Joint Circular No. 11/TC-NHNN guiding the handling of overdue debts for enterprises.

JOINT CIRCULAR

Guidelines for Handling Stagnant Debts of Enterprises

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Implementing the guidance of the Prime Minister in Circular No. 3278/KTTH dated August 14, 1994, issued by the Government Office on "Handling Stagnant Debts of Enterprises." The State Bank and the Ministry of Finance provide guidelines for handling stagnant debts of enterprises to banks as follows:

I. SCOPE AND OBJECTS OF DEBT WRITING-OFF:

1. Stagnant debts to be written off according to Circular No. 3278/KTTH dated August 14, 1994, of the Government Office include:

a) Stagnant debts due to natural disasters, typhoons, floods, and other force majeure causes (of all economic sectors) up to December 31, 1993.

b) Remaining stagnant debts arising before December 31, 1993, of state-owned enterprises dissolved pursuant to Decisions 315/HĐBT and 330/HĐBT, and those dissolved due to enterprise restructuring under Decree 388/HĐBT, still outstanding as of December 31, 1993.

2. The handling of debt write-off for the aforementioned objects shall be carried out based on the following principles:

a) Only debts due to objective reasons and with complete legal documentation, verified and confirmed by local branches of the State Bank and provincial finance departments, and with confirmation from the People's Committee of the locality (for locally managed enterprises) or the central competent ministry (for centrally managed enterprises), will be eligible for debt write-off.

Debts due to subjective reasons of the enterprise or bank shall not be eligible for debt write-off.

b) Stagnant debts up to December 31, 1993, that have already been written off (according to Directive No. 321/CT dated October 17, 1991, and other government documents such as Circular No. 1113/KTKH dated March 9, 1994; Decision Nos. 609 and 611/TTg dated December 21, 1993, etc.) are excluded from the scope of this debt write-off.

c) Legal documents requesting the State Bank and the Ministry of Finance to consider debt write-off shall be compiled at the grassroots level. Branches of state-owned commercial banks and the Development Bank have the responsibility to compile materials from the enterprises' files and submit reports to the General Directors of state-owned commercial banks and the Development Bank, which then consolidate and report to the inter-ministerial panel for review and decision.

d) Stagnant debts due to natural disasters, fires, typhoons, floods, and other force majeure causes shall be subject to a maximum write-off period of three years (from the date of the write-off decision). During the write-off period, the enterprise must develop a specific plan to repay the bank upon expiration of the write-off period.

II. SPECIFIC CONTENTS OF DEBT WRITE-OFF HANDLING:

1. For enterprises:

a) Stagnant debts due to natural disasters, typhoons, floods, and other force majeure causes remaining outstanding as of December 31, 1993:

Legal documents include:

+ Copies of loan agreements with banks.

+ Annual financial statements and business results for 1993.

+ Minutes confirming property damage due to natural disasters, fires, typhoons, floods, belonging to the borrowing entity. In cases of force majeure (loans for investment, equipment, goods procurement, in accordance with government policy), confirmation from relevant agencies: Provincial People's Committees, competent authorities, provincial finance departments, and the State Bank is required.

For centrally managed state-owned enterprises, confirmation from the Ministry of Finance (Department of Financial Management) and the competent ministry or sector is required.

+ A repayment plan within three years after the write-off period.

NoteIf the enterprise has repaid part of the debt to the bank prior to the write-off, it shall be excluded from the scope of the write-off.

b) Remaining stagnant debts arising from December 31, 1993, of state-owned enterprises dissolved pursuant to Decision 315/HĐBT and those unable to re-establish, dissolved under Decree No. 388/HĐBT of the Council of Ministers (now the Government):

Legal documents include:

+ Copies of loan agreements with banks.

+ Liquidation minutes of the dissolution committee (attached with the dissolution decision).

+ Confirmation from the provincial People's Committee, provincial finance department, State Bank branch, and competent authority.

c) The above entities' documents shall be compiled and submitted to the state-owned commercial banks where the enterprises directly conduct transactions. In addition to the aforementioned documents, the entities must clearly state the reasons for the stagnant debts (objective and subjective), measures to resolve the debts, and any support from the state budget (if applicable).

2. For branches of state-owned commercial banks and the Development Bank:

Carefully examine the legal documents of enterprises' stagnant debts: compare and control the legality and rationality of the debts, aggregate them according to the causes of debt occurrence, and report to the State Bank branch, provincial finance department, and provincial People's Committee (using the attached form).

Branches of state-owned commercial banks and the Development Bank are responsible for compiling debt write-off applications and reporting to the Central General Directors of state-owned commercial banks and the Development Bank.

3. For branches of the State Bank and provincial finance departments:

The Ministry of Finance and the State Bank authorize branches of the State Bank and provincial finance departments to cooperate in verifying and rechecking the legal documents of enterprises with stagnant debts in their jurisdictions based on the compiled data and figures reported by branches of state-owned commercial banks and the Development Bank.

After reviewing each debt, if found legal, the branches of the State Bank and provincial finance departments shall sign confirmation on the aggregated documents and seek confirmation from the provincial People's Committee to complete the local file.

4. State-owned commercial banks and the Central Development Bank shall aggregate the debt write-off reports and send the entire file to the State Bank of Vietnam and the Ministry of Finance for processing.

During implementation, the Ministry of Finance and the State Bank will coordinate to inspect and audit some provinces and cities before writing off the debts.

5. For centrally managed state-owned enterprises, in addition to the reports and confirmations from units and state-owned commercial banks and the Development Bank, the debt write-off application must also be confirmed by the specialized Department of Financial Management of the Ministry of Finance and the competent ministry or sector of the enterprise.

6. Units and state-owned commercial banks and the Development Bank that have compiled and reported the documents should review and supplement them to ensure compliance with the provisions of this document.

III/ Implementation Organization:

1. On the basis of the scope, objects, and content of the overdue debt write-off according to the joint circular of the ministries, the branches of State-owned Commercial Banks (SOCBs) and Development Banks shall guide enterprises to compile data for reporting. By no later than September 15, 1994, the branches of SOCBs and Development Banks must complete the consolidation (with full verification opinions from the branch of the State Bank of Vietnam, Department of Finance, People's Committee of the locality, etc.) and send it to the central SOCBs and Development Banks.

2. The central SOCBs and Development Banks shall consolidate and submit all files and reports requesting debt write-off to the State Bank of Vietnam and the Ministry of Finance before September 30, 1994 (compiled according to the attached model).

3. From October 1, 1994 to October 30, 1994, the State Bank of Vietnam and the Ministry of Finance will review and verify some units and localities. Based on the results of the verification, the joint ministries will examine and approve the overdue debt write-off applications reported by the SOCBs and Development Banks.

The above are some contents regarding the overdue debt write-off for enterprises, implemented according to Circular No. 3278/KTKH dated June 14, 1994 of the Government Office. The joint ministries of the State Bank of Vietnam and the Ministry of Finance provide guidance for the state banking system and related enterprises to implement.

During the implementation process, if there are any difficulties, the units are requested to report to the Ministry of Finance and the State Bank of Vietnam for timely guidance.