Directive No. 01/2008/CT-NHNN on Strengthening Guidance for the Liquidation of People's Credit Funds

DIRECTIVE

On strengthening the guidance for the liquidation of People's Credit Funds

                                                            ______________________________

In recent times, the work of liquidating People's Credit Funds that have been revoked their establishment and operation licenses during the implementation of consolidating, perfecting, and developing the system of People's Credit Funds according to the spirit of Directive No. 57-CT/TW dated October 10, 2000 of the Politburo on "Consolidating, Perfecting, and Developing the System of People's Credit Funds" and Decision No. 135/2000/QĐ-TTg dated November 28, 2000 of the Prime Minister on "Approving the Project on Consolidating, Perfecting, and Developing the System of People's Credit Funds" has achieved certain results, contributing to ensuring social order and safety as well as safety in the operations of the system of People's Credit Funds.

However, over more than seven years of implementing the liquidation of People's Credit Funds, despite the State Bank of Vietnam and local authorities where the People's Credit Funds are being liquidated having made efforts to concentrate guidance and urge progress, the effectiveness of the liquidation of People's Credit Funds remains low, as evidenced by specific issues such as slow debt recovery with signs of stagnation leading to prolonged liquidation periods, requiring the competent authority to extend the liquidation many times. The reasons are mainly due to the majority of loans to be recovered being difficult-to-collect debts that have been overdue for many years before the People's Credit Funds began liquidation, while most borrowers are extremely poor, suffering losses or facing difficulties, thus unable to repay the debts, and some individuals deliberately delay repayment.

To resolve difficulties and obstacles, accelerate the progress, and promptly conclude the liquidation of People's Credit Funds, the Governor of the State Bank of Vietnam requests the State Bank branches in provinces and centrally-administered cities where People's Credit Funds are currently undergoing liquidation to urgently implement the following tasks:

1. Enhance responsibility and strengthen the effectiveness of supervision activities in the liquidation of People's Credit Funds; regularly grasp the progress of debt recovery, payment, and issues arising during the liquidation process to timely provide guidance measures aimed at accelerating the liquidation progress of People's Credit Funds within the jurisdiction.

2. Strengthen and improve the operational machinery of the Liquidation Council of People's Credit Funds. Evaluate and draw lessons from the contents of work already implemented during the liquidation process but which were not effective or had low effectiveness and did not meet the planned targets; urge and guide to enhance the responsibilities of individual and collective members of the Liquidation Council during the liquidation process of People's Credit Funds, while proposing solutions to improve the effectiveness of the liquidation work of People's Credit Funds.

3. Continue to advise the Provincial Party Committee, Municipal Party Committee, and People's Committees of provinces and centrally-administered cities to strengthen guidance for all levels of Party committees, People's Committees, and local law enforcement agencies to actively support the Liquidation Council of People's Credit Funds in debt recovery work to pay off creditors, minimize financial losses of People's Credit Funds and the state during the liquidation process, and promptly conclude the liquidation work. For People's Credit Funds that have fully settled all debts to creditors as stipulated, it is necessary to urgently urge the completion of liquidation procedures in accordance with the provisions of the law.

4. Direct the Liquidation Council of People's Credit Funds to develop and implement a Plan for Waiving and Reducing Interest on Loans for Borrowers of People's Credit Funds currently undergoing liquidation based on the actual debt collection capacity of the People's Credit Funds to accelerate the liquidation process. The waiver and reduction of interest on loans for borrowers of People's Credit Funds currently undergoing liquidation shall be handled according to the following principles:

- Borrowers who have suffered asset losses related to borrowed funds leading to financial difficulties.

- The waiver and reduction of interest and the extent of such waiver and reduction shall be based on the borrower repaying the full principal amount to encourage repayment and maximize the collection of loan amounts.

The Plan for Waiving and Reducing Interest on Loans for Borrowers of People's Credit Funds currently undergoing liquidation developed by the Liquidation Council must be approved by the State Bank branch in the province or centrally-administered city and reported to the People's Committee of the province or centrally-administered city for consideration and approval to allow implementation. The Liquidation Council may only implement the waiver and reduction of interest on loans for borrowers after the Plan for Waiving and Reducing Interest on Loans for Borrowers has been approved by the People's Committee of the province or centrally-administered city; and must bear responsibility for the implementation of the waiver and reduction of interest on loans for borrowers in accordance with the regulations.

5. Heads of relevant Departments and Bureaus under the State Bank of Vietnam, Directors of State Bank branches in provinces and centrally-administered cities where People's Credit Funds are currently undergoing liquidation, and Chairmen of the Liquidation Councils of People's Credit Funds are responsible for enforcing this Directive.

This Directive shall take effect fifteen days after its publication in the Official Gazette.