Management of foreign currencies when purchasing and selling bad debts of Vietnam Asset Management Company

According to Circular No. 32/2019/TT-NHNN of the State Bank of Vietnam, VAMC, debt-selling credit institutions, purchasers of debts from VAMC, borrowers and other relevant parties have the responsibility to comply with law regulations on restricted use of foreign currencies within the territory of Vietnam when purchasing and selling bad debts, and collecting purchased debts.

Circular No. 32/2019/TT-NHNN stipulates that when purchasing, selling debts with VAMC:

- The debt purchaser shall use a checking account in VND opened at a commercial bank or foreign bank branch in Vietnam to pay VAMC for the purchased debts and relevant costs under the debt purchase contract if the currency used for purchasing debts is VND;

- The debt purchaser who is a non-resident shall use a checking account in a foreign currency opened at a commercial bank or foreign bank branch licensed to do foreign exchange activities in Vietnam or a foreign currency account opened overseas to pay VAMC for the purchased debts and relevant costs under the debt purchase contract if the currency used for purchasing debts is a foreign currency.

When collecting debts purchased from VAMC, the collected debts must be transferred to 01 (one) checking account in VND or 01 (one) checking account in a foreign currency (for the debts collected in foreign currency) opened by the debt purchaser at a commercial bank or foreign bank branch licensed to do foreign exchange activities within the territory of Vietnam.

When purchasing or selling a debt derived from overseas lending or repayment for a non-resident principal debtor:

- The debt seller (VAMC or the credit institution that sells the debt to VAMC) shall register a change to the overseas loan and collection of guaranteed debts according to applicable regulations on foreign currency management applied to overseas lending and collection of guaranteed debts for non-resident principal debtors;

- The debt purchaser (VAMC or the non-resident that purchases the debt from VAMC) shall register a plan for debt collection according to applicable regulations on foreign currency management applied to collection of foreign debts derived from purchase or sale of debts.

View amendments at Circular No. 32/2019/TT-NHNN of the State Bank of Vietnam effective from February 14, 2020.

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