Công văn 676-NHNN-CSTT

With a view to implementing provisions in Article 17 of the Regulation on factoring activity of credit institutions issued in conjunction with the Decision No. 1096/2004/QD-NHNN dated 6 September 2004 of the Governor of the State Bank, the State Bank of Vietnam provides guidance to commercial banks, joint venture banks, foreign banks branches in Vietnam and finance companies (hereinafter referred to as credit institution) on the performance of the restructuring of the repayment period, overdue debts classification for factoring contracts as follows:

1. Credit institutions shall restructure their repayment period for factoring contracts under the two following modes:

- Adjustment of repayment period, which is the approval by credit institutions of changes of repayment periods within the payment term previously agreed in a factoring contract whereby the last repayment period is not changed.

- Debt rescheduling, which is the approval by credit institutions of the extension of the repayment period of factoring amount beyond the payment term previously agreed in the factoring contract.

2. Credit institutions shall perform the restructuring of the repayment period, overdue debts classification for factoring contracts under which credit institutions have made an advance to the selling party as follows:

a. Credit institutions shall, based on their financial capacity and their valuation of the repayment ability of borrowing customers, make decision by themselves on the restructuring of the repayment period for following cases:

- If a customer fails to duly repay the principals and/or interests within the payment period agreed in the factoring contract under which an advance has been made to the selling party and the customer is assessed by credit institutions to be able to repay in the following periods, credit institutions consider the adjustment of repayment period of principals and/or interests of the factoring amount.

- If a customer fails to repay in full the principals and/or interests on the due date agreed in the factoring contract under which an advance has been made to the selling party and it is assessed by the credit institutions to be able to repay in a certain period of time after the factoring term, credit institutions consider the rescheduling of the payment period for the principals and/or interests of the factoring amount.

b. Where a customer fails to repay on the due date agreed in the factoring contracts stated in point 2 of this official dispatch and is assessed by credit institutions not being able to repay in a certain period of time after the repayment term, and is not accepted for the restructuring of his repayment period, the outstanding principals of that factoring contract shall be classified as overdue debts; credit institutions must classify the entire outstanding principals of the factoring amount of the customer to appropriate debt groups, set up and use provisions for dealing with credit risks in accordance with applicable provisions of the State Bank of Vietnam.

3. In respect of export factoring under which credit institutions must, in lieu of exporter, make the payment of debts, credit institutions shall carry out the restructuring of the repayment period, overdue debts classification for the amount they have paid in accordance with applicable provisions of the State Bank of Vietnam on the bank guarantee.

4. Credit institutions must classify the entire outstanding principals of the factoring amount of customers whose debts are restructured to appropriate debt groups, set up and use provisions for dealing with credit risks in accordance with applicable provisions of the State Bank of Vietnam.

5. Credit institutions must issue a procedure on payment rescheduling in line with provisions of this official dispatch, of related laws on the factoring activity and submit to the State Banks Inspectorate right after its issuance.

6. For factoring contracts, which are rescheduled, credit institutions must report in accordance with applicable provisions of the State Bank on statistic reporting regime applicable to credit institutions