Thông tư 105/2007/TT-BTC

CIRCULAR

GUIDING ON HANDLING OF RISK FOR INVESTMENT CREDIT CAPITAL AND EXPORT CREDIT OF THE STATE

Implementation of the Decree No.151/2006/ND-CP dated December 20, 2006 of the Government on development investment credit and export credit of the State, the Ministry of Finance guides the handling of risk for investment credit capital and export credit of the State at the Vietnam Development Bank as follows:

I. GENERAL PROVISIONS

1. Scope of application

1.1. The Vietnam Development Bank;

1.2. The customers who are related to investment credit and export credit with the Development Bank of Vietnam, including:

a) Investors who have projects to loan investment credit capital of the State (including the projects which are guaranteed investment credit after receiving the required debt with the Vietnam Development Bank);

b) The exporters that have export contracts to loan export credit capital of the State (including contracts which are guaranteed export credit, bidding and performance of the contract after receiving the required debt with the Vietnam Development Bank);

Hereinafter, the projects to loan investment credit capital; export contract to loan export credit capital collectively referred to as the projects to loan investment and export credit capital of the State.

2. Scope of risk handling

Part or all of the debt (principal and interest) of the project to loan investment credit capital and export credit of the State.

3. Risk treatment measures

3.1. Debt rescheduling

Debt rescheduling is the extension for a period of repayment (principal and interest) exceeding the lending term which was previously agreed upon in the signed credit agreement.

3.2. Debt freezing

Debt freezing is the temporary measure of not yet collected the debt (principal and interest) within a certain time and not charging interest on the principal debt which is frozen within that time.

3.3. Debt clearing (principal and interest)

Debt clearing (principal and interest) is the measure of not collecting principal and interest debt toward the customers meeting risk of inability to pay debts after application of all measures to recover and handle debts as prescribed.

3.4. Debt sale

Debt sale is the transfer of debt, whereby, the debt seller (the Vietnam Development Bank) transfers of the right of creditor to the debt purchaser (debt purchase and sale company and outstanding assets of the enterprise) and receives payment from the debt purchaser.

4. Principles for handling of risks

4.1. Only consider and handle risks to consumers that have the projects to loan investment credit capital and export credit of the State meeting risks of force majeure and the financial difficulties of the state-owned enterprises which are necessary to be handled as the change of ownership, unable to pay in full the due debts to the Vietnam Development Bank under the credit agreement which was signed, are subject and scope as mentioned above.

4.2. The consideration and handling of risks is done for each particular case, based on the financial ability of the customer, the cause of risk.

4.3. A project can be applied simultaneously multiple measures of handling risk, based on the extent of damage and causes of risk as prescribed in this Circular to apply the measures of handling risk properly in accordance with provisions.

4.4. Only consider to apply the measures of debt clearing of investment credit capital and export credits of the State after the application of measures to recover the debt under the provisions, including the compensation of the insurers (for the properties formed from loan capital which is subject to mandatory insurance) but the customer has not got any more source to repay.

4.5. The debts which have been handled frozen by the decision of the competent State agencies, the time of debt freezing is not included in the loan term stated in the signed credit agreement.

4.6. The consideration for handling of risk in case the objective reasons of force majeure is done periodically in batches. For cases of transfer of ownership of State-owned enterprises, the consideration for handling of risk is done by actually incurred in accordance with the law regulations on change of ownership of State-owned enterprises.

5. The cases which are not subject to the adjustment

5.1. The ODA loan projects, the projects of working fund appraised and decided to loan by the Vietnam Development Bank.

5.2. The debts have been handled according to decisions of the competent State agencies (unless the customers are bankrupt, dissolved in accordance with the law regulations or the customer is the individual who is dead, missing after the disposal of assets).

II. SPECIFIC PROVISIONS

Item 1: CAUSES AND MEASURES TO HANDLE RISK

1. Cause of risk handled debts

1.1. Customers who have the projects to loan investment credit capital and export credit of the State, meeting financial difficulties and debt repayment by one of the causes of force majeure risk, namely:

a) Natural disasters, crop failures, epidemics, earthquakes, accidents, fires, wars, political risks, risks due to changes in State policy directly causing damage to property of the investors or exporters;

b) Having lost their civil act capacity; dead, missing, having no more assets to pay debts and having no heir or the heir cannot afford to repay debts for client as the substitute in case the customer is individual;

c) Dissolution or bankruptcy by the decision of the competent State agency;

1.2. Customer that is the State-owned enterprise made ​​the transfer of ownership (equalization, assignment, and sale) by decision of the competent State agency, meeting financial difficulties which are necessary to be handled.

