Time for risk assessment and management of the credit guarantee fund for small and medium enterprises in Vietnam

Time for risk assessment and management of the credit guarantee fund for small and medium enterprises in Vietnam​ (Image from the Internet)

1. Time for risk assessment and management of the credit guarantee fund for small and medium enterprises in Vietnam

The time for risk management consideration by the credit guarantee fund for small and medium enterprises in Vietnam according to Article 5 of Circular 57/2019/TT-BTC is as follows:

- Regarding the risk management consideration within the handling authority of the Credit Guarantee Fund: The time for risk management consideration is conducted after the Credit Guarantee Fund receives complete dossiers requesting risk management from the client or when risk situations occur requiring the Credit Guarantee Fund to process secured assets.

- Regarding the risk management consideration within the handling authority of the Chairman of the People's Committee of the province, city under central authority (hereinafter collectively referred to as the Chairman of the provincial People's Committee): The time for risk management consideration is conducted periodically, at least once every six (6) months based on the proposal of the Chairman of the Credit Guarantee Fund.

2. Cases eligible for risk management consideration by the credit guarantee fund for small and medium enterprises in Vietnam

The cases eligible for risk management consideration by the Credit Guarantee Fund for Small and Medium Enterprises in Vietnam according to Article 7 of Circular 57/2019/TT-BTC are as follows:

- The client suffers financial, asset losses due to natural disasters, poor harvests, epidemics, fires, political risks, wars affecting business production activities, leading to the client being unable to repay debts (principal, interest) on time according to the mandatory debt acknowledgement contract signed.

- The client is declared bankrupt according to the current laws.

- The state's change of policy affects the client's business production activities, leading to the client being unable to repay debts (principal, interest) on time according to the mandatory debt acknowledgement contract signed.

- The client encounters risks due to other objective causes directly affecting business production activities, leading to the client being unable to repay debts (principal, interest) on time according to the mandatory debt acknowledgement contract signed.

- The client has bad debts (from group 3 to group 5) according to the debt classification results as stipulated in Clause 1, Article 36 of Decree 34/2018/ND-CP of the Government of Vietnam.

3. Legal status, legal personality, and obligations to the state budget of the credit guarantee fund in the provinces, central-affiliated cities in Vietnam

The legal status, legal personality, and obligations to the state budget of the Credit Guarantee Fund in the provinces, central-affiliated cities in Vietnam according to Article 2 of Decree 34/2018/ND-CP are as follows:

- The Credit Guarantee Fund is a state financial fund outside the budget established by the provincial, city People's Committee under central authority (hereinafter abbreviated as Provincial People's Committee), operating not for profit, preserving and developing capital; performing the function of providing credit guarantees for small and medium enterprises according to the provisions of this Decree and related laws. The Credit Guarantee Fund operates under the model of a one-member limited liability company wholly owned by the State according to the provisions of Decree 34/2018/ND-CP and related laws when not stipulated in Decree 34/2018/ND-CP.

- The Credit Guarantee Fund has legal personality, has charter capital, has separate financial statements, a seal, and is allowed to open accounts at the State Treasury and legitimate commercial banks operating in Vietnam according to legal regulations.

- The Credit Guarantee Fund has income from activities of performing the task of credit guarantee as stipulated in Decree 34/2018/ND-CP and is exempt from paying corporate income tax. In cases where the Credit Guarantee Fund has income from activities other than credit guarantee operations, they must pay taxes according to the tax law provisions.

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