Circular No. 02/2023/TT-NHNN on restructuring repayment terms and maintaining the same loan classification for customers of credit institutions and foreign bank branches to support businesses and individuals facing difficulties.

CIRCULAR
Regarding the restructuring of debt repayment terms for credit institutions and foreign bank branches
outside the restructuring of debt repayment terms and maintaining the same loan classification group
to support customers facing difficulties

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

Pursuant to the Law on Credit Institutions dated June 16, 2010; the Law Amending and Supplementing Certain Articles of the Law on Credit Institutions dated November 20, 2017;

Pursuant to Decree No. 102/2022/NĐ-CP dated December 12, 2022 of the Government stipulating the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;

On the basis of Resolution No. 50/NQ-CP dated April 8, 2023 of the Government on the meeting between the Government and localities and the regular session of the Government in March 2023, and Resolution No. 59/NQ-CP dated April 23, 2023 of the Government on measures to support and resolve difficulties for borrowers serving living needs and consumption;

After reaching consensus with the Ministry of Finance;

At the proposal of the Director of the Department of Credit for Economic Sectors;

The Governor of the State Bank of Vietnam issues this Circular to regulate the organization of credit institutions and foreign bank branches in restructuring debt repayment terms and maintaining the same loan classification group to support customers facing difficulties.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular regulates the organization of credit institutions and foreign bank branches in restructuring debt repayment terms, maintaining the same loan classification group to support customers facing difficulties in business operations and customers facing difficulties in repaying loans serving living needs and consumption.

Article 2. Applicability

1. Credit institutions (excluding policy banks), foreign bank branches.

2. Customers of credit institutions and foreign bank branches (excluding customers who are credit institutions and foreign bank branches).

3. Other organizations and individuals related to the restructuring of debt repayment terms and maintaining the same loan classification group to support customers facing difficulties.

Article 3. Application of relevant legal regulations

The restructuring of debt repayment terms and maintaining the same loan classification group, provisioning for risk mitigation to support customers facing difficulties in business operations and customers facing difficulties in repaying loans serving living needs and consumption shall be carried out in accordance with the provisions of this Circular; matters related to the restructuring of debt repayment terms, classification of debts, provisioning and utilization of reserves not regulated in this Circular shall be implemented in accordance with other relevant legal regulations.

Chapter II

SPECIFIC PROVISIONS

Article 4. Restructuring of debt repayment terms

Credit institutions and foreign bank branches may consider and decide to restructure the debt repayment term for the principal and/or interest balance of a loan (including loans within the scope of adjustment under Decree No. 55/2015/NĐ-CP dated June 9, 2015 of the Government on credit policies to serve agricultural and rural development (as amended and supplemented)) based on the customer's request, the financial capacity of the credit institution or foreign bank branch, and compliance with the following requirements:

1. Principal debt arising before the date this Circular takes effect and from lending and leasing activities.

3. The outstanding balance of the loan subject to restructuring must still be within the due date or overdue by up to 10 (ten) days from the due date specified in the contract or agreement.

4. The credit institution or foreign bank branch assesses that the customer does not have the ability to repay the principal and/or interest on time according to the contract or agreement due to reduced revenue or income compared to the repayment plan in the contract or agreement.

5. The customer is assessed by the credit institution or foreign bank branch to have the ability to fully repay the principal and/or interest according to the restructured repayment schedule.

6. The credit institution or foreign bank branch will not restructure the debt repayment term for loans that violate legal provisions.

7. The duration of the debt repayment term restructuring (including extensions) shall be determined in accordance with the level of difficulty of the customer and shall not exceed 12 months from the due date of the outstanding balance subject to restructuring.

Article 5. Maintaining the loan classification group

1. Credit institutions and foreign bank branches may maintain the existing loan classification group for a debt with principal and/or interest balances that have been restructured according to this Circular (hereinafter referred to as the "restructured debt") as the loan classification group already classified according to the regulations of the Governor of the State Bank of Vietnam on asset classification, provisioning levels, risk provisioning methods, and the use of provisions to address risks in the operations of credit institutions and foreign bank branches at the time immediately before restructuring the repayment period under this Circular.

2. The debt after restructuring the repayment period and maintaining the existing loan classification group as provided for in Clause 1 of this Article remains within the restructured repayment period, credit institutions and foreign bank branches are not required to apply the principle of adjusting and reclassifying into a higher risk loan classification group according to the regulations of the Governor of the State Bank of Vietnam on asset classification, provisioning levels, risk provisioning methods, and the use of provisions to address risks in the operations of credit institutions and foreign bank branches.

3. In cases where the debt after restructuring the repayment period and maintaining the existing loan classification group as provided for in Clause 1 of this Article becomes overdue according to the restructured repayment period and is not further restructured by credit institutions and foreign bank branches according to this Circular, credit institutions and foreign bank branches must classify the debt according to the regulations of the Governor of the State Bank of Vietnam on asset classification, provisioning levels, risk provisioning methods, and the use of provisions to address risks in the operations of credit institutions and foreign bank branches.

4. For accrued interest receivable of debts that meet the criteria for maintaining the existing loan classification group (Group 1) after restructuring the repayment period as provided for in this Circular, from the date of restructuring, credit institutions and foreign bank branches are not required to recognize income (provisional income) but shall monitor collection through off-balance sheet tracking; recognize it as income when collected according to the legal regulations on financial regimes for credit institutions and foreign bank branches.

