This Circular stipulates the handling of risks in the lending activities of the Small and Medium Enterprise Development Fund. It includes measures such as selling debts, disposing of collateral assets, and writing off principal and interest when enterprises encounter difficulties and cannot repay their debts. The Circular also specifies the sources for implementing these measures and the responsibilities of related organizations and individuals.
Scope of application
Small and Medium Enterprise Development Fund
Key points
- Provisions on selling debts at a price lower than the book value of the principal debt
- Provisions on disposing of collateral assets when the amount recovered from the disposal of collateral assets is lower than the book value of the debt
- Provisions on writing off principal and interest when enterprises can no longer repay their debts
- Provisions on the sources for implementing risk management measures
- Provisions on the responsibilities of related organizations and individuals
🌐 Social impact of this document
- Helps the Small and Medium Enterprise Development Fund manage risks in lending activities more effectively
- Provides a legal basis for handling debts when enterprises encounter difficulties and cannot repay their debts
❓ Frequently asked questions
When does this Circular take effect?
This Circular takes effect from February 25, 2021
Who is responsible for issuing regulations on authority in reviewing and deciding on risk management measures as prescribed in this Circular?
The Small and Medium Enterprise Development Fund is responsible for issuing this regulation
Full text
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MINISTRY OF PLANNING AND INVESTMENT |
SOCIALIST REPUBLIC OF VIET NAM |
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Number: 14/2020/TT-BKHĐT |
Hanoi, December 31, 2020 |
CIRCULAR
GUIDELINES FOR THE MANAGEMENT OF RISKS IN THE DIRECT LOAN ACTIVITIES OF THE SMALL AND MEDIUM ENTERPRISES DEVELOPMENT FUND
ENTERPRISE DEVELOPMENT FUND
Pursuant to the State Budget Law dated June 25, 2015;
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 the Enterprise Law dated November 26, 2014;
Pursuant to the Law on Support for Small and Medium Enterprises dated June 12, 2017;
Pursuant to the Government Decree numberDecision No. 86/2017/NĐ-CPDecision No. 25/2017/QĐ-TTg dated July 25, 2017 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Planning and Investment;
Pursuant to Decree No.Decision No. 39/2019/NĐ-CPdated May 10, 2019 of the Government on the organization and operation of the Small and Medium Enterprises Development Fund;
Based on the proposal of the Chairman of the Board of Directors of the Small and Medium Enterprises Development Fund;
The Minister of Planning and Investment issues this Circular guiding the management of risks in the direct loan activities of the Small and Medium Enterprises Development Fund.
PART I
GENERAL PROVISIONS
Article 1. Scope of Regulation
This Circular guides the management of risks in the direct loan activities of the Small and Medium Enterprises Development Fund as prescribed in Section I Chapter III and Section II Chapter V of Decree No. 39/2019/NĐ-CP dated May 10, 2019 of the Government on the organization and operation of the Small and Medium Enterprises Development Fund (hereinafter referred to as Decree No. 39/2019/NĐ-CP).
Article 2. Applicability
1. The Small and Medium Enterprises Development Fund (hereinafter referred to as the Fund);
2. Small and Medium Enterprises (hereinafter referred to as SMEs) borrowing capital from the Fund as prescribed in Section I Chapter III of Decree No. 39/2019/NĐ-CP;
3. Organizations and individuals related to the implementation of this Circular.
Article 3. Explanation of Terms
In this Circular, in addition to the terms defined in Decree No. 39/2019/NĐ-CP, the following terms shall be understood as follows:
1. "Direct Loan Contract" (hereinafter referred to as the Contract) means the agreement on direct lending as prescribed in Article 20 of Decree No. 39/2019/NĐ-CP.
2. "Risk" means potential loss to the Fund's debts due to SMEs not performing or being unable to perform part or all of their debt repayment obligations (principal, interest) according to the signed Contract.
3. "Risk Management" means applying the measures prescribed in Article 40 of Decree No. 39/2019/NĐ-CP to manage the debts of SMEs at risk leading to the Fund not being able to fully recover the loan (principal, interest) according to the signed Contract.