2. Risk treatment measures

2.1. Debt rescheduling

Debt rescheduling is applied to the cases mentioned in section a, point 1.1, but the customers still have the ability to repay and the cases mentioned in point 1.2, clause 1, Item 1, Part II.

2.2. Debt freezing

Debt freezing is applied to the cases mentioned in section a, point 1.1, but the customers still have the ability to repay and the cases mentioned in point 1.2, clause 1, Item 1, Part II.

2.3. Dept clearing

a) Dept clearing (principal and interest) is applied to the cases mentioned in point 1.1, clause 1, Item 1, Part II, after application of all measures to recover and handle debts as prescribed.

b) In case the customer is the State-owned enterprise transferring ownership referred to in point 1.2, clause 1, Item 1, Part II shall be considered only for interest debt clearing. Total interest debt is cleared maximum by the remaining accumulated losses (after the handling in accordance with the law regulations on change of ownership of the state-owned enterprises) at the time of determining value of the enterprise.

2.4. Debt Sale

a) Debt sales for the debt purchase and sale company and outstanding assets of the enterprise is applied to the cases mentioned in clause 1, Item 1, Part II, after the application of measures to handle the debt: debt rescheduling and debt freezing.

b) Development Bank of Vietnam reports to the Ministry of Finance each specific case of debt sale for considering and solving upon competence.

Item 2: RECORDS OF RISK HANDLING

3. Records of risk handling

3.1. General records of risk handling include:

a) A written request to handle risk of client or customer’s representative as prescribed by law.

b) A written request to handle risk for customer of the high level State administration agency by management decentralization (for clients to be the State-owned Enterprise).

c) A financial statement of two (02) most recent years to the time of request for handling the customer's risk. A written certification of the commune, ward People’s Committee where the customer resides on the financial situation of the customer (in case the customer is the person).

If customers are subject to compulsory audit according to provisions of the State, they must submit an audit report of the last year to the time of requesting for handling risks.

d) The credit agreement and Annex of the credit agreement (if any).

đ) A loan contract, debt cross-check sheet to the time of requesting for handling risks.

e) If the customer’ property and goods are damaged due to objective reasons (natural disasters, crop failures, epidemics, earthquakes, accidents, fires,...): The Minutes to determine damages, specifically:

- The Minutes to determine damages which are made after the damages occurred;

- The Minutes to determine damages must be stated clearly the level (quantity) and losses of each type of property and goods;

- The participants in determining damages: customer; branch of the Vietnam Development Bank; The competent local authorities (such as ward-level People's Committees (Commune); the district-level financial agency; concerned function agencies (such as prevention of fire, prevention, and combat of flood, animal health ... as the case by case).

f) If the customer is the State-owned enterprise implementing ownership transfer:

- The Minutes to determine the value of enterprises together with the detailed list of actual payable debts at the time of determining value of the enterprise of the function agency;

- The Decision approving the value of enterprise of the competent State agencies.

g) If the customer is an individual who is lost his/her civil act capacity: a decision to declare the loss of civil act capacity of the court.

h) If the customer is an individual who is dead or is declared dead: one of the following documents:

- The Death certificate;

- The Decision to declare a person dead of the people's court;

- The Certification of the Public Security agency where the household is managed or of the local government where the person resides.

i) If the customer is an individual who is declared to be missing: The decision to declare a person to be missing of the people's court.

k) If the customer is dissolved:

- The decision on dissolution of the competent State agency.

- The Decision to approve the dissolution plan of the competent State agency.

- The financial statement on dissolution of the Company of the Council of dissolution.

l) If the customer is bankrupted:

- The Decision to suspend asset liquidation procedure of the court.

- The decision to declare the bankrupted customer of the court.

m) The other concerned documents and papers relating to records of debt loan of the State, financial situation of the enterprise and the non-repayment of customer as promised.

3.2. Additional dossiers of handling risks for each specific case

a) Dossiers prescribed in point 3.1, clause 3, Item 2, Part II above apply to all measures of handling investment credit risk and export credit of the State referred to in clause 2, Part II.

b) For each specific case, the dossier of handling risk is added as follows:

- Debt rescheduling: The feasible plan to reorganize production, business and the plan to repay loan of customer after the extension of debt with the approval of the branch of the Vietnam Development Bank.

