Circular No. 04/2021/TT-NHNN on refinancing for credit institutions after such credit institutions have lent to Vietnam National Airline Corporation - Joint Stock Company and regarding the restructuring of debt repayment terms, maintaining the risk classification group, and provisioning for risks related to the debts of Vietnam National Airline Corporation - Joint Stock Company due to the impact of the COVID-19 pandemic.

CIRCULAR

Regulations onon refinancing for credit institutions after such credit institutions have lent to Vietnam Airlines Joint Stock Company and restructuring of debt repayment terms, maintaining the risk classification group, and provisioning for risks related to the debt of Vietnam Airlines Joint Stock Company due to the impact of the COVID-19 pandemic the restructuring the debt repayment period, maintaining the risk classification group, and setting aside provisions for risks related to the debts of Vietnam Airlines Joint Stock Corporation due to the impactof the COVID-19 pandemic

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, and the Law Amending and Supplementing Certain Provisions of the Law on Credit Institutions dated November 20, 2017;

Pursuant to Government Decree No. 16/2017/NĐ-CP dated February 17, 2017 on the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;

Pursuant to Resolution No. 135/2020/QH14 dated November 17, 2020 of the National Assembly on the 10th Session of the 14th National Assembly;

After reaching consensus with the Ministry of Finance;

At the request of the Director of the Monetary Policy Department, the Inspector General, and the Director of the Credit Department for Industries;

The Governor of the State Bank of Vietnam issues this Circular stipulating on refinancing for credit institutions after such credit institutions have lent to Vietnam Airlines Joint Stock Company and the restructuring of debt repayment terms, maintaining the risk classification group, and provisioning for risks related to the debt of Vietnam Airlines Joint Stock Company due to the impact of the COVID-19 pandemic.

Article 1. Scope of Regulation

This Circular stipulates on:

1. The State Bank of Vietnam (hereinafter referred to as the State Bank) will refinance credit institutions after such credit institutions have lent to Vietnam Airlines Joint Stock Company (hereinafter referred to as VNA) according to the Resolution of the National Assembly and the Resolution of the Government.

2. Credit institutions will restructure the debt repayment terms, maintain the risk classification group, and provision for risks related to the VNA debt that has been refinanced by the State Bank in accordance with the provisions of this Circular (hereinafter referred to as the VNA debt).

Article 2. Applicability

1. Credit institutions (excluding credit institutions under special control) having loans to VNA.

2. Related organizations and individuals.

Article 3. Explanation of Terms

In this Circular, the following terms are understood as follows:

2. The Resolution of the Government includes Resolutions: Resolution No. 24/NQ-CP dated July 29, 2020 of the Government on measures to resolve difficulties for VNA due to the impact of the COVID-19 pandemic; Resolution No. 194/NQ-CP dated December 31, 2020 of the Government on implementing the Resolution of the National Assembly on measures to resolve difficulties for VNA due to the impact of the COVID-19 pandemic.

3. Loans to VNA are loans from credit institutions according to the Resolutions specified in Clause 2, Article 3 of Decision No. 450/QĐ-TTg dated March 26, 2021 of

Article 4. Amount of Refinancing

1. The maximum amount of refinancing for each loan to VNA shall not exceed the amount of the loan to VNA as stated in the credit institution's application for refinancing.

2. The total amount of refinancing for all credit institutions shall not exceed 4,000 billion VND (four thousand billion VND).

Article 5. Interest Rate on Refinancing

1. The interest rate on refinancing is 0% per annum, applicable to the term of refinancing and any extension of the refinancing term.

2. The interest rate applied to overdue principal refinancing debt is 150% of the refinancing interest rate published by the State Bank during the relevant period at the time the refinancing debt becomes overdue.

Article 6. Collateral

The State Bank does not require collateral when refinancing credit institutions.

Article 7. Term of Refinancing and Extension of Refinancing

1. Term of Refinancing: The term of refinancing proposed by the credit institution shall be equal to or less than the term of the loan to VNA (excluding any extension of the loan term to VNA) and shall not exceed 364 days. The term of refinancing starts from the day following the date when the State Bank disburses the refinancing funds to the credit institution.

2. The term of refinancing stipulated in Clause 1 of this Article shall apply according to each disbursement as specified in Clause 2 of Article 9 of this Circular.