4. "Adjustment of Repayment Period and Amount" means the Small and Medium Enterprises Development Fund changing the repayment periods (principal, interest) or amounts (principal, interest) previously agreed upon in the signed Contract.
5. "Debt Extension" means the Fund and SMEs agreeing to extend the repayment period (principal, interest) in the signed Contract.
6. "Debt Write-off" means the Fund temporarily not collecting part or all of the debt (principal, interest) of SMEs within a certain period according to the signed Contract.
7. "Interest Arrears" means the unpaid interest amount that SMEs owe to the Fund, calculated based on the principal and the interest rate stipulated in the signed Contract.
8. "Interest Write-off" means the Fund not collecting part or all of the interest arrears of SMEs according to the signed Contract.
9. "Principal Arrears" means the principal amount that has been disbursed by the Fund to SMEs but not repaid to the Fund according to the signed Contract.
10. "Principal Write-off" means the Fund not collecting part or all of the principal arrears of SMEs according to the signed Contract.
11. "Debt Sale" means the Fund transferring part or all of the right to claim debt and other related rights to the buyer of debt and receiving payment from the buyer of debt.
12. "Book Value of Debt" means the total value of the outstanding principal, interest arrears, and other financial obligations related to the debt of SMEs (if any) recorded in the Fund's accounting books in accordance with the law.
13. "Debt Buyer" means organizations and individuals with the function of buying and selling debt as prescribed by law.
14. "Broker" means organizations and individuals with the function of brokering the purchase and sale of debt as prescribed by law.
15. "Secured Asset Disposal" means the Fund implementing measures to dispose of the secured assets of SMEs to recover the debt (principal, interest) of SMEs.
16. "Risk Provision" means the amount of money set aside by the Fund as prescribed in Decree No. 39/2019/NĐ-CP to cover potential losses arising from SMEs' failure to fulfill their debt repayment obligations according to the signed Contract.
Article 4. Principles for Handling Risks of the Fund
The handling of risks of the Fund must ensure compliance with the principles stipulated in Article 39 of Decree No. 39/2019/NĐ-CP.
Article 5. Cases to be Considered for Risk Handling
1. Small and Medium Enterprises (SMEs) suffer financial and asset losses due to natural disasters, catastrophes, crop failures, epidemics, fires, wars, national emergencies.
2. SMEs encounter risks due to other objective factors directly affecting their production and business activities, leading to an inability to repay loans (principal and interest) according to the signed Contract.
3. SMEs have non-performing debts classified according to Clause 1 of Article 37 of Decree No. 39/2019/NĐ-CP issued by the Government and do not fall under the cases specified in Clauses 1 and 2 of this Article.
4. SMEs declared bankrupt in accordance with current laws.
Article 6. Determining the Level of Capital and Asset Losses
1. When SMEs face risks while borrowing capital, the Fund is responsible for coordinating with relevant parties including the Fund, SMEs, and competent authorities (if applicable) to conduct inspections and evaluations of the risks and prepare a Record confirming the level of capital and asset losses of the SMEs.
2. The Record confirming the level of capital and asset losses of SMEs must be confirmed by all relevant parties and should include details such as the incident that occurred, the risk that occurred, the cause of the risk, and the level of capital and asset losses.
3. The level of capital and asset losses of SMEs is the monetary value of the actual losses in assets and capital at the time the Record is prepared.
4. The Fund may hire organizations or individuals with appraisal functions to assess the level of capital and asset losses of SMEs.
Chapter II
REGULATIONS ON MEASURES FOR HANDLING RISKS AND SOURCES OF RISK HANDLING
Section I
MEASURES FOR MANAGING RISKS
Article 7. Adjusting Repayment Periods and Amounts
1. Objectives for Consideration:
SMEs encountering risks as specified in Clause 1 or Clause 2 of Article 5 of this Circular.
2. Conditions for Consideration:
SMEs will be considered for adjusting repayment periods and amounts when they meet the following conditions:
a) They belong to the category specified in Clause 1 of this Article.
b) They have used borrowed capital for the purposes stated in the Contract.
c) They are experiencing difficulties in production and business operations, leading to an inability to fully repay the loan (principal and interest) on time as per the signed Contract.
d) They have complete documentation as required by Clause 3 of this Article.
