Circular No. 105/2007/TT-BTC guiding the handling of risks related to state investment credit and export credit capital

CIRCULAR

Guidelines for handling risks of state investment credit and export credit funds

of the State

_____________________________

Implementing Decree No. 151/2006/NĐ-CP dated December 20, 2006 of the Government on state investment development credit and export credit, the Ministry of Finance guides the handling of risks of state investment credit and export credit funds at the Vietnam Development Bank as follows:

This technical regulation sets out technical requirements, testing methods, sampling procedures; management requirements; responsibilities of organizations and individuals producing, trading, and importing cigarettes.

a) Cadres, civil servants, public officials, and workers as stipulated in Article 2 of Decree No. 178/2024/NĐ-CP dated December 31, 2024 (amended and supplemented by Decree No. 67/2025/NĐ-CP dated March 15, 2025) of the Government on policies and treatment for cadres, civil servants, public officials, workers, and armed forces personnel in the process of organizational restructuring of the political system, having a total mandatory social insurance contribution period of at least 15 years when working in heavy, hazardous, or dangerous jobs or extremely heavy, hazardous, or dangerous jobs listed by the agency under the Government responsible for labor administration, or working in areas with particularly difficult socio-economic conditions including time worked in places with regional allowances of coefficient 0.7 or higher before January 1, 2021, and reaching the retirement age as specified in Appendix II issued together with Decree No. 135/2020/NĐ-CP, ceasing work immediately due to direct impact from organizational restructuring and implementation of the two-level local government model;

1.1. The Vietnam Development Bank;

1.2. Credit customers having investment credit and export credit relations with the Vietnam Development Bank, including:

a) Project sponsors borrowing state investment credit funds (including projects guaranteed by state investment credit after being compulsorily recognized as debtors by the Vietnam Development Bank);

b) Exporters borrowing state export credit funds under export contracts (including contracts guaranteed by state export credit, bid guarantees, and contract performance guarantees after being compulsorily recognized as debtors by the Vietnam Development Bank);

Hereinafter, investment credit loan projects and export contracts borrowing export credit funds shall be collectively referred to as state investment credit and export credit loan projects.

2. Scope of risk handling

A portion or all of the loan debt (principal, interest) of state investment credit and export credit loan projects.

3. Risk handling measures

3.1. Loan extension

Loan extension is the prolongation of the repayment period (principal, interest) beyond the agreed term in the signed credit contract.

3.2. Debt write-off suspension

Debt write-off suspension is a temporary measure of not collecting the principal and interest within a specified time period without accruing interest on the suspended principal during that period.

3.3. Debt write-off (principal, interest)

Debt write-off (principal, interest) is a measure of not collecting the principal and interest from customers encountering risks who are unable to repay after applying all recovery and debt handling measures as prescribed.

3.4. Debt sale

Debt sale involves transferring the debt, whereby the selling party (Vietnam Development Bank) transfers the creditor rights of the debt to the purchasing party (Company for buying and selling debts and business inventory) and receives payment from the purchasing party.

4. Principles for risk handling

4.1. Only consider risk handling for customers with state investment credit and export credit loan projects encountering unavoidable risks and financial difficulties of state-owned enterprises that must be addressed when ownership is transferred and are unable to fully pay their due debts to the Vietnam Development Bank according to the signed credit contract, falling within the scope mentioned above.

4.2. Risk handling consideration is carried out on a case-by-case basis, based on the customer's financial capacity and the causes leading to the risk.

4.3. A project may simultaneously apply multiple risk handling measures. Based on the level of damage and the causes of the risk stipulated in this Circular, appropriate risk handling measures shall be applied as prescribed.

4.4. Consideration of the debt write-off measure for state investment credit and export credit funds shall only be made after applying debt recovery measures as prescribed, including compensation by insurance companies (for assets formed from loans subject to mandatory insurance), and the customer still lacks the means to repay the debt.

