What are regulations on debt self-classification principles of credit institution in Vietnam?
Please provide me with the regulations on debt self-classification principles of credit institution in Vietnam? Looking forward to hearing from you soon.
Debt self-classification principles of credit institution in Vietnam is specified in Article 9 of Circular 11/2021/TT-NHNN, specifically as follows:
1. All outstanding loans and off-balance sheet commitments a borrower owes to a credit institution or foreign bank branch must be classified into the same debt group. For any borrower with two or more debts and/or off-balance-sheet commitments at a credit institution or foreign bank branch, if any debt or off-balance sheet commitment is classified into the group posing higher risk than other off-balance sheet debts or commitments, that credit institution or foreign bank branch must re-classify the borrower's remaining debts and/or off-balance sheet commitments into the group posing the highest level of risk.
2. As for syndicated loans, each credit institution or foreign bank branch involved in the grant of these syndicated loans shall be responsible for notifying the credit institution or foreign bank branch involved in granting these syndicated loans of debt self-classification results according to the provisions of Clause 1 of Article 8 herein.
3. With respect to an entrusted loan, if the trustee has not yet fully disbursed that loan agreed upon in the entrustment contract, the credit institution or foreign bank branch as the trustor must classify the undisbursed loan as a loan granted to the trustee. The period during which the loan is deemed past due starts from the time of the trustee’s failure to disburse the loan by the disbursement deadline specified in the entrustment contract.
4. If proceeds from selling a loan (except for loans from which provisions for risks are used) have not yet been collected in full, the credit institution or foreign bank branch that sells such loan shall classify that amount as an unsold loan.
5. With respect to a purchased loan, at the time of purchase, the credit institution or the foreign bank branch that purchases that loan shall classify that loan into a group of debts with a risk level not lower than the risk level of a group of debts into which it is classified at the latest time before purchase, and further classify it as the debt at the credit institution or foreign bank branch.
6. As for amounts used for purchasing, entrusted to other organizations (including credit institutions or foreign bank branches) to purchase unlisted corporate bonds, credit institutions or foreign bank branches shall classify them as unguaranteed loans taken out by bond issuers, except in case where corporate bonds are guaranteed by property.
7. As for discounts of negotiable instruments and other securities:
a) Existing in the form of buying forward: Credit institutions and foreign bank branches shall classify a discount in this form as a loan granted to a beneficiary;
b) Existing in the form of buying with reservation of the right of recourse: Credit institutions and foreign bank branches shall classify a discount in this form as a loan granted to an issuer (except security instruments such as Government bonds, Government-guaranteed bonds and municipal bonds). In case of exercising the right of recourse, credit institutions and foreign bank branches shall classify a discount offered in this case as a loan granted to the beneficiary.
8. As for loans involved in the violation referred to in c(iv), clause 1, Article 10 herein, at the time of discovery of this violation, credit institutions or foreign bank branches must make decisions on recovery of these loans in accordance with regulations of laws.
As for loans that need to be recovered according to inspection and examination conclusions, credit institutions or foreign bank branches must issue decisions on recovery under these conclusions.
As for loans involved in the violation referred to in c(iv), clause 1, Article 10 herein; loans that need to be recovered according to inspection and examination conclusions, credit institutions or foreign bank branches shall not be allowed to reschedule debt repayment and, pending the recovery of loans according to recovery decisions, shall classify and provide for any risks resulting in loss of loans in accordance with this Circular.
9. As for factoring loans, credit institutions and foreign bank branches shall classify them as loans granted to goods sellers within factoring terms. In case of exercising the right of recourse, credit institutions or foreign bank branches shall classify these loans as those granted to sellers.
10. As for loans and deposits that credit institutions credit institutions provide as support to those put under special control according to the provisions of Clause 9 Article 148d of the Law on Credit Institutions (amended and supplemented), the supporting credit institutions may classify them into the group of standard loans and shall not be required to regroup loans according to the list of customers provided by CIC as prescribed in Clause 3, Article 8 of this Circular (if any).
11. As for repurchased Government bonds, credit institutions or foreign bank branches shall classify the amounts paid for purchase of these bonds as loans granted to sellers in purchase transactions (1st transaction) in accordance with laws on registration, depository, listing, trading of and settlement of trades in government debt instruments, government-guaranteed bonds issued by policy banks, and municipal bonds.
12. As for amounts used for purchasing promissory notes, treasury bills or certificates of deposit issued by other credit institutions and foreign bank branches, credit institutions or foreign bank branches shall classify these amounts as loans granted to issuing credit institutions or foreign bank branches.
Best Regards!
