Chỉ thị 06/CT-NHNN

DIRECTIVE

IMPLEMENTING RESOLUTION NO. 42/2017/QH14 ON PILOT SETTLEMENT OF BAD DEBTS OF CREDIT INSTITUTIONS AND DECISION NO. 1058/QD-TTG OF THE PRIME MINISTER ON APPROVING SCHEME FOR “RESTRUCTURING SYSTEM OF CREDIT INSTITUTIONS ASSOCIATED WITH SETTLEMENT OF BAD DEBTS IN THE PERIOD OF 2016-2020

On June 21, 2017, the 14^th National Assembly passed the Resolution No. 42/2017/QH14 on pilot settlement of bad debts of credit institutions (hereinafter referred to as Resolution No. 42/2017/QH14). Resolution No. 42/2017/QH14 deals with pilot policies for settlement of bad debts and treatment of assets tied to bad debts (hereinafter referred to as collateral) to eliminate difficulties and create legal basis for credit institutions and branches of foreign banks to completely settle bad debts and enable the system of credit institutions (hereinafter referred to as the system) to promote its role to provide capital for business.

On July 19, 2017, the Prime Minister promulgated Decision No. 1058/QD-TTg on approving the Scheme for restructuring system associated with settlement of bad debts in the period of 2016-2020 (hereinafter referred to as Scheme 1058). The continual restructuring of system associated with settlement of bad debts in the period of 2016-2020 is deemed necessary to remedy defects of the system of credit institutions in previous periods, and follow and inherit achievements obtained during the initiation of Decision No. 254/QD-TTg with a view to create the foundation for the safe and sustainable development of the system by 2020.

In order to effectively implement the said Resolution No. 42/2017/QH14 and Decision No. 1058/QD-TTg the Governor of the State bank of Vietnam requires affiliates of the State bank and credit institutions, branches of foreign banks (hereinafter referred to as credit institutions) to heighten their awareness and perform the following key tasks:

I. Objectives

Measures for restructuring of system associated with settlement of bad debts as mentioned in Scheme 1058 will be synchronously initiated, financial situation will be made healthier, administration capacity of credit institutions will be improved as per the law and in conformity with international practice; commercial banks, by 2020, are basically expected to have regulatory capital as required by Basel II; and at least 1 or 2 commercial banks is/are ranked in the Asia’s 100 largest banks.

Resolution No. 42/2017/QH14 will be implemented effectively to completely settle bad debts and collateral under scope of Resolution, measures for avoidance of incurring bad debts and improvement of credit quality will be initiated; the role of VAMC in settlement of bad debts will be enhanced. By 2020, bad debt ratio of the system, bad debt ratio to be sold to VAMC and bad debt ratio having undergone classification measures is expected to account for less than 3% (excluding financially weak commercial banks of which specific settlement plans have been approved by the government).

II. Specific tasks and measures

1. Affiliates of the State bank shall perform the following tasks:

a) Office of the State Bank

Take charge and cooperate with Bank Supervision and Inspection Agency, the Legal Department, and relevant units in holding a meeting of training of Resolution No. 42/2017/QH14 and Decision No. 1058/QD-TTg on approving the Scheme on restructuring of the system of credit institutions in association with the settlement of bad debts in the 2016-2020 period in banking sector as a whole no later than July 25, 2017.

b) Department of Communication

Take charge of communications in terms of implementation of Resolution No. 42/2017/QH14 and Scheme 1058.

c) Bank Supervision and Inspection Agency

- Formulate and request the Governor to promulgate a banking action plan for initiation of the Scheme on restructuring of the system of credit institutions in association with the settlement of bad debts in the 2016-2020 period.

- Direct each credit institution to make plan for restructuring associated with settlement of bad debts in the period of 2017-2020, and submit it to the State Bank for approval, containing annual plans for settlement of bad debts and supervise these plans.

- Take charge and cooperate with relevant units in requesting the Governor to amend the following legislative documents:

+ Circular on amendments to Circular No. 19/2013/TT-NHNN dated September 6, 2013 on trading and settlement of bad debts of Vietnamese credit institutions and guidelines for Article 6 of Resolution No. 42/2017/QH14. This Circular will be promulgated before August 15, 2017.

+ Circular replacing Circular No. 44/2011/TT-NHNN dated December 19, 2011 on internal control system, internal audit of credit institutions and Circular on procedures for banking supervision. These Circulars will be promulgated before August 31, 2017

- Formulate and request the Government to promulgate a Decree on amendments to the Government's Decree No. 26/2014/ND-CP dated April 7, 2014 on organization and operation of banking supervision and inspection and present the Prime Minister with decision draft replacing Decision No. 35/2014/QD-TTg of the Prime Minister dated June 12, 2014 on functions, tasks, powers and organizational structure of Bank Supervision and Inspection Agency affiliated to the State Bank in the third quarter of 2017.

- Regularly review and request the improvement of legal framework in terms of credit extension, administration of credit institutions, especially risk management to avoid incurring bad debts;

- Request the Governor to issue banking supervision handbooks before September 30, 2017.

- Inspect and supervise the implementation of Resolution No. 42/2017/QH14 by credit institutions, VAMC; propose measures for improvement the inspection and supervision of the system of Bank Supervision and Inspection Agency.

- Receive reports from relevant ministries and prepare a consolidated report on implementation of Resolution No. 42/2017/QH14.