4.5. Debts that have been handled through suspension decisions by competent state agencies shall not have the suspension period counted towards the loan period recorded in the signed credit contract.

4.6. Risk handling considerations due to objective and unavoidable reasons shall be conducted periodically in batches. For cases involving state-owned enterprise ownership transfer, risk handling considerations shall be carried out based on actual occurrences in accordance with laws governing state-owned enterprise ownership transfer.

5. Cases not covered by these guidelines

5.1. Projects borrowing ODA funds and revolving fund projects reviewed and decided upon for lending by the Vietnam Development Bank.

5.2. Debts that have been handled according to decisions by competent state agencies (except in cases where the customer has been declared bankrupt or dissolved according to the law or the customer is an individual who has died or gone missing after asset liquidation).

II. SPECIFIC PROVISIONS

SECTION 1: CAUSES AND MEASURES TO HANDLE RISKS

1. CAUSES OF RISKS TO BE HANDLED IN DEBT MANAGEMENT

1.1. CUSTOMERS WITH STATE CREDIT LOANS FOR INVESTMENT AND EXPORT CREDIT PROJECTS WHO ARE EXPERIENCING FINANCIAL DIFFICULTIES AND ARE UNABLE TO REPAY THEIR LOANS DUE TO ANY OF THE FOLLOWING UNAVOIDABLE RISKS, SPECIFICALLY:

a) NATURAL DISASTERS, POOR HARVESTS, DISEASES, EARTHQUAKES, SUDDEN ACCIDENTS, FIRES, WARS, POLITICAL RISKS, OR RISKS CAUSED BY CHANGES IN STATE POLICY THAT DIRECTLY RESULT IN DAMAGE TO THE ASSETS OF THE INVESTOR OR EXPORTER;

b) LOSS OF LEGAL CAPACITY; DEATH, MISSING WITHOUT ANY ASSETS LEFT TO PAY THE DEBTS AND WITHOUT ANY HEIRS OR HEIRS WHO DO NOT HAVE THE ABILITY TO REPAY THE DEBTS ON BEHALF OF THE CUSTOMER IN CASE THE CUSTOMER IS AN INDIVIDUAL;

c) DISSOLUTION OR BANKRUPTCY ACCORDING TO THE DECISION OF THE AUTHORIZED STATE AGENCY;

1.2. STATE ENTERPRISES IMPLEMENTING OWNERSHIP TRANSFORMATION (STOCKIZATION, ASSIGNMENT, SALE) ACCORDING TO THE DECISION OF THE AUTHORIZED STATE AGENCY WHO ARE EXPERIENCING FINANCIAL DIFFICULTIES MUST BE HANDLED.

2. MEASURES TO HANDLE RISKS

2.1. EXTENDING THE DEBT DUE DATE

EXTENDING THE DEBT DUE DATE APPLIES TO THE CASES LISTED IN SUBPARAGRAPH a, POINT 1.1 BUT WHERE THE CUSTOMER STILL HAS THE ABILITY TO REPAY THE DEBT AND THE CASE LISTED IN POINT 1.2, CLAUSE 1, SECTION 1, PART II.

2.2. WRITING OFF THE DEBT

WRITING OFF THE DEBT APPLIES TO THE CASES LISTED IN SUBPARAGRAPH a, POINT 1.1 BUT WHERE THE CUSTOMER STILL HAS THE ABILITY TO REPAY THE DEBT AND THE CASE LISTED IN POINT 1.2, CLAUSE 1, SECTION 1, PART II.

