Guiding the procedures for outstanding principal write-off in lending operations of small and medium enterprise development fund in Vietnam

According to Article 13 of the Circular No. 14/2020/TT-BKHĐT of the Ministry of Planning and Investment of Vietnam, procedures for outstanding principal write-off in lending operations of small and medium enterprise (SME) development fund are as following:

(1) Eligible borrowers: SMEs facing risks due to bankruptcy in accordance with current regulations of law.

(2) An SME may be eligible for outstanding principal write-off when meeting all of the following requirements:

- It is subject to bankruptcy in accordance with regulations.

- It has used borrowed funds for the purposes specified in the Contract.

- It has submitted an adequate application in accordance with regulations.

- The risk treatment measure prescribed in Article 11 hereof has been adopted to collect the outstanding principal from the SME but there is still an amount of outstanding principal yet to be collected.

(3) Application for outstanding principal write-off

- The written proposal for risk treatment made by the Fund, indicating the followings: causes of the risk resulting in the SME’s failure to repay debt under the signed contract, the outstanding principal and interest payable. Any adopted risk treatment measures and proposed ones must be specified in the written proposal for risk treatment.

- The record of capital and asset damage incurred by the SME (the SME’s certification thereon is not required).

- The original of the decision to declare bankruptcy issued by the civil judgment enforcement agency.

(4) Dossier on outstanding principal write-off

- The dossier as mentioned above.

- The Fund's report on risk treatment:  In addition to the contents specified in Point c Clause 4 Article 7 of the Circular No. 14/2020/TT-BKHĐT, the report on risk treatment shall include the proposed amount of outstanding principal to be written off.

(5) Authority to decide the outstanding principal write-off

- In case of outstanding principal write-off which does not cause a decrease in the Fund’s charter capital: the Fund shall request the Minister of Planning and Investment of Vietnam to consider deciding the outstanding principal write-off as prescribed in Point b Clause 1 Article 41 of the Decree No. 39/2019/ND-CP.

- In case of outstanding principal write-off resulting in a decrease in the Fund’s charter capital: the Fund shall request the Ministry of Planning and Investment to play the leading role and cooperate with the Ministry of Finance in requesting the Prime Minister to consider deciding to write off the outstanding principal in accordance with Point a Clause 1 Article 41 of the Decree No. 39/2019/ND-CP.

(6) Rules for outstanding principal write-off

- The amount of outstanding principal to be written off shall be decided by the competent person prescribed in Clause 5 Article 13 of the Circular No. 14/2020/TT-BKHĐT.

- An amount of outstanding principal shall be written off once only.

(7) Writing off outstanding principal

The Fund shall carry out risk assessment and determination of capital and asset damage incurred by the SME, prepare and submit a report on risk treatment to competent authorities for decision; carry out the debt sale after obtaining a decision on debt sale issued by a competent authority.

More details at the Circular No. 14/2020/TT-BKHĐT of the Ministry of Planning and Investment of Vietnam, effective from February 25, 2021.

Ty Na

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