Thông tư 06/2021/TT-NHNN

CIRCULAR

AMENDMENTS TO CIRCULAR NO. 39/2013/TT-NHNN DATED DECEMBER 31, 2013 OF THE GOVERNOR OF THE STATE BANK OF VIETNAM ON DETERMINATION, CONTRIBUTION, MANAGEMENT AND USE OF LOAN LOSS PROVISION OF STATE BANK OF VIETNAM

Pursuant to the Law on State Bank of Vietnam dated June 16, 2010;

Pursuant to the Government’s Decree No. 16/2017/ND-CP dated February 17, 2017 on functions, tasks, powers and organizational structure of State Bank of Vietnam;

Pursuant to the Prime Minister’s Decision No. 07/2013/QD-TTg dated January 24, 2013 on financial regulation of State Bank of Vietnam;

At the request of the Director of the Finance – Accounting Department;

The Governor of the State bank of Vietnam promulgates a Circular on amendments to Circular No. 39/2013/TT-NHNN dated December 31, 2013 of the Governor of the State bank of Vietnam on determination, contribution, management and use of loan loss provision of State Bank of Vietnam (SBV).

Article 1. Amendments to Circular No. 39/2013/TT-NHNN dated December 31, 2013 of the Governor of the State bank of Vietnam on determination, contribution, management and use of loan loss provision of SBV (hereinafter referred to as Circular No. 39/2013/TT-NHNN)

1. Amendments to Article 6:

“Article 6. Classification of risk-weighted assets

1. Money, gold deposited in foreign banks, loans and amounts payable by foreign banks:

a) Group 1: Money, gold deposited in foreign banks, loans and amounts payable by partners that satisfy the standards for investment approved by the SBV’s Governor (except the case in Point c of this Clause);

b) Group 2: Money, gold deposited in foreign banks, loans and amounts payable by partners that do not satisfy the standards for investment approved by the SBV’s Governor (except the case in Point c of this Clause);

c) Group 3: Money, gold deposited in foreign banks, loans and amounts payable by partners in countries with ongoing wars, terrorism, bankruptcy, natural disasters and these partners have become insolvent.

2. Securities invested on international financial markets:

SBV shall not classify securities invested on international financial markets for making of loan loss provision. Provisions shall only be made for securities invested on international financial markets that decrease in value compared to their book values.

3. Loans shall be sorted by level of risk in ascending order as follows:

a) Group 1:

(i) Undue loans (including automatically renewed loans as prescribed by SBV);

(ii) Loans without due dates that have occurred for less than 06 months;

b) Group 2:

(i) Loans that have been overdue for less than 06 months;

(ii) Loans without due dates that have occurred for 06 months – less than 01 year;

(iii) Loans that have been deferred for the first time and still undue;

c) Group 3:

(i) Loans that have been overdue for less than 06 months;

(ii) Loans without due dates that have occurred for 01 year – less than 03 year;

(iii) Loans that have been deferred for the first time and overdue for less than 06 months;

(iv) Loans that are deferred for the second time and still undue;

d) Group 4:

(i) Loans that have been overdue for 01 year – less than 02 years;

(ii) Loans without due dates that have occurred for 03 year – less than 05 year;

(iii) Loans that have been deferred for the first time and overdue for 06 months – less than 01 year;

(iv) Loans that have been deferred for the second time and overdue for less than 06 months;

(v) Loans that are deferred for the third time and still undue;

dd) Group 5:

(i) Loans that have been overdue for at least 02 years;

(ii) Loans without due dates that have occurred for 05 years or more;

(iii) Loans that have been deferred for the first time and overdue for at least 01 years;

(iv) Loans that have been deferred for the second time and overdue for at least 06 months;

(v) Loans that have been deferred for the third time and overdue;

 (vi) Loans that have been deferred for the fourth time onward;

(vii) Charged-off debts.

4. Amounts payable by the State and state budget:

a) Group 1:

(i) Advances to state budget as prescribed by the Law on the State bank of Vietnam that are still undue;

(ii) Amount payable by the State that have specific due dates but are still undue;

(ii) Amounts payable by the State that do not have specific due dates, are unpaid and have occurred for less than 01 year;

b) Group 2:

(i) Advances to state budget as prescribed by the Law on the State bank of Vietnam that have been overdue for less than 05 years;

(ii) Amounts payable by the State that have specific due dates and have been overdue for less than 05 year;

(ii) Amounts payable by the State that do not have specific due dates and, are unpaid and have occurred for 01 year – less than 05 years;

c) Group 3:

(i) Advances to state budget as prescribed by the Law on the State bank of Vietnam that have been overdue for at least 05 years;

