Thông tư 03/2005/TT-NHNN

CIRCULAR

PROVIDING GUIDANCE TO FINANCE LEASING COMPANIES ON THE RESTRUCTURING OF REPAYMENT PERIOD, OVERDUE DEBTS CLASSIFICATION FOR FINANCE LEASING ACTIVITIES

With a view to implementing the provision in Article 42 of the Decree No. 16/2001/ND-CP dated 2 May 2001 of the Government on the organization and operation of finance leasing companies and in order to ensure the unity of legal provisions for other forms of credit extension, the State Bank of Vietnam provides guidance to the finance leasing companies on the implementation of the restructuring of the repayment period, the overdue debts classification in respect of the finance leasing activities as follows:

1. The finance leasing companies shall perform the restructuring of the repayment period for finance leasing contracts under two following modes:

a. Adjustment of the repayment period, which is an act where a finance leasing company accepts changes to repayment periods within the finance leasing term as previously agreed in the finance leasing contract and without any change to the last repayment period.

b. Debt rescheduling, which is an act where a finance leasing company accepts the extension of the repayment duration beyond the leasing term as previously agreed in the finance leasing contract.

2. The finance leasing companies shall perform the restructuring of the repayment period, overdue debts classification in respect of finance leasing contract as follows:

a. The finance leasing companies shall, based on their financial capacity and the revaluation of the repayment ability of the lessee, make decision by themselves on the restructuring of the repayment period for cases:

- Where a finance lessee fails to duly repay the principals and/or interests of the finance leased payments within the repayment term as agreed in the finance leasing contract and is assessed by the finance leasing company to be able to repay in the following periods, finance leasing companies shall consider the adjustment of repayment period of the principals and/or interests of the finance lease payments

- Where a finance lessee fails to repay in full the principals and/or interests of the finance lease payments on the due date as agreed in the finance leasing contract and is assessed by the finance leasing company to be able to repay in a certain period of time after the leasing term, the finance leasing company shall consider the extension of the repayment term for a certain period commensurate with repayment capability of the lessee.

The finance leasing companies shall classify the entire outstanding principals of the lessees with restructured repayment period to appropriate debt groups, make provisions and use it for settlement of credit risks in accordance with applicable provisions of the State Bank of Vietnam.

b. If a finance lessee fails to duly repay debt as agreed in the finance leasing contract and is assessed by the finance leasing company not to be able to repay in a certain period of time after the leasing term and not accepted by it for the restructuring of the repayment periods, the outstanding principals of that finance leasing contract shall be classified as overdue debt; the finance leasing companies shall classify the entire outstanding principals of the finance lease payment of the lessee to the appropriate debt groups, make provisions and use it for settlement of credit risks in accordance with applicable provisions of the State Bank of Vietnam.

3. The finance leasing companies must issue a procedure on the restructuring of the repayment period in line with provisions of this Circular, of relevant laws on finance leasing activities and submit to the State Bank Inspection right after its issuance.

4. Finance leasing companies must report of finance leasing contracts with restructured repayment period in accordance with provisions of the State Bank of Vietnam on the statistic reporting regime applicable to credit institutions.

5. Implementing organization

a. This Circular shall be effective after 15 days since its publication in the Official Gazette and replace the Circular No. 01/2003/TT-NHNN dated 28 January 2003 guiding the adjustment of debt repayment period, rescheduling of debt repayment, classification of overdue debts in respect of finance leasing activities

b. Finance leasing companies shall agree with finance lessees to supplement provisions on the restructuring of repayment period to finance leasing contracts entered into prior to the effective date of this Circular. In case where no agreement can be made with the lessee, finance leasing companies shall consider and decide on the overdue debt classification for the finance leasing contracts where repayments are not duly made in accordance with provisions in this Circular to perform the classification, provisioning and use of provisions against risks without making change to other agreements in the finance leasing contract previously agreed.

c. The Director of the Administrative Department, the Director of the Legal Department, the Director of the Monetary Policy Department and Heads of units of the State Bank, General Managers of the State Bank's branches in provinces, cities under the central Governments management, the Board of Directors and General Directors (Directors) of Finance Leasing Companies shall be responsible for the implementation of this Circular.