3. Documentation for Requesting Adjustment of Repayment Periods and Amounts
The documentation for requesting risk handling prepared by SMEs and submitted to the Fund includes:
a) A request letter for risk handling signed by the legal representative of the enterprise, including the reasons for the inability to repay the loan as per the signed Contract, the level of capital and asset losses, the remaining principal and interest owed, measures already taken to handle the risk (if any), specific risk handling measures recommended, and commitments regarding the feasibility of the business operation plan and the loan repayment plan if the risk handling is accepted.
b) Certified copies of the audited financial statements of the two (2) most recent years prior to the date of the risk handling request, or the audited financial statements or tax reports of the year before the risk handling request for enterprises operating less than two (2) years.
c) A certified copy of the debt statement up to the date of the risk handling request.
d) Other relevant documents (if any).
4. Documentation for Adjusting Repayment Periods and Amounts
The Fund is responsible for preparing one set of risk handling documentation including:
a) Documentation for requesting risk handling as specified in Clause 3 of this Article.
b) A Record confirming the level of capital and asset losses of SMEs.
c) A report on risk handling by the Fund including the following contents: The business situation of SMEs, the loan repayment situation (principal and interest) according to the signed Contract, the occurrence of risks, causes of risks, levels of capital and asset losses incurred by SMEs, measures already taken to handle risks and their results (if any), specific risk handling measures recommended, the necessity of applying the proposed risk handling measures, and the ability of SMEs to repay (principal and interest) after applying the proposed risk handling measures.
d) Other relevant documents (if any).
5. Authority to Decide on Adjusting Repayment Periods and Amounts
The Fund examines and decides on the application of measures to adjust repayment periods and amounts.
6. Principles for Adjusting Repayment Periods and Amounts
a) A single loan may be adjusted multiple times in terms of repayment period and amount.
b) Adjustments to repayment periods and amounts must remain within the loan term and cannot change the final repayment period or the total amount to be repaid as per the signed Contract.
7. Adjusting Repayment Periods and Amounts
After receiving the complete set of documentation as specified in Clause 3 of this Article, the Fund is responsible for organizing appraisals and evaluations of risks, determining the level of capital and asset losses incurred by SMEs, deciding, and implementing adjustments to repayment periods and amounts.
Article 8. Extension of Debt Repayment
1. Subject for Consideration: Small and Medium Enterprises (SMEs) encountering risks as specified in Clauses 1, 2, and 3 of Article 5 of this Circular.
2. Conditions for Consideration: SMEs will be considered for debt extension if they meet all of the following conditions.
a) They belong to the category specified in Clause 1 of this Article.
b) They have used borrowed capital for the purposes stated in the Contract.
c) They are experiencing difficulties in production and business operations, leading to an inability to fully repay the loan (principal and interest) on time as per the signed Contract.
d) They have complete documentation as required by Clause 3 of this Article.
3. Application for Debt Extension
SMEs prepare one set of application documents in accordance with Clause 3 of Article 7 of this Circular.
4. Debt Extension Documents
The Fund prepares documents in accordance with Clause 4 of Article 7 of this Circular.
5. Authority to Decide on Debt Extension
The Fund examines and decides on the implementation of debt extension measures.
6. Principles of Debt Extension
a) A debt may be extended multiple times.
b) The extension must be within the loan term and not exceed the maximum loan term as stipulated in the Fund's direct lending regulations.
7. Implementation of Debt Extension
Follow the provisions of Clause 7 of Article 7 of this Circular.
Article 9. Write-off of Debts
1. Objectives for Consideration:
SMEs encountering risks as specified in Clauses 1, 2, and 3 of Article 5 of this Circular.
2. Conditions for Consideration:
SMEs will be considered for debt write-off if they meet all of the following conditions.
a) They belong to the category specified in Clause 1 of this Article.
b) They have used borrowed capital for the purposes stated in the Contract.
c) Facing difficulties in business operations leading to at least one consecutive year of losses or cumulative losses, unable to fully repay the principal and interest according to the signed contract.
d) They have complete documentation as required by Clause 3 of this Article.