2.3. DELETING THE DEBT

a) DELETING THE DEBT (PRINCIPAL AND INTEREST) APPLIES TO THE CASES LISTED IN POINT 1.1, CLAUSE 1, SECTION 1, PART II AFTER ALL DEBT COLLECTION AND MANAGEMENT MEASURES HAVE BEEN APPLIED ACCORDING TO THE REGULATIONS.

b) FOR THE CASES WHERE THE CUSTOMER IS A STATE ENTERPRISE IMPLEMENTING OWNERSHIP TRANSFORMATION LISTED IN POINT 1.2, CLAUSE 1, SECTION 1, PART II, ONLY THE DEBT INTEREST CAN BE CONSIDERED FOR DELETION. THE TOTAL DEBT INTEREST DELETED SHALL BE MAXIMUM EQUAL TO THE REMAINING ACCUMULATED LOSSES (AFTER APPLYING THE REGULATIONS ON STATE ENTERPRISE OWNERSHIP TRANSFORMATION) AT THE TIME OF DETERMINING THE VALUE OF THE BUSINESS.

2.4. SELLING THE DEBT

a) SELLING THE DEBT TO THE COMPANY PURCHASING AND SELLING DEBTS AND BUSINESS REMAINING ASSETS APPLIES TO THE CASES LISTED IN CLAUSE 1, SECTION 1, PART II AFTER APPLYING DEBT MANAGEMENT MEASURES: EXTENDING THE DEBT DUE DATE AND WRITING OFF THE DEBT.

b) VIETNAM DEVELOPMENT BANK REPORTS EACH DEBT SALE CASE TO THE MINISTRY OF FINANCE FOR CONSIDERATION AND RESOLUTION ACCORDING TO AUTHORITY.

SECTION 2: DOCUMENTS FOR HANDLING RISKS

3. DOCUMENTS FOR HANDLING RISKS

3.1. GENERAL DOCUMENTS FOR HANDLING RISKS INCLUDE:

a) THE CUSTOMER'S OR THE CUSTOMER'S REPRESENTATIVE'S DOCUMENT REQUESTING RISK HANDLING ACCORDING TO THE LAW.

b) THE SUPERIOR GOVERNMENT AGENCY'S DOCUMENT REQUESTING RISK HANDLING FOR THE CUSTOMER ACCORDING TO THE LEVEL OF MANAGEMENT (FOR STATE ENTERPRISE CUSTOMERS).

c) THE CUSTOMER'S FINANCIAL REPORTS FOR THE TWO (02) MOST RECENT YEARS UNTIL THE TIME OF RISK HANDLING REQUEST. A CONFIRMATION LETTER FROM THE PEOPLE'S COMMITTEE OF THE COMMUNE WHERE THE CUSTOMER RESIDES REGARDING THE CUSTOMER'S FINANCIAL SITUATION (FOR INDIVIDUAL CUSTOMERS).

IF THE CUSTOMER IS REQUIRED TO BE AUDITED ACCORDING TO THE STATE'S REGULATIONS, THEY MUST SUBMIT THE MOST RECENT AUDITED REPORT UNTIL THE TIME OF RISK HANDLING REQUEST.

d) THE CREDIT CONTRACT AND THE CONTRACT APPENDIX (IF ANY).

đ) THE LOAN AGREEMENT, THE DEBT BALANCE SHEET UP TO THE TIME OF RISK HANDLING REQUEST.

e) IN CASE THE CUSTOMER HAS SUFFERED PROPERTY OR GOODS DAMAGE DUE TO OBJECTIVE REASONS (NATURAL DISASTERS, POOR HARVESTS, DISEASES, EARTHQUAKES, SUDDEN ACCIDENTS, FIRES, ...) THE DAMAGE CERTIFICATION DOCUMENT SHOULD BE SPECIFIED AS FOLLOWS:

- THE DAMAGE CERTIFICATION DOCUMENT IS COMPILED AFTER THE DAMAGE OCCURS;

- THE DAMAGE CERTIFICATION DOCUMENT MUST CLEARLY STATE THE EXTENT (QUANTITY) AND VALUE OF DAMAGE FOR EACH TYPE OF ASSET OR GOODS;

- PARTICIPANTS IN THE DAMAGE CERTIFICATION PROCESS: CUSTOMER; VIETNAM DEVELOPMENT BANK BRANCH; LOCAL AUTHORITY (SUCH AS: COMMUNE PEOPLE'S COMMITTEE; DISTRICT FINANCIAL AUTHORITY; FUNCTIONAL AUTHORITIES RELATED (SUCH AS: FIRE PREVENTION AND FIGHTING, STORM AND FLOOD PREVENTION, ANIMAL HEALTH... DEPENDING ON THE SPECIFIC CASE).