(ii) Amounts payable by the State that have specific due dates and have been overdue for at least 05 year;

(ii) Amounts payable by the State that do not have specific due dates, are unpaid and have occurred for less than 05 year;

5. Amounts receivable from organizations and individuals with original documents proving unpaid debts:

a) Original documents proving unpaid debts include:

- One of the following documents: business contracts, debt agreements, judgments, decisions of the court about liabilities of the organizations or individuals to SBV;

- The contract finalization record (if any);

- Debt comparison record or the written request for debt comparison or the debt notice sent by SBV (bearing the postal stamp or seal of the delivery unit);

- Debt statement;

- Documents relevant to occurrence of debts of organizations and individuals to SBV (if any).

b) Classification:

(i) Group 1: Amounts receivable from organizations and individuals that are still undue or have been overdue for less than 06 month;

(ii) Group 2:

- Amounts receivable from organizations and individuals that have been overdue for 06 months; - less than 01 year;

- Amounts receivable from organizations and individuals under effective judgments, decisions of the court the voluntary compliance periods of which are still unexpired;

(iii) Group 3:

- Amounts receivable from organizations and individuals that have been overdue for 01 years - less than 02 year;

- Amounts receivable from organizations and individuals under effective judgments, decisions of the court the voluntary compliance periods of which have been expired for less than 06 months;

(iv) Group 4:

- Amounts receivable from organizations and individuals that have been overdue for 02 years - less than 03 year;

- Amounts receivable from organizations and individuals under effective judgments, decisions of the court the voluntary compliance periods of which have been expired for less 06 months – less than 01 year;

(v) Group 5:

- Amounts receivable from organizations and individuals that have been overdue for at least 03 year;

- Amounts receivable from organizations and individuals under effective judgments, decisions of the court the voluntary compliance periods of which have been expired for at least 01 year;

- Amounts receivable from organizations that have been dissolved (for debts that occur before the effective date of the 1997’s the Law on the State Bank of Vietnam) or bankrupt as investigated by SBV; individuals who are dead; debts that cannot be collected because the debtors are missing or absent from their residences. Determination of individuals who are dead, missing, absent from residences shall be carried out in accordance with Articles 64, 68, 71 of the 2015’s Civil Code.

6. In case a loan is suitable for multiple groups in Clause 3 of this Article, it shall be put into the group with the highest level of risk.

7. In case an asset is monitored in two different accounts, it shall be removed from one of them according to instructions of SBV before classification prescribed in this Article.

8. The determination, conversion of time periods and starting points of time periods specified in Clauses 3, 4, 5 of this Article shall be carried out in accordance with Article 146, Article 147 and Article 148 of the 2015’s Civil Code.”

2. Amendments to Point dd Clause 2 of Article 7:

“dd) Amounts receivable from organizations and individuals with original documents proving unpaid debts:

- Subjects: Amounts receivable from organizations and individuals that have been overdue or are still undue but SBV have discovered that the debtors are organizations that have been dissolved (for debts that occur before the effective date of the 1997’s the Law on the State Bank of Vietnam) or bankrupt; individuals who are dead; debts that cannot be collected because the debtors are missing or absent from their residences. Determination of individuals who are dead, missing, absent from residences shall be carried out in accordance with Articles 64, 68, 71 of the 2015’s Civil Code.

- Provision calculation method:

Where:

+ The value of the amounts receivable shall be determined when calculating provision;

+ Provision rates:

• Group 1: 0%;

• Group 2: 30%;

• Group 3: 50%;

• Group 4: 70%;

• Group 5: 100%.”

3. Amendments to Article 9:

“Article 9. Losses that may be settled with loan loss provisions

After all measures have been taken but certain amounts cannot be collected, SBV may use the loan loss provisions to settle the losses that remain after compensation is paid by the organizations and individuals that cause the losses, insurers and collateral settlement. To be specific:

1. Money, gold deposited in foreign banks, loans and amounts payable by foreign banks

Losses of money, gold deposited in foreign banks, loans and amounts payable by foreign banks due to force majeure events such as the country in which SBV invest or deposits its assets has an ongoing war, terrorism, bankruptcy, natural disaster and the foreign bank has become insolvent.

2. Securities invested on international financial markets:

In case SBV is not able to fully recover the book value of securities invested on international financial markets due to force majeure events such as war, terrorism, natural disaster, SBV may use loan loss provisions to settle these losses.

3. Loaning

a) Debts (principal and interest) are cancelled under decision of the Prime Minister but the Government does not provide adequate compensation for SBV;

b) Loans, amounts paid on behalf of credit institutions where there is evidence that they are not recoverable when the credit institutions are dissolved (for debts that occur before the effective date of the 1997’s Law on the State Bank of Vietnam) or bankrupt as prescribed by law.

