Conditions for a bad debt to be purchased by Vietnam Asset Management Company with special bonds

According to Clause 5 Article 1 of Circular No. 32/2019/TT-NHNN of the State Bank of Vietnam, a bad debt shall be purchased by VAMC with special bonds when it meets all of the following conditions:

- It is a bad debt as defined in Clause 7a Article 3 hereof;

- There is the collateral for the bad debt;

- The bad debt and its collateral must be lawful and supported by valid documents, and meet the following conditions:

+ The credit contract or loan agreement, the entrustment contract for credit extension, the debt purchase contract, corporate bond purchase contract or entrustment contract for purchasing corporate bonds or the guarantee contract must specify rights of the creditor that is the credit institution, and repayment responsibility and obligations of borrowers, guarantors and debt payers towards the credit institution;

+ The bad debt is not yet used for guaranteeing the fulfillment of obligations of the credit institution;  

+ The collateral for the bad debt is not in any dispute case which has been accepted but is not yet settled or is under the consideration by a competent court; is not subject to any interim injunctions applied by the Court; is not seized or subject to any security measures for judgment enforcement as prescribed by law at the time of purchasing or selling the debt. Pursuant to relevant laws, VAMC shall determine whether the bad debt and its collateral are lawful and supported by valid documents or not.

- The borrower still exists;

- The book value of outstanding principal of the bad debt or the bad debts of a borrower or a group of borrowers as prescribed in Clause 4 Article 8 of Circular No. 19/2013/TT-NHNN at the time of selling the debt is not lower than VND 3 billion, for a group of borrowers and borrowers that are organizations, or VND 1 billion, for borrowers that are individuals, or another amount decided by SBV's Governor.

View relevant provisions at Circular No. 32/2019/TT-NHNN of the State Bank of Vietnam effective from February 14, 2020 and Circular No. 19/2013/TT-NHNN.

Thu Ba

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