Conditions for debt rescheduling for borrowers in Vietnam according to Circular 02/2023/TT-NHNN

Conditions for debt rescheduling for borrowers in Vietnam according to Circular 02/2023/TT-NHNN (Internet image)

Conditions for debt rescheduling for borrowers in Vietnam according to Circular 02/2023/TT-NHNN

Conditions for debt rescheduling for borrowers according to Article 4 of Circular 02/2023/TT-NHNN are as follows:

A credit institution or FBB may consider rescheduling outstanding debt, including the principal and/or interest (including the debts regulated by Decree No. 55/2015/ND-CP (with amendments)) on the basis of borrowers’ requests, its financial capacity and compliance with the following regulations:

- The outstanding debt is principal of a loan granted before the effective date of Circular 02/2023/TT-NHNN, and from lending and finance lease.

- The principal and/or interest have to be paid within the period from the effective date of this Circular to June 30, 2024 inclusive.

- The outstanding debt to be rescheduled is undue or up to 10 (ten) days overdue according to the loan/finance lease agreement.

- The credit institution or FBB determines that the borrower is unable to repay the principal and/or interest on schedule under the signed agreement due to decrease in revenue or income compared to that specified in the principal and/or interest repayment plan under the signed agreement.

- The credit institution or FBB determines that the borrower is able to fully repay the principal and/or interest after the debt is rescheduled.

- Debts that violate regulations of law shall not be rescheduled.

- Rescheduling time (including repayment deadline extension) shall vary according to the degree of difficulty facing the borrower and shall not exceed 12 months from the due date of the outstanding debt to be rescheduled.

- Debt rescheduling under regulations of Circular 02/2023/TT-NHNN shall be carried out from April 24, 2023 to June 30, 2024 inclusive.

Regulations on retention of debt category and debt classification in Vietnam

Regulations on retention of debt category and debt classification with banks in Vietnam according to Article 5 of Circular 02/2023/TT-NHNN are as follows:

- Credit institutions and FBBs may retain the debt categories with respect to the debt whose principal and/or interest has been rescheduled (hereinafter referred to as “rescheduled debt”) under regulations of Circular 02/2023/TT-NHNN in the same manner as:

The debt categories that have been assigned in accordance with SBV Governor’s regulations on classification of assets, rates and methods of making loan loss provision and use of loan loss provision for handling of risks arising from operations of credit institutions and FBBs at the nearest time before prior to the debt rescheduling according to regulation of Circular 02/2023/TT-NHNN.

- After debt rescheduling and retention of debt categories are carried out as prescribed in clause 1 of Article 5 of Circular 02/2023/TT-NHNN within the time limit for rescheduling:

Credit institutions and FBBs are not required to put these debts into a higher-risk category according to SBV Governor’s regulations on classification of assets, rates and methods of making loan loss provision and use of loan loss provision for handling of risks arising from operations of credit institutions and FBBs.

- If the outstanding debts after rescheduling and retention of debt categories prescribed in clause 1 of Article 5 of Circular 02/2023/TT-NHNN are not granted another debt rescheduling by the credit institution or FBB according to regulations of Article 5 of Circular 02/2023/TT-NHNN:

The credit institution or FBB shall carry out debt classification in accordance with SBV Governor’s regulations on classification of assets, rates and methods of making loan loss provision and use of loan loss provision for handling of risks arising from operations of credit institutions and FBBs.

- From the rescheduling date, credit institutions and FBBs shall not record the interests on the outstanding debts that are rescheduled and debts that remain current non-performing loans (Category 1) as prescribed in Article 5 of Circular 02/2023/TT-NHNN as revenue (estimated).

Instead, they shall be monitored off-balance sheet and recorded as revenue when they are collected in accordance with regulations of law on financial regimes applicable to credit institutions and FBBs.

More details can be found in Circular 02/2023/TT-NHNN effective from 24/4/2023.

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