3. Application for Debt Write-off
SMEs prepare one set of application documents in accordance with Clause 3 of Article 7 of this Circular.
4. Debt Write-off Documents
The Fund prepares documents in accordance with Clause 4 of Article 7 of this Circular.
5. Authority to Decide on Debt Write-off
The Fund is responsible for reporting to the Minister of Planning and Investment for examination and decision-making on the implementation of debt write-off measures.
6. Principles of Debt Write-off
a) A debt may be written off multiple times.
b) The total time for debt write-off shall not exceed three years, which does not count towards the loan period.
c) During the debt write-off period, SMEs do not have to bear accrued interest, nor pay the principal and interest.
7. Implementation of Debt Write-off
a) After receiving a complete set of documents as stipulated in Clause 3 of this Article, the Fund is responsible for organizing an assessment and evaluation of the risk, determining the extent of capital and asset loss suffered by SMEs, preparing a report on risk management, and submitting it to the competent authority for decision-making.
b) After making a decision on risk management, the Fund is responsible for implementing the debt write-off.
Article 10. Sale of Debts
1. Objectives for Consideration:
SMEs encountering risks as specified in Clauses 1, 2, and 3 of Article 5 of this Circular.
2. Conditions for Consideration:
SMEs will be considered for debt sale if they meet all of the following conditions.
a) They belong to the category specified in Clause 1 of this Article.
b) They have used borrowed capital for the purposes stated in the Contract.
c) Facing difficulties in business operations leading to at least one consecutive year of losses or cumulative losses, unable to fully repay the principal and interest according to the signed contract.
d) They have complete documentation as required by Clause 3 of this Article.
3. Application for Debt Sale
a) In case SMEs propose to sell debts
SMEs prepare one set of application documents in accordance with Clause 3 of Article 7 of this Circular. If SMEs propose to sell debts for the full book value, the risk management proposal document does not need to include commitments and feasible production and business plans, and repayment plans if accepted for risk management.
b) In case the Fund proposes to sell debts
The Fund prepares one set of debt sale application documents including:
- A document proposing risk management by the Fund containing the reasons for non-payment according to the signed contract, remaining principal and interest balances. The proposal must clearly state applied risk management measures (if any) and proposed risk management measures.
- A confirmation of the extent of capital and asset loss suffered by SMEs (without requiring confirmation from SMEs).
4. Debt Sale Documents
a) In case SMEs propose risk management: Debt sale documents include the documents and papers as specified in point a of Clause 3 of this Article.
b) In case the Fund proposes risk management: Debt sale documents include the documents and papers as specified in point b of Clause 3 of this Article.
c) Risk Management Report of the Fund: In addition to the contents specified in point c of Clause 4 of Article 7 of this Circular, the risk management report must also include recommendations for selling debts for part or the full book value of the debt.
d) Original document proposing or approving the purchase of debts by the buyer.
đ) Other documents and papers as required by law and requested by the buyer (if any).
5. Authority to Decide on Risk Management Measures
a) In case selling debts does not reduce the Fund's charter capital: The Fund examines and decides on the implementation of debt sale measures in accordance with point c of Clause 1 of Article 41 of Decree No. 39/2019/NĐ-CP and other regulations of the State Bank regarding debt buying and selling activities.
b) In case selling debts reduces the Fund's charter capital:
The Fund is responsible for preparing one set of risk management documents, reporting to the Ministry of Planning and Investment to coordinate with the Ministry of Finance to submit to the Prime Minister for examination and decision-making on the implementation of debt sale measures in accordance with point a of Clause 1 of Article 41 of Decree No. 39/2019/NĐ-CP.
6. Principles of Debt Sale
a) The buying and selling of debts between the Fund and the buyer shall be carried out in accordance with the State Bank's regulations on debt buying and selling activities of credit institutions and foreign bank branches, and other relevant laws.
b) A debt can be sold for part or the full book value of the debt.
c) Auction-based debt sale is prioritized. If auction fails, the Fund may consider and apply negotiated debt sale.
