have records and documents proving that all debt recovery measures have been taken but failed;
b) They must obtain SBV’s written approval of such charge-off after receipt of the Ministry of Finance’s opinions.
3. For credit institutions that are joint-stock companies, the charge-off of debts from the group of off-balance sheet commitments as specified in Clause 1 of this Article can be carried out only when the conditions mentioned hereunder are satisfied:
a) They have records and documents proving that all debt recovery measures have been taken but failed;
b) Such charge-off is ratified by the shareholders’ general meeting.
4. For credit institutions that are limited liability companies, the charge-off of debts from the group of off-balance sheet commitments as specified in Clause 1 of this Article can be carried out only when the conditions mentioned hereunder are satisfied:
a) They have records and documents proving that all debt recovery measures have been taken but failed;
b) Such charge-off is ratified by the Board of Directors.
5. For foreign bank branches, the charge-off of debts from the group of off-balance sheet commitments as specified in Clause 1 of this Article can be carried out only when the conditions mentioned hereunder are satisfied:
a) They have records and documents proving that all debt recovery measures have been taken but failed;
b) Such charge-off is approved by parent foreign banks.
6. Documentation requirements for the charge-off prescribed in clause 1 of this Article shall include:
a) Risk treatment or management file prescribed in clause 4 of Article 16 herein;
b) Decision or approval of the credit institution, foreign bank branch regarding the charge-off of debts to which risks are treated by using provisions from the group of off-balance sheet commitments;
c) Decision or approval of measures for recovery of debts to which risks are treated by using provisions;
d) Proof that all measures have been taken to recover debts, but failed, according to reality and relevant laws.
Documentation on charge-off of debts already subject to risk controls from the group of off-balance sheet commitments must be deposited by credit institutions and foreign bank branches in accordance with law.
Best Regards!
