Which debts are allowed to be purchased and sold in Vietnam?

Which debts are allowed to be purchased and sold in Vietnam?

Pursuant to Article 4 of the Circular 09/2015/TT-NHNN stipulating conditions for debts to be purchased and sold in Vietnam as follows:

To be purchased and sold, a debt must meet the following conditions:

1. Dossier and related documents and records of the debt to be purchased and sold and security contract (if any) provided by the debt seller must fully and accurately show the state of the debt in accordance with law.

2. There is no written agreement on ban on debt purchase and sale.

3. The debt is not used to secure the fulfillment of a civil obligation at the time of debt purchase and sale, except the case where the secured party accepts in writing the debt sale.

Is it permissible to purchase and sale debts by foreign currencies in Vietnam?

Pursuant to Article 8 of the Circular 09/2015/TT-NHNN stipulating currency used in transactions in Vietnam as follows:

1. The currency used in debt purchase and sale is Vietnam dong. Foreign currencies may only be used in debt purchase and sale transactions when credit institutions and foreign bank branches sell debts in foreign currencies to debt purchasers being non-residents.

2. Currencies in debt recovery are currencies of the debts or other currencies agreed upon by debt purchasers and debtors in accordance with regulations on restriction on foreign exchange use in the Vietnamese territory.

What are principles for debts purchase and sale in Vietnam?

Pursuant to Article 5 of the Circular 09/2015/TT-NHNN stipulating principles for debts purchase and sale in Vietnam as follows:

1. Debt purchase and sale must not be contrary to the contents of credit extension contracts and guarantee contracts signed by debts sellers, clients and guarantors.

2. Debt purchase and sale shall be agreed by parties and comply with this Circular and relevant regulations.

3. A credit institution or foreign bank branch may only purchase debts when its debt purchase activity is approved by the State Bank of Vietnam (below referred to as the State Bank) in the establishment and operation license of the credit institution or the establishment license of the foreign bank branch (below referred to as license) and its non-performing loan ratio is below 3%, except cases of debt purchase under an approved restructuring plan. For debt sale, the permission of the State Bank is not required.

4. Credit institutions and foreign bank branches shall promulgate internal regulations on debt purchase and sale (clearly stating the decentralized competence based on the principle of division of responsibilities for appraisal of and decision on debt purchase and sale; debt purchase and sale modes; debt purchase and sale process; debt assessment process; debt auction process for debts auctioned by these institutions or branches themselves, and risk management of debt purchase and sale transactions) before conducting the purchase and sale of debts.

5. Credit institutions and foreign bank branches purchasing debts shall comply with regulations on assurance of safety for their operations.

6. Debt sellers may not redeem the debts they have sold.

7. A credit institution may not sell debts to its own subsidiary companies, except case of debts sold to its debt management and asset operation company under an approved restructuring plan.

8. A debt management and asset operation company being a subsidiary company of a credit institution may only purchase debts of other credit institutions or foreign bank branches when the parent credit institution have a non-performing loan ratio of below 3%, except cases of debt purchase under an approved restructuring plan.

9. In case of selling part of a debt or selling a debt to more than one purchaser, the debt seller and debt purchasers shall agree on proportion, modes, rights and obligations of each party, determination of the value of security assets (if any) for the part of purchased and sold debt and other specific contents of the debt purchase and sale contract in accordance with law.

10. Purchased and sold debts shall be monitored, accounted and statistically reported in accordance with law.

Best regards!