7. Methods of Debt Sale
a) Debt sale through auction
- The Fund hires an auction organization established and operating under the law or organizes the auction of the debt according to the law on auctioning assets.
- Determining the starting price for auction is carried out in accordance with the State Bank of Vietnam's regulations on valuing debts in debt buying and selling activities of credit institutions.
b) Debt sale through negotiation
- The Fund and the buyer directly negotiate the sale of debts or through intermediaries based on market principles.
- Determining the selling price for negotiation-based debt sale is carried out in accordance with the State Bank of Vietnam's regulations on valuing debts in debt buying and selling activities of credit institutions.
8. Purchase and Sale Contract of Debts
The sale of debts by the Fund is conducted through a Purchase and Sale Contract of Debts, specifying the selling price, transfer of creditor rights from the Fund to the buyer, and other related agreements.
9. Handling the Difference Between Selling Price and Book Value of Debts (after deducting legal costs)
a) In case the selling price is higher than the book value of the debt
The excess portion shall be implemented in accordance with point c, Clause 3, Article 51 of Decree No. 39/2019/NĐ-CP.
b) In the case where the sale price of the debt is lower than the book value of the debt
The shortfall portion shall be implemented in accordance with point a, Clause 1, Article 42 and point b, Clause 3, Article 51 of Decree No. 39/2019/NĐ-CP.
10. Accounting entries in selling debts
The Fund shall carry out accounting treatment for debt sale according to current regulations on accounting systems applicable to the Fund.
11. Implementation of selling debts
a) In case SMEs propose to sell debts
Selling debts within the authority to decide of the Fund shall be carried out in accordance with Clause 7, Article 7 of this Circular.
Selling debts within the authority to decide of the Prime Minister: shall be carried out in accordance with Clause 7, Article 9 of this Circular.
b) In case the Fund proposes to sell debts
The Fund shall appraise, assess risks, determine the level of capital and asset losses occurring to SMEs, prepare a risk management report, and submit it to the competent authority for decision; sell debts after receiving a decision on selling debts from the competent authority.
Article 11. Handling collateral assets
1. Objectives for Consideration:
SMEs encountering risks as specified in Clauses 1, 2, and 3 of Article 5 of this Circular.
2. Conditions for Consideration:
SMEs may be considered for handling collateral assets if they meet the following conditions:
a) They belong to the category specified in Clause 1 of this Article.
b) They have used borrowed capital for the purposes stated in the Contract.
c) Facing difficulties in business operations leading to at least one consecutive year of losses or cumulative losses, unable to fully repay the principal and interest according to the signed contract.
d) They have complete documentation as required by Clause 3 of this Article.
3. Documents requesting the handling of collateral assets
a) In the case where SMEs request risk management
SMEs prepare one set of application documents in accordance with Clause 3 of Article 7 of this Circular.
If SMEs request the handling of collateral assets for the full book value of the debt, the risk management proposal document does not need to include commitments and business operation plans, feasible repayment plans if accepted for risk management.
b) In the case where the Fund requests risk management: The Fund prepares one set of documents in accordance with point b, Clause 3, Article 10 of this Circular.
4. Documents for handling collateral assets
a) In the case where SMEs request risk management: Documents in accordance with point a, Clause 3 of this Article.
b) In the case where the Fund requests risk management: Documents in accordance with point b, Clause 3 of this Article.
c) Risk management report of the Fund: In addition to the contents stipulated in point c, Clause 4, Article 7, the risk management report must also include recommendations for handling collateral assets for part or all of the book value of the debt.
d) Other documents and papers as prescribed by laws on handling collateral assets.
5. Authority to decide on applying measures to handle collateral assets
a) In the case where handling collateral assets does not reduce the charter capital of the Fund:
The Fund shall consider and decide on applying measures to handle collateral assets in accordance with point c, Clause 1, Article 41 of Decree No. 39/2019/NĐ-CP, provisions of the Civil Code 2015, and relevant laws on handling collateral assets.
b) In the case where handling collateral assets reduces the charter capital of the Fund:
The Fund has the responsibility to prepare documents for handling collateral assets, report to the Ministry of Planning and Investment, in coordination with the Ministry of Finance, for the Prime Minister to consider and decide on applying measures to handle collateral assets in accordance with point a, Clause 1, Article 41 of Decree No. 39/2019/NĐ-CP.