f) IN CASE THE CUSTOMER IS A STATE ENTERPRISE IMPLEMENTING OWNERSHIP TRANSFORMATION:

- THE BUSINESS VALUATION DOCUMENT ACCOMPANIED BY THE DETAIL LIST OF ACTUAL DEBTS TO BE PAID AT THE TIME OF BUSINESS VALUATION BY THE FUNCTIONAL AUTHORITY;

- THE DECISION APPROVING THE BUSINESS VALUATION BY THE AUTHORIZED STATE AGENCY.

g) IN CASE THE CUSTOMER IS AN INDIVIDUAL WHO HAS LOST LEGAL CAPACITY: THE COURT DECISION DECLARING THE LOSS OF LEGAL CAPACITY.

h) IN CASE THE CUSTOMER IS AN INDIVIDUAL WHO HAS DIED OR BEEN DECLARED DEAD: ONE OF THE FOLLOWING DOCUMENTS:

- DEATH CERTIFICATE;

- COURT DECISION DECLARING A PERSON DEAD;

- CONFIRMATION FROM THE POLICE STATION WHERE THE CUSTOMER'S HOUSEHOLD REGISTRATION IS MANAGED OR FROM THE LOCAL ADMINISTRATION WHERE THE CUSTOMER RESIDES.

i) IN CASE THE CUSTOMER IS AN INDIVIDUAL WHO HAS BEEN DECLARED MISSING: THE COURT DECISION DECLARING A PERSON MISSING.

k) IN CASE THE CUSTOMER IS DISSOLVED:

- DISSOLUTION DECISION BY THE AUTHORIZED STATE AGENCY.

- APPROVAL DECISION ON DISSOLUTION PLAN BY THE AUTHORIZED STATE AGENCY.

- DISSOLUTION FINANCIAL REPORT OF THE COMPANY BY THE DISSOLUTION BOARD.

l) IN CASE THE CUSTOMER IS BANKRUPT:

- COURT DECISION SUSPENDING THE ASSET LIQUIDATION PROCEDURE.

- COURT DECISION DECLARING THE CUSTOMER BANKRUPT.

m) OTHER DOCUMENTS AND MATERIALS RELATED TO THE STATE LOAN APPLICATION, THE BUSINESS FINANCIAL SITUATION, AND THE CUSTOMER'S FAILURE TO REPAY THE LOAN AS PROMISED.

3.2. SUPPLEMENTARY DOCUMENTS FOR HANDLING RISKS FOR EACH SPECIFIC CASE

a) THE DOCUMENTS PROVIDED IN POINT 3.1, CLAUSE 3, SECTION 2, PART II ABOVE APPLY TO ALL RISK MANAGEMENT MEASURES FOR STATE INVESTMENT CREDIT AND EXPORT CREDIT LISTED IN CLAUSE 2, PART II.

b) FOR EACH SPECIFIC CASE, THE SUPPLEMENTARY RISK HANDLING DOCUMENTS ARE AS FOLLOWS:

- EXTENDING THE DEBT DUE DATE: THE VIETNAM DEVELOPMENT BANK BRANCH APPROVES THE CUSTOMER'S VIABLE BUSINESS REORGANIZATION PLAN AND POST-EXTENSION DEBT REPAYMENT PLAN.

- WRITING OFF THE DEBT: THE VIETNAM DEVELOPMENT BANK BRANCH APPROVES THE CUSTOMER'S VIABLE BUSINESS REORGANIZATION PLAN AND POST-WRITTEN-OFF DEBT REPAYMENT PLAN.

- Sale of debts: The document proposing the sale of debts by the Vietnam Development Bank, specifying the reasons and the effectiveness of selling the debts.

MỤC 3. PROCEDURE AND PROCEDURES FOR HANDLING RISKS

4. Customers with debts proposed for handling shall be responsible for preparing the dossier in accordance with regulations and submitting it to the Branch of the Vietnam Development Bank where transactions take place.

Customers bear full responsibility for the accuracy and legality of the documents in the risk management proposal dossier.

5. The Branch of the Vietnam Development Bank shall check and confirm the accuracy and legality of the customer's risk management proposal dossier; provide comments in writing on the customer's risk management proposal and send them back to the Vietnam Development Bank (along with the risk management proposal dossier).

6The Vietnam Development Bank shall be responsible for reviewing and consolidating customers' and Branches' proposals to consider and handle according to its authority or propose risk management measures to report to the Ministry of Finance.

7. The Ministry of Finance shall handle according to its authority or lead and coordinate with the Ministry of Planning and Investment and the State Bank of Vietnam to report to the Prime Minister for consideration and decision.

8Based on the risk management decisions of competent state agencies, the Vietnam Development Bank shall guide the Branches of the Vietnam Development Bank to organize implementation in accordance with regulations.

MỤC 4: AUTHORITY AND RESPONSIBILITY FOR RISK MANAGEMENT

9. Vietnam Development Bank

9.1. The General Director of the Vietnam Development Bank shall examine and decide on loan extensions not exceeding one-third of the lending period recorded in the initial signed credit contract, and the total borrowing period after extension shall not exceed the maximum lending period stipulated for each project.

9.2. The Vietnam Development Bank shall report to the Ministry of Finance for examination and resolution within its authority regarding loan extensions (for projects with total extension periods exceeding one-third of the initial lending period or the lending period after extension exceeding the maximum lending period stipulated); write-off of debts, debt cancellation, and sale of debts.

9.3. Guide customers to prepare risk management dossiers in accordance with regulations; review risk management dossiers and compile, propose risk management measures to report to the Ministry of Finance; organize the implementation of risk management decisions of competent state agencies.

10. Ministry of Finance

10.1. Organize the inspection of the risk management proposal dossiers of the Vietnam Development Bank and decide on loan extensions for projects with total extension periods exceeding one-third of the initial lending period or the lending period after extension exceeding the maximum lending period stipulated; write-off of debts and cancellation of interest for customers.

10.2. Lead and coordinate with the Ministry of Planning and Investment and the State Bank of Vietnam to submit to the Prime Minister for consideration and decision on the cancellation of principal debts for customers based on the proposal of the Vietnam Development Bank.

10.3. Examine and decide in cases where the debt sale price is higher than the principal value; lead and coordinate with the Ministry of Planning and Investment and the State Bank of Vietnam to submit to the Prime Minister for consideration and decision in cases where the debt sale price is lower than the principal value.

10.4. Announce the results and guide the Vietnam Development Bank to organize the implementation of risk management according to the Prime Minister's decision.

III. ESTABLISHMENT AND USE OF THE RISK PREVENTION FUND

1. The establishment and use of the Risk Prevention Fund shall be carried out in accordance with Article 40 of Decree No. 151/2006/ND-CP dated December 20, 2006 of the Government on state investment credit and export credit, and Decision No. 44/2007/QD-TTg dated March 30, 2007 on the issuance of financial management regulations for the Vietnam Development Bank.

2. The Risk Prevention Fund may only be used in cases of principal debt cancellation (including cases where the debt sale price is lower than the principal value) as decided by the competent authority.

IV. IMPLEMENTATION

1. This Circular takes effect fifteen days from the date of publication in the Official Gazette, replacing Circular No. 89/2004/TT-BTC dated September 3, 2004 of the Ministry of Finance guiding the management of state investment credit and export credit risks and other relevant provisions on the management of state investment credit and export credit risks.

2. The Chairman of the Management Council, the General Director of the Vietnam Development Bank, and customers with state investment credit and export credit projects are responsible for implementing this Circular./.