Vietnam: 04 cases of consideration for treatment of risks arising from direct lending operations of small and medium enterprise (SME) development fund

Duc Thao

14:05, 09/01/2021

This is a notable content of the Circular No. 14/2020/TT-BKHĐT providing guidance on treatment of risks arising from direct lending operations of small and medium enterprise (SME) development fund in Vietnam.

According to Article 5 of the Circular No. 14/2020/TT-BKHĐT of the Ministry of Planning and Investment of Vietnam, cases of consideration for treatment of risks arising from direct lending operations of small and medium enterprise (SME) development fund are as follows:

- SMEs suffer financial and/or property damage due to disasters, calamities, crop failure, epidemics, fire, war events or national state of emergency.

- SMEs incur risks due to objective factors which directly affect their business operations resulting in their inability or failure to repay debts (principal and/or interest) under signed contracts.

- SMEs have bad debts according to results of debt classification as prescribed in Clause 1 Article 37 of Decree No. 39/2019/ND-CP and fall into neither the above cases

- SMEs are declared bankrupt in accordance with current regulations of law.

Moreover, when an SME borrowing funds from the Fund incurs risk, the Fund shall play the leading role and cooperate with relevant parties, including the SME and competent authorities (if any), to examine and assess the risk and make a record of capital and asset damage incurred by that SME.

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

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