6. Methods of handling collateral assets
a) Auctioning the asset;
b) The party receiving the guarantee selling the asset itself;
c) The party receiving the guarantee accepting the asset itself in lieu of the fulfillment of the obligation by the party providing the guarantee;
d) Other methods as prescribed by law on the handling of collateral assets.
7. Principles for handling collateral assets
a) A debt may be handled through collateral assets multiple times for part or all of the book value of the debt.
b) Handling collateral assets shall be carried out in accordance with the Civil Code and relevant laws on handling collateral assets.
The method of handling collateral assets must be specified in the Collateral Contract. In the absence of an agreement on the method of handling collateral assets, the asset shall be handled through public auction.
8. Handling the difference between the amount received from handling collateral assets and the book value of the debt (after deducting costs as prescribed by law)
a) In the case where the amount received from handling collateral assets exceeds the book value of the debt, the excess portion shall be handled according to the agreement in the signed contract (if any) or transferred back to the SMEs.
b) In the case where the amount received from handling collateral assets is less than the book value of the debt, the shortfall portion shall be handled in accordance with Decree No. 39/2019/NĐ-CP.
The Fund has the right to require SMEs to pay the remaining shortfall of the debt. The amount received from the remaining shortfall shall be handled in accordance with point c, Clause 3, Article 51 of Decree No. 39/2019/NĐ-CP.
9. Accounting entries in handling collateral assets
The Fund shall carry out accounting entries for handling collateral assets in accordance with current accounting regulations applicable to the Fund.
10. Handling collateral assets
Implemented in accordance with Clause 11, Article 10 of this Circular.
Article 12. Debt Interest Write-off
1. Objectives for Consideration:
Small and Medium-sized Enterprises (SMEs) encountering risks as prescribed in Clause 1 or Clause 4 of Article 5 of this Circular.
2. Conditions for Consideration:
SMEs may be considered for debt interest write-off if they meet all of the following conditions:
a) They belong to the category specified in Clause 1 of this Article.
b) They have used borrowed capital for the purposes stated in the Contract.
c) Facing difficulties in production and business operations, resulting in losses in two consecutive years immediately preceding the year in which risk must be addressed; or continuing to have accumulated losses in one year prior to the year in which risk must be addressed (for SMEs with less than two years of operation); unable to fully repay debts (principal and interest) according to the signed Contract on time (except in cases prescribed in Clause 4 of Article 5 of this Circular).
d) Having complete documentation to request risk handling as prescribed in Clause 3 of this Article.
đ) In cases prescribed in Clause 1 of Article 5 of this Circular: The debt of SMEs has been subject to risk handling measures prescribed in Articles 10 or 11 of this Circular to recover principal and interest, but SMEs still have remaining unpaid interest.
e) In cases prescribed in Clause 4 of Article 5 of this Circular: The debt of SMEs has or has not been subject to risk handling measures prescribed in Articles 10 or 11 of this Circular to recover interest, but SMEs still have remaining unpaid interest.
3. Documentation for Requesting Debt Interest Write-off
a) In cases where SMEs request debt interest write-off, SMEs can request debt interest write-off when encountering risks as prescribed in Clause 1 of Article 5 of this Circular and prepare documentation as prescribed in Clause 3 of Article 7 of this Circular.
b) In cases where the Fund requests debt interest write-off
The Fund requests debt interest write-off for SMEs encountering risks as prescribed in Clause 4 of Article 5 of this Circular. The Fund prepares the documentation for requesting debt interest write-off as follows:
- Documentation as prescribed in Point b, Clause 3, Article 10 of this Circular.
- Decision of the Enforcement Agency regarding the execution of the decision declaring bankruptcy (original copy).
