The State Bank of Vietnam has recently issued Circular 09/2017/TT-NHNN amending and supplementing Circular 19/2013/TT-NHNN on the regulation of the purchase, sale, and handling of non-performing loans by the Vietnam Asset Management Company (VAMC).
Amendments and supplements of certain contents as follows:
A more detailed definition of the concept: What is debt?
Debt is the principal debt, interest debt, and other financial obligations related to the debt that the customer has not paid according to the credit contract or agreement; entrusted credit granting; debt buying and selling; purchasing, entrusting the purchase of corporate bonds that are not listed on the stock market or not registered for trading on the trading market of unlisted public companies, being accounted for by credit institutions, and the Asset Management Company on and off the balance sheet.
Contrary to the current regulation in Circular 19/2013/TT-NHNN: Debt is the remaining balance of the credit granting contract or agreement, trustee contract, corporate bond purchase contract of the credit institution.
Specific conditions for bad debts purchased by VAMC at market value
Circular 09/2017/TT-NHNN adds regulations on determining bad debt. From there, determining the conditions for bad debts to be purchased by the Asset Management Company at market value. To be specific:
- Bad debts are determined according to the regulations of the State Bank on asset classification, provisioning levels, provisioning methods, and the use of provisions to handle risks in the operations of credit institutions and foreign bank branches, which are purchased by the Asset Management Company when they fully meet the following conditions:- The conditions stipulated in Clause 1 Article 16 of Circular 19/2013/TT-NHNN;- Assessed by the Asset Management Company to be capable of recovering the full amount of money used to purchase the debt;- The collateral for the bad debt is capable of being liquidated or the borrowing customer has the potential to recover the ability to repay the debt.- Bad debts are determined according to Article 4 of Resolution 42/2017/QH14, which are purchased by the Asset Management Company when they fully meet the following conditions:- The conditions stipulated in Points b, c, and d, Clause 1, Article 16 of Circular 19/2013/TT-NHNN;- Assessed by the Asset Management Company to be capable of recovering the full amount of money used to purchase the debt;- The collateral for the bad debt is capable of being liquidated or the borrowing customer has the potential to recover the ability to repay the debt;- In case of converting bad debt purchased by special bonds into bad debt purchased at market value, the special bonds corresponding to such bad debt must meet the condition of not yet being due for payment and not being blocked at the State Bank.
See more Circular 09/2017/TT-NHNN effective from August 15, 2017.