Circular No. 01/2003/TT-NHNN on guiding the implementation of adjustments to repayment terms and the transfer of overdue debts for financial leasing activities

CIRCULAR

OF THE STATE BANK OF VIETNAM YEAR

Regarding the guidance on adjusting repayment terms, transferring overdue debts for leasing activities

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Pursuant to Article 42 of Decree No. 16/2001/NĐ-CP dated May 2, 2001 of the Government on the organization and operation of financial leasing companies, the characteristics of financial leasing activities are medium and long-term credit operations; the State Bank of Vietnam guides financial leasing companies to implement adjustments to repayment terms, extensions of repayment, and transfers of overdue debts for financial leasing activities as follows:

1. Financial leasing companies shall consider and decide on adjusting repayment terms, extending repayment, and transferring overdue rental payment debts for financial leasing contracts where the lessee agrees to repay both principal and interest within the same term (combined principal and interest) as follows:

a. If the lessee cannot repay the financial lease rental payments according to the agreed term in the financial leasing contract and submits a written request to adjust the repayment term, the financial leasing company shall consider and decide to adjust the repayment term for the financial lease rental payments. In cases where the lessee does not submit a written request to adjust the repayment term or such adjustment is not approved by the financial leasing company, the financial leasing company shall transfer the entire actual remaining balance of the financial lease rental payments under that contract to overdue debt.

b. If the lessee fails to fully repay the financial lease rental payments within the contract term and submits a written request for an extension of repayment, the financial leasing company shall consider and decide to extend the financial lease rental payment debt. The maximum extension period shall be half of the agreed lease term in the financial leasing contract. In cases where the lessee does not submit a written request for an extension of repayment or such extension is not approved by the financial leasing company, the financial leasing company shall transfer the entire actual remaining balance of the financial lease rental payments under that contract to overdue debt.

2. Financial leasing companies shall consider and decide on adjusting repayment terms, extending repayment, and transferring overdue rental payment debts for financial leasing contracts where the repayment of principal and interest is agreed upon with different repayment periods as follows:

a. If the lessee cannot repay the principal or interest according to the agreed term in the financial leasing contract and submits a written request to adjust the repayment term for the principal or interest, the financial leasing company shall consider and decide to adjust the repayment term for the principal or interest. In cases where the lessee does not submit a written request to adjust the repayment term for the principal or interest or such adjustment is not approved by the financial leasing company, the financial leasing company shall transfer the entire actual remaining balance of the principal under that contract to overdue debt.

b. If the lessee fails to fully repay the principal or interest within the contract term and submits a written request for an extension of the principal or interest, the financial leasing company shall consider and decide to extend the principal or interest. The extension period for the principal or interest shall be applied according to the extension repayment term for financial lease rental payments stipulated in point 1b of this Circular. In cases where the lessee does not submit a written request for an extension of the principal or interest or such extension is not approved by the financial leasing company, the financial leasing company shall transfer the entire actual remaining balance of the principal under that contract to overdue debt.

3. To facilitate the implementation of the provisions above, financial leasing companies and lessees may agree in the financial leasing contract that if the lessee fails to fully repay the financial lease rental payments within the maximum repayment term plus an additional 10 working days without submitting a written request to adjust the repayment term or extend the debt, the financial leasing company shall transfer the remaining balance of the financial lease rental payments under that contract to overdue debt.

4. Financial leasing companies shall implement classification and provision for risk reserves for the outstanding overdue balances arising from the provisions of the State Bank of Vietnam. Male.

- Directing the Department of Information and Communications to advise on management, plan formulation, and implementation after approval by the Provincial People's Committee;

a. This Circular takes effect from the date 15/3/2003.

b. For financial leasing contracts signed before the date this Circular takes effect, financial leasing companies shall negotiate with lessees to supplement provisions regarding the adjustment of repayment terms, extension of repayment, and transfer of overdue debts in accordance with the provisions of this Circular; in cases where agreement cannot be reached with the lessee, the financial leasing company may consider and decide to transfer overdue debts for financial leasing contracts that fail to repay on time for classification of debts and provision for risk handling, but without changing the contents previously agreed upon in the financial leasing contract.

c. Heads of units under the State Bank; Branch Governors of the State Bank in provinces and centrally-administered cities; Boards of Directors, General Managers (Directors) of financial leasing companies are responsible for implementing this Circular.