- Debt freezing: The feasible plan to reorganize production, business and the plan to repay loan of customer after the freezing of debt with the approval of the branch of the Vietnam Development Bank.

- Debt sale: written request for debt sale of the Development Bank of Vietnam, in which stating clearly the reasons for and the effectiveness of the debt sale.

Item 3: ORDER AND PROCEDURES FOR HANDLING OF RISK

4. Customer who has loans requested for handling is responsible for making the records as prescribed and sending to the branch of Vietnam Development Bank where the transaction was made;

Customer bears full responsibility for the accuracy and validity of documents in the dossier requesting for handling risks.

5. Branches of the Vietnam Development Bank inspect and certify the accuracy and validity of dossiers requesting for handling risks sent to by customers; send comments in writing on the request for handling risk of customers to the Vietnam Development Bank (together with the dossier requesting for handling risks).

6. The Vietnam Development Bank is responsible for inspecting and synthesizing the customers' requests and the branches of the Vietnam Development Bank for consideration and handling according to competence or proposal of the measures of handling risk and reporting to the Ministry of Finance.

7. The Ministry of Finance handles under the competence or presides over coordinates with the Ministry of Planning and Investment, the State Bank of Vietnam to report to the Prime Minister for consideration and decision.

8. Based on the decisions to handle risks of the competent state agencies, the Development Bank of Vietnam guides the branches of Vietnam Development Bank to organize the implementation in accordance with regulations.

Item 4: COMPETENCE AND RESPONSIBILITIES FOR HANDLING OF RISKS

9. The Vietnam Development Bank

9.1. General Director of the Vietnam Development Bank considers to decide the debt rescheduling not exceeding 1/3 the lending term stated in the credit agreement signed at the first time and the total loan term after the debt rescheduling does not exceed the maximum loan term of each type of project according to regulations;

9.2. The Vietnam Development Bank reports to the Ministry of Finance for consideration and resolving under the competence for the debt rescheduling (for the projects with total debt rescheduling term more than 1/3 of the original loan term or the loan term after the debt rescheduling exceeding maximum loan term as prescribed); debt freezing, debt clearing and debt sale.

9.3. Guides customers to compile dossier handling risks as prescribed; inspects dossier of handling risks and synthesizes, recommends the measures of handling risks, reports to the Ministry of Finance; implements the decision to handle risk of the competent State management agencies.

10. Ministry of Finance

10.1. Inspects dossiers requesting for handling risks of the Vietnam Development Bank and the decides the debt rescheduling for the projects with total debt rescheduling term more than 1/3 of the original loan term or loans term after debt rescheduling exceeding the maximum loan term as prescribed; debt freezing and interest debt clearing to customers;

10.2. Presides over and coordinates with the Ministry of Planning and Investment, the State Bank of Vietnam to submit to the Prime Minister for consideration and decision of principal debt clearing for customers on the basis of proposals of the Development Bank of Vietnam;

10.3. Considers and decides in the case of debt sale prices higher than the value of the principal debt; presides over and coordinates with the Ministry of Planning and Investment, the State Bank of Vietnam to submit to the Prime Minister for consideration and decision in the case of debt sale prices lower than the value of the original debt.

10.4. Notifies the results and guides the Vietnam Development Bank to organize the implementation of handling risk as decided by the Prime Minister.

III. SETTING UP AND USE OF RISK-RELATED RESERVE FUND

1. The appropriation and use of risk-related reserve fund shall comply with the provisions of Article 40 of Decree 151/2006/ND-CP dated December 20, 2006 of the Government on investment credit and export credit of the State and Decision No.44/2007/QD-TTg dated March 30, 2007 on promulgating the Regulation of financial management for the Vietnam Development Bank.

2. The risk-related reserve fund is used only in the case of the original debt clearing (including the case of debt sale prices lower than the value of principal debt) as decided by the competent authorities.

IV. IMPLEMENTATION OGANIZATION

1. This Circular takes effect 15 days after its publication in the Official Gazette; and replaces the Circular No.89/2004/TT-BTC dated September 03, 2004 of the Ministry of Finance guiding the handling of risk of the development investment credit capital of the State and other provisions relating to the handling risk of investment credit capital and export credit of the State.

2. Chairman of the Management Board, General Director of the Development Bank of Vietnam, customers having the projects to loan investment credit capital and export credit of the State are responsible for the implementation of this Circular./.