4. Amounts payable by the State and state budget

SBV shall take charge and cooperate with the Ministry of Finance in requesting the Prime Minister to consider permitting the use of loan loss provisions to settle the amounts payable by the State and state budget, including: amounts payable that have been overdue or do not have specific due dates and are not paid after at least 05 years.

5. Amounts payable by organizations and individuals with original documents proving unpaid debts:

The amounts receivable that can be lost or unrecoverable during operation of SBV where SBV determines that the debtors that are organizations have been dissolved (for debts that occur before the effective date of the 1997’s the Law on the State Bank of Vietnam) or bankrupt as investigated by SBV; individuals who are dead; debts that cannot be collected because the debtors are missing or absent from their residences. Determination of individuals who are dead, missing, absent from residences shall be carried out in accordance with Articles 64, 68, 71 of the 2015’s Civil Code.

6. Losses during payment, fundkeeping, management of foreign-exchange reserves and intervention in stabilization of the domestic gold market:

a) Losses during payment such as failures of payment network, technology, etc.

b) Losses of money, gold, valuable assets and valuable papers in fundkeeping such as:

- Losses that occur in transport due to force majeure events such as accidents, robbery, natural disaster, fire, terrorism;

- Losses of cash, valuable assets, valuable papers at transaction places and treasuries due to sabotage, robbery, fire, natural disaster, war, terrorism;

c) Losses that occur during state management of foreign-exchange reserves and intervention in stabilization of the domestic gold market such as losses in quality inspection of gold, reduction in gold price.”

4. Amendments to Article 10:

a) Amendments to Clause 2:

“2. Reports and proposals of units affiliated to SBV that are assigned to manage, monitor losses or where losses are incurred.”

b) Addition of Clause 6:

“6. Documents proving that SBV have implemented debt collection measures but still fails to collect the debts."

5. Amendments to Clause 4 of Article 11:

“4. On the basis of the relevant documents specified in Article 10 of this Circular, opinions of Finance – Accounting Department and comments of relevant units, the Loss Settlement Council shall carry out analysis and assessment, propose solutions to SBV’s Governor, who will discuss the matters with the Ministry of Finance. After reaching an agreement with the Ministry of Finance, SBV’s Governor shall consider using the loan loss provisions for settlement of each loss.

In case the Prime Minister has not issued a written approval for SBV to use loan loss provisions to settle the losses mentioned in Point a Clause 3 Article 9 and amounts payable by the State and state budget mentioned in Clause 4 Article 9 of this Circular, the Loss Settlement Council shall submit a report to SBV’s Governor, who will seek opinions from the Ministry of Finance and request the Prime Minister to consider approving before settlement. After an approval is granted by the Prime Minister, SBV’s Governor shall decide the use of loan loss provision to settle each loss.

6. Amendments to Clause 2 of Article 12:

“2. Members of the Council include: Chief Banking Inspector or Deputy Chief Banking Inspector, heads or deputies of the following units:

a) Finance – Accounting Department: Standing Deputy Chairperson;

b) Internal Audit Department;

c) Financial Policy Department;

d) Economic Sector Credit Department;

dd) Legal Department;

e) Organization and Personnel Department;

g) Issuance and Treasury Department;

h) Units that are relevant to the losses as requested by Finance – Accounting Department.”

7. Amendments to Clause 1 and Clause 2 of Article 14:

“1. The units that incur losses must not notify the debtors and shall keep monitoring and collecting the debts (if possible).

2. Documents about the losses that have been settled by loan loss provisions shall be retained as prescribed by law, including loss settlement documents and all documents proving that the debts cannot be collected even though the heads of the units have taken every measure possible to collect them.”

Article 2.

The phrase “refinancing” in Point a Clause 2 Article 1 and Point c Clause 2 Article 7 of Circular No. 39/2013/TT-NHNN is replaced with “loan”.

Article 3. Transition clauses

SBV shall keep managing the losses that have been settled by loan loss provisions before the effective date of this Circular in accordance with Circular No. 39/2013/TT-NHNN.

Article 4. Responsibility for implementation

Chief of Office, the head of Finance – Accounting Department and units of SBV are responsible for the implementation of this Circular.

Article 5. Implementation clauses

1. This Circular comes into force from August 16, 2021.

2. This Circular annuls Clause 3, Clause 5 and Clause 6 Article 1 of Circular No. 37/2018/TT-NHNN dated December 25, 2013 on amendments to Circular No. 39/2013/TT-NHNN./.