Article 8. Disbursement of Refinancing Funds

1. The State Bank shall disburse refinancing funds according to the request of credit institutions within the amount of refinancing funds specified in Clause 1, Article 4 of this Circular and ensure that the principal balance of the refinancing loan does not exceed the outstanding principal balance of the VNA loan (for each VNA loan) as stated in the Request for Disbursement of Refinancing Funds.

2. The State Bank shall stop disbursing refinancing funds to credit institutions when the State Bank has fully disbursed 4,000 billion VND (four thousand billion VND) but no later than December 31, 2021.

Article 9. Procedures for Refinancing and Disbursement of Refinancing Funds

1. The procedures for refinancing are as follows:

a) When there is a need to borrow refinancing funds, credit institutions directly send to the One-Stop Service Unit or through postal service to the Head Office of the State Bank one Request for Borrowing Refinancing Funds according to Appendix I issued together with this Circular;

d) Within three working days from the date of receipt of all opinions from relevant units, the Monetary Policy Department compiles and submits to the Governor of the State Bank for consideration and decision on refinancing for credit institutions. In case of disagreement, the State Bank will issue a written notice stating the reasons and send it to the credit institution;

đ) Within two working days from the date of receipt of the Decision on Refinancing, the State Bank Trading Center and the credit institution shall sign the Principle Agreement on Refinancing;

2. The procedures for disbursement of refinancing funds in installments for credit institutions are as follows:

a) Based on the signed Principle Agreement on Refinancing, taking into account the outstanding principal balance of the VNA loan, the credit institution sends to the State Bank (State Bank Trading Center) the Request for Disbursement of Refinancing Funds according to Appendix II issued together with this Circular, clearly stating the amount of refinancing disbursement as stipulated in Clause 1, Article 8 of this Circular;

b) Within two working days from the date of receipt of the credit institution's Request for Disbursement of Refinancing Funds, the State Bank Trading Center approves the disbursement request; the credit institution signs the Promissory Note; the State Bank Trading Center disburses the refinancing funds to the credit institution.

Article 10. Repayment of Refinancing Loans

1. When the refinancing loan reaches its maturity date (end of the refinancing period and any extension thereof, if any), the credit institution must repay the entire outstanding principal balance of the refinancing loan.

2. Within three working days from the date the outstanding principal balance of the refinancing loan exceeds the outstanding principal balance of the corresponding VNA loan, the credit institution must proactively repay the refinancing loan in the order of the earliest signed Promissory Notes corresponding to the VNA loans, ensuring that the outstanding principal balance of the refinancing loan does not exceed the outstanding principal balance of the VNA loan (for each VNA loan).

3. Credit institutions may repay refinancing loans ahead of schedule.

Article 11. Handling when credit institutions fail to repay refinancing loans on time

1. In case credit institutions fail to repay refinancing loans on time as stipulated in Clause 1, Article 10 of this Circular, the State Bank shall transfer the overdue principal amount of refinancing loans that have not been repaid on time to be monitored as overdue loans according to the State Bank's regulations on calculation methods and accounting for interest income and expenditure in deposit-taking and lending activities between the State Bank and credit institutions and other organizations; apply the interest rate prescribed in Clause 2, Article 5 of this Circular to the overdue principal amount of refinancing loans from the day following the due date until the date when the credit institution fully repays the overdue principal amount.

2. In case credit institutions fail to repay loans on time as stipulated in Clause 2, Article 10 of this Circular, the State Bank shall apply an interest rate equal to 150% of the refinancing loan interest rate published by the State Bank during each period from the day following the due date to the date when the credit institution fully repays the overdue principal amount of refinancing loans.

3. The State Bank shall implement the deduction from the credit institution’s deposit account at the State Bank to recover the full amount that the credit institution must pay (including the overdue principal amount of refinancing loans and interest prescribed in Clauses 1 and 2 of this Article) starting from the next working day:

a) The day transferring the overdue principal amount of refinancing loans to be monitored as overdue (for cases where credit institutions fail to repay loans on time as stipulated in Clause 1, Article 10 of this Circular);

1. Based on VNA's proposal and the assessment of its ability to fully repay principal and/or interest after restructuring repayment terms, credit institutions shall restructure the repayment terms of VNA's debt within a maximum period of three years (including both the lending period and the restructuring period) but no later than December 31, 2024.

