What groups of credit institutions classify debts/loans and off-balance sheet commitments in Vietnam?
Concerning the regulations on debt classification. Please ask, what groups of credit institutions classify debts/loans and off-balance sheet commitments in Vietnam? Please advice.
credit institutions classify debts/loans and off-balance sheet commitments in Vietnam according to the groups specified in Clause 1, Article 11 of Circular 11/2021/TT-NHNN, specifically as follows:
1. Credit institutions and foreign bank branches shall classify debts/loans and off-balance sheet commitments into the following five groups:
a) Group 1 (Standard debts/loans) including:
Loans/debts rated by credit institutions and foreign bank branches to be recoverable in full in terms of the principal and interest by the maturity dates.
Off-balance sheet commitments with borrowers that are able to fulfill their agreed-upon obligations according to the assessment of credit institutions, foreign bank branches.
b) Group 2 (Debts/loans needing attention), including:
Loans/debts with the principal and interest that are likely to be recovered in full, but borrowers showing signs of reduction in ability to pay according to the assessment of credit institutions, foreign bank branches. .
Off-balance sheet commitments with borrowers that are able to fulfill their agreed obligations, but showing signs of decrease in ability to pay according to the assessment of credit institutions, foreign bank branches.
c) Group 3 (Sub-standard debts/loans), including:
Loans/debts with the principal and interest that are unlikely to be recovered by the maturity dates according to the assessment of credit institutions and foreign bank branches. These loans/debts are rated by credit institutions and foreign bank branches as those likely to cause loss.
Off-balance sheet commitments with borrowers that are unable to fulfill their agreed obligations according to the assessment of credit institutions, foreign bank branches.
Debts/loans that need to be classified into group 3 as provided in clause 4 of Article 8 herein.
d) Group 4 (Doubtful debts/loans), including:
Loans/debts that are rated by credit institutions and foreign bank branches as those posing high risk of causing loss.
Off-balance sheet commitments with high possibility that borrowers fail to fulfill their commitments.
Debts/loans that need to be classified into group 4 as provided in clause 4 of Article 8 herein.
dd) Group 5 (Debts/loans likely giving rise to loss), including:
Loans/debts rated by credit institutions, foreign bank branches as those unlikely to be recovered and posing risk of causing loss.
Off-balance sheet commitments with possibility that borrowers are unable to fulfill their agreed obligations.
Debts/loans that need to be classified into group 5 as provided in clause 4 of Article 8 herein.
Best Regards!