Article 6. Provisioning for Risk

1. Credit institutions and foreign bank branches shall establish specific provisions for customers with debt balances that have been restructured according to this Circular as follows:

a) Based on the regulations of the Governor of the State Bank of Vietnam on risk provisioning in the operations of credit institutions and foreign bank branches, credit institutions and foreign bank branches shall establish specific provision amounts for the entire debt balance of the customer according to the loan classification results stipulated in Article 5 of this Circular for debts maintained in the same loan classification group and the loan classification results for the remaining debt balance of the customer according to the regulations of the Governor of the State Bank of Vietnam on asset classification, provisioning levels, risk provisioning methods, and the use of provisions to address risks in the operations of credit institutions and foreign bank branches.

b) Credit institutions and foreign bank branches determine the specific provision amount to be established for the entire debt balance of the customer according to the loan classification results stipulated by the Governor of the State Bank of Vietnam on asset classification, provisioning levels, risk provisioning methods, and the use of provisions to address risks in the operations of credit institutions and foreign bank branches (without applying the regulation of maintaining the same loan classification group as stipulated in Article 5 of this Circular).

c) Credit institutions and foreign bank branches determine the additional specific provision amount to be established according to the following formula:

Additional specific provision amount to be established = A - B

Where:

- A: The specific provision amount to be established as stipulated in point b, Clause 1 of this Article.

- B: The specific provision amount already established as stipulated in point a, Clause 1 of this Article.

d) In cases where the additional specific provision amount to be established determined according to the provisions of point c, Clause 1 of this Article is positive, credit institutions and foreign bank branches shall establish additional specific provisions as follows:

(i) By December 31, 2023: At least 50% of the additional specific provision amount to be established;

(ii) By December 31, 2024: Establish the remainder to reach 100% of the additional specific provision amount to be established.

2. Credit institutions and foreign bank branches shall establish general provisions for the entire debt balance of the customer according to the loan classification results determined according to the provisions of point b, Clause 1 of this Article.

Article 7. Responsibilities of credit institutions and foreign bank branches

1. Credit institutions and foreign bank branches shall be responsible for decisions to restructure debt repayment terms and maintain the original loan classification group as prescribed in this Circular, and implement internal checks and controls to ensure strict supervision, safety, prevention, and blocking of any abuse of debt restructuring and maintenance of the original loan classification group for personal gain.

2. Issue internal regulations on debt restructuring and maintaining the original loan classification group as prescribed in this Circular to uniformly implement throughout the system, including specific provisions on the following contents:

a) Criteria for determining the outstanding balance of debts eligible for debt restructuring and maintaining the original loan classification group as prescribed in this Circular;

b) Procedures, formalities, division of responsibilities, tasks, and duties of each individual and department in implementing debt restructuring and maintaining the original loan classification group ensuring that the decision-makers for debt restructuring and maintaining the original loan classification group are not the same individuals or departments approving credit, except where credit approval is made by the Board of Directors, Board of Members, General Director/Director, or parent bank (for foreign bank branches). In cases where credit approval and debt restructuring approval are conducted through a committee mechanism, the Chairman of the Debt Restructuring Approval Committee must not be the Chairman of the Credit Approval Committee, and at least two-thirds (2/3) of the members of the Debt Restructuring Approval Committee must not be members of the Credit Approval Committee;

c) Frequency of reviewing and assessing the debtor's ability to repay after debt restructuring and maintaining the original loan classification group according to the law; monitoring, checking, controlling, and supervising debt restructuring and maintaining the original loan classification group.

3. Credit institutions and foreign bank branches shall submit one copy of the internal regulations prescribed in Clause 2 of this Article to the State Bank of Vietnam (the Inspection and Supervision Agency, the State Bank of Vietnam branch in the province or centrally-administered city where the main office is located) in accordance with the law.

4. Within ten (10) days of the first day of each month, credit institutions (excluding people's credit funds) and foreign bank branches must submit reports to the State Bank of Vietnam (Credit Policy Department, the Inspection and Supervision Agency) on the implementation of debt restructuring and maintaining the original loan classification group up to the end of the previous month in accordance with Appendix 01 and Appendix 02 attached to this Circular.

5. Within ten (10) days of the first day of each month, credit institutions that are people's credit funds must submit reports to the State Bank of Vietnam branch in the province or centrally-administered city where the main office is located (hereinafter referred to as the State Bank of Vietnam branch) on the implementation of debt restructuring and maintaining the original loan classification group up to the end of the previous month in accordance with Appendix 01 and Appendix 02 attached to this Circular.

Article 8. Responsibilities of Units under the State Bank of Vietnam

1. Responsibilities of the Credit Department for Economic Sectors

a) Aggregate the reports prescribed in Clause 4 of Article 7 of this Circular and point a of Clause 3 of this Article;

b) Take the lead and coordinate with the Monetary Policy Department, the Inspection and Supervision Agency, and related units in advising the Governor of the State Bank of Vietnam on handling issues arising during the implementation process.

2. Responsibilities of the Inspection and Supervision Agency

Conduct inspections and supervision of credit institutions and foreign bank branches' implementation of this Circular in accordance with their functions and responsibilities.

3. Responsibilities of the State Bank Branches

a) Within fifteen (15) days of the first day of each month, aggregate the reports of people's credit funds in the area as prescribed in Clause 5 of Article 7 of this Circular and submit them to the Credit Policy Department for consolidation;

b) Conduct inspections and supervision of credit institutions and foreign bank branches' implementation of this Circular in accordance with their functions and responsibilities.

Chapter III

IMPLEMENTING PROVISIONS

Article 9. Effective Date

This Circular takes effect from April 24, 2023.

Article 10. Implementation Organization

The Head of the Office, the Director of the Credit Department for Economic Sectors, The Head of Inspection and Supervision, banking, Heads of units under the State Bank of Vietnam, Governors of the State Bank of Vietnam branches, Chairmen of the Management Boards, Chairmen of the Member Councils and General Directors (Directors) of credit organizations, foreign bank branches shall be responsible for organizing the implementation of this Circular./.