3. Credit institutions shall set aside specific provisions for the entire outstanding balance of VNA as follows:

a) According to the State Bank's regulations on setting aside specific provisions for risk in the operations of credit institutions and foreign bank branches, credit institutions shall set aside specific provision amounts for the entire outstanding balance of VNA based on the results of the debt classification prescribed in Clause 2 of this Article for the portion of the outstanding balance maintained in the original risk classification group and the results of the debt classification for the remaining outstanding balance of VNA according to the State Bank's regulations on debt classification in the operations of credit institutions and foreign bank branches;

b) Credit institutions shall determine the specific provision amount to be set aside for the entire outstanding balance of VNA based on the results of the debt classification according to the State Bank's regulations on debt classification in the operations of credit institutions and foreign bank branches (without applying the regulation to maintain the original risk classification group as prescribed in Clause 2 of this Article);

c) Credit institutions shall determine the additional specific provision amount to be set aside according to the following formula:

Additional specific provision amount to be established = A - B

Where:

- A: The specific provision amount to be set aside as prescribed in point b of this Clause.

- B: The specific provision amount already set aside as prescribed in point a of this Clause;

d) In case the additional specific provision amount to be set aside determined according to point c of this Clause is positive, credit institutions shall set aside additional specific provisions as follows:

- By December 31, 2021: At least 30% of the additional specific provision amount to be set aside;

- By December 31, 2022: At least 60% of the additional specific provision amount to be set aside;

- By December 31, 2023: 100% of the additional specific provision amount to be set aside;

- From January 1, 2024: 100% of the additional specific provision amount to be set aside.

4. Matters related to restructuring repayment terms, debt classification, setting aside and using provisions to address risks not specified in this Circular, credit institutions shall comply with the relevant regulations in other legal normative documents.

Article 13. Responsibilities of credit institutions

1. When there is a need to borrow rediscount funds or disburse rediscount funds, credit institutions shall submit a request document confirmed by VNA in accordance with this Circular and bear legal responsibility for the accuracy and legality of these documents.

2. Implement the signing of the Principle Rediscount Contract and the Debt Acknowledgment Agreement; repay the rediscount loan to the State Bank fully and on time in accordance with this Circular.

3. Monitor, account for, and manage separately the loans from VNA and the rediscount loans from the State Bank.

a) Within a maximum period of five working days following the date when the principal balance of the rediscount loan exceeds the outstanding principal balance of the VNA loan as stipulated in Clause 2, Article 10 of this Circular, the credit institution shall report in accordance with Appendix III issued together with this Circular;

b) During the period when there is still an outstanding balance of the rediscount loan, monthly, within the first fifteen days of each month, the credit institution shall report on the outstanding principal balances of the VNA loans that have an outstanding balance of the rediscount loan in the previous month, confirmed by VNA in accordance with Appendix IV issued together with this Circular.

5. Fulfill other responsibilities prescribed in the Resolution of the National Assembly, the Resolution of the Government, Decision No. 450/QĐ-TTg, this Circular, and relevant laws.

Article 14. Responsibilities of units under the State Bank

2. The Credit Department for Economic Sectors shall provide comments to the Monetary Policy Department on the credit institution's request to borrow rediscount funds in accordance with point c, Clause 1, Article 9 of this Circular.

a) Provide comments to the Monetary Policy Department on the credit institution's request to borrow rediscount funds in accordance with point c, Clause 1, Article 9 of this Circular;

b) Implement the signing of the Principle Rediscount Contract as stipulated in point d, Clause 1, Article 9 of this Circular; approve and disburse rediscount funds in accordance with point b, Clause 2, Article 9 of this Circular; extend the term of the rediscount, collect the rediscount debt, and transfer the overdue rediscount account in accordance with this Circular;

c) Implement the measures prescribed in Clause 3, Article 11 of this Circular;

d) Monthly, within the first fifteen days of each month, report on the rediscount data for the previous month of the credit institution in accordance with Appendix V issued together with this Circular.

a) Provide comments to the Monetary Policy Department on the credit institution's request to borrow rediscount funds in accordance with point c, Clause 1, Article 9 of this Circular;

5. The Information Technology Department shall organize upgrades and modifications to the business software system to comply with this Circular.

Article 15. Effective Date

1. This Circular takes effect from April 5, 2021.

2. The Director of the Office, the Heads of the Monetary Policy Department, the Director of Banking Inspection and Supervision, the Heads of the Credit Department for Economic Sectors, the Heads of units under the State Bank of Vietnam, and credit institutions are responsible for organizing the implementation of this Circular./.