- Receive reports, prepare and send an annual report on data of settlement of bad debts of credit institutions and VAMC to the Government (before September 15), to Standing Committee of the National Assembly, the National Assembly (before October 1) as required by Resolution No. 42/2017/QH14. Annual data of settlement of bad debts shall be determined from August 15 of the previous year to August 15 of reporting year; and instruct VAMC to prepare and send annual reports.

- Make a consolidated report on implementation of Resolution No. 42/2017/QH14 and send it to the Government (before November 30, 2021), to the Standing Committee of National Assembly, National Assembly (before December 31, 2021) as required by the Resolution and send a report on initiation of Scheme 1058 to Governor of the State Bank, which shall be subsequently sent to the Government.

- Cooperate with the Legal Department in reviewing and requesting improvement of legal framework in terms of restructuring of financially-weak credit institutions on the basis of consolidated report on implementation of the Scheme on restructuring of the system of credit institutions in association with the settlement of bad debts in the 2016-2020 period.

- Take charge and request competent authorities to handle difficulties arising during the implementation of Scheme 1058.

c) Legal Department

- Handle difficulties arising during the implementation of Resolution No. 42/2017/QH14 or requesting competent authorities to handle them.

- Propose improvement of legal system in terms of settlement of bad debts and collateral on the basis of application of regulations of Resolution No. 42/2017/QH14 and improvement of legal framework in terms of restructuring of financially-weak credit institutions after completion of the Scheme on restructuring of the system of credit institutions in association with the settlement of bad debts in the 2016-2020 period.

d) Other departments affiliated to the State Bank

Effectively perform or ensure schedule and quality of tasks as mentioned in the banking action plan in initiating the Scheme on restructuring of the system of credit institutions in association with the settlement of bad debts in the 2016-2020 period promulgated by Governor of the State Bank.

dd) Branches of the State Bank of provinces and central-affiliated cities (hereinafter referred to as provinces)

- Cooperate with local governments and competent regulatory agencies in provinces in implementing Resolution No. 42/2017/QH14 and structural plan associated with settlement of bad debts in the period of 2017-2020 of credit institutions in provinces.

- Inspect and supervise the implementation of Resolution No. 42/2017/QH14 in provinces.

- Promptly report on difficulties arising during the implementation of Resolution No. 42/2017/QH14 to the Legal Department affiliated to the State Bank and difficulties arising during the implementation of Scheme 1058 to Bank Supervision and Inspection Agency affiliated to the State Bank.

2. VAMC

- Heighten its awareness of Resolution No. 42/2017/QH14; make and initiate annual plan for settlement of bad debts and trading of bad debts according to market prices.

- Comprehensively adopt measures prescribed in Resolution No. 42/2017/QH14 to accelerate the settlement of bad debts and collateral purchased by VAMC.

- Send monthly reports on settlement of bad debts no later than 25^th of the month succeeding the reporting month, as guided by the State Bank, to Bank Supervision and Inspection Agency affiliated to the State Bank.

- Annually, evaluate the effectiveness and feasibility of pilot policies prescribed in Resolution No. 42/2017/QH14 on the basis of achievements of VAMC and propose amendments to regulations of law on settlement of bad debts and collateral and relevant law provisions to the Legal Department affiliated to the State Bank.

- Promptly report on difficulties arising during the trading and settlement of bad debts and collateral as prescribed in Resolution No. 42/2017/QH14 to the Legal Department affiliated to the State Bank.

3. Credit institutions

- Heighten individual credit institutions’ awareness of Resolution No. 42/2017/QH14 and Scheme 1058;

- Formulate a structural plan associated with settlement of bad debts in the period of 2017-2020, closely conforming to policies in Resolution No. 42/2017/QH14 and measures in Scheme 1058 and submit it to the State Bank for approval; initiate the plan which has been approved with comprehensive application of measures prescribed in Resolution No. 42/2017/QH14 to accelerate the settlement of bad debts and collateral to stick to the objectives stated in the plan approved by the State Bank.

- Send monthly reports on settlement of bad debts no later than 25th of the month succeeding the reporting month, using the form issued herewith, to Bank Supervision and Inspection Agency affiliated to the State Bank.

- Adopt measures for improving internal administration capacity, especially risk management, improving credit appraisal quality, improving qualifications of personnel in charge of credit appraisal and debt settlement.

- Effectively adopt measures for avoiding incurring bad debts by violations of law at individual credit institutions.

- Regularly review and report on clients and estimated profits prescribed in Article 16 of Resolution No. 42/2017/QH14 in accordance with guiding documents of Bank Supervision and Inspection Agency.

- Annually, evaluate the effectiveness and feasibility of pilot policies prescribed in Resolution No. 42/2017/QH14 on the basis of achievements of credit institutions and propose amendments to regulations of law on settlement of bad debts and collateral and relevant law provisions to the Legal Department affiliated to the State Bank.

- Promptly report on difficulties arising during the implementation of Resolution No. 42/2017/QH14 to the Legal Department affiliated to the State Bank and difficulties arising during the implementation of Scheme 1058 to Bank Supervision and Inspection Agency affiliated to the State Bank.

III. Implementation

1. This Directive comes into force from the day on which it is signed.

2. The Chief officers, the Chief Banking Inspector-Supervisor and heads of affiliates of the State bank, Directors of State Bank’s branches of provinces, Presidents of the Board of Directors, Presidents of the Member assembly and General Directors (Directors) of credit institutions, President of the Member assembly and General Director of VAMC shall implement this Directive./.