4. Documentation for Debt Interest Write-off
a) In cases where SMEs request debt interest write-off: Documentation as prescribed in Point a, Clause 3 of this Article.
b) In cases where the Fund requests debt interest write-off: Documentation as prescribed in Point b, Clause 3 of this Article.
c) Risk Handling Report of the Fund: In addition to the contents prescribed in Point c, Clause 4, Article 7, the Risk Handling Report must include a recommendation for the level of debt interest write-off.
5. Authority to Decide on Risk Management Measures
The Fund is responsible for reporting to the Minister of Planning and Investment for consideration and decision on applying the debt interest write-off measure as prescribed in Point b, Clause 1, Article 41 of Decree No. 39/2019/NĐ-CP.
6. Principles of Debt Interest Write-off
a) The level of debt interest write-off is decided by the authorized person prescribed in Clause 5 of this Article.
b) A debt interest can only be written off once.
7. Implementation of Debt Interest Write-off
a) In cases where SMEs request debt interest write-off
Implement as prescribed in Clause 7 of Article 9 of this Circular.
b) In cases where the Fund requests debt interest write-off
Implement as prescribed in Point b, Clause 11 of Article 10 of this Circular.
Article 13. Principal Debt Write-off
1. Objectives for Consideration:
SMEs encountering risks as prescribed in Clause 4 of Article 5 of this Circular.
2. Conditions for Consideration:
SMEs may be considered for principal debt write-off if they meet all of the following conditions:
a) They belong to the category specified in Clause 1 of this Article.
b) They have used borrowed capital for the purposes stated in the Contract.
c) Having complete documentation as prescribed in Clause 3 of this Article.
d) The debt of SMEs has or has not been subject to risk handling measures prescribed in Article 11 of this Circular to recover principal, but SMEs still have remaining unpaid principal.
3. Documentation for Requesting Principal Debt Write-off
The Fund prepares documentation as prescribed in Point b, Clause 3 of Article 12 of this Circular.
4. Documentation for Principal Debt Write-off
a) Documentation as prescribed in Point b, Clause 3 of this Article.
b) Risk Handling Report of the Fund: In addition to the contents prescribed in Point c, Clause 4, Article 7, the Risk Handling Report must include a recommendation for the level of principal debt write-off.
5. Authority to Decide on Applying Principal Debt Write-off Measures
a) In cases where principal debt write-off does not reduce the registered capital of the Fund: The Fund is responsible for reporting to the Minister of Planning and Investment for consideration and decision on applying the principal debt write-off measure as prescribed in Point b, Clause 1, Article 41 of Decree No. 39/2019/NĐ-CP.
b) In cases where principal debt write-off reduces the registered capital of the Fund:
The Fund is responsible for submitting to the Ministry of Planning and Investment to take the lead and coordinate with the Ministry of Finance to report.
6. Principles of Principal Debt Write-off
a) The level of principal debt write-off is decided by the authorized person prescribed in Clause 5 of this Article.
b) A principal debt can only be written off once.
7. Implementation of Principal Debt Write-off
Implement as prescribed in Point b, Clause 11 of Article 10 of this Circular.
PART II
SOURCES OF RISK HANDLING
Article 14. Sources for Risk Management
1. Revenue recovered from selling debts and processing collateral assets.
2. Sources from risk reserves and financial reserve funds
a) The risk reserve fund and financial reserve fund as prescribed in Clause 1, Article 42 and Clause 3, Article 51 of Decree No. 39/2019/NĐ-CP shall be used to implement measures to manage risks: selling debts (in cases where the sale price is lower than the original debt value recorded in the books); disposing of collateral assets (in cases where the proceeds from disposing of collateral assets are lower than the book value of the debt); writing off the original debt.
b) In cases where the risk reserve and financial reserve fund have been fully utilized but are insufficient to cover the risks, the Fund shall report to the Ministry of Planning and Investment, which will take the lead and coordinate with the Ministry of Finance to submit proposals.
3. Sources to implement other risk handling measures shall be carried out in accordance with the provisions of the law.
Chapter III
IMPLEMENTATION
Article 15. Responsibilities of Relevant Organizations and Individuals
1. Relevant organizations, units, and individuals are responsible for implementing this Circular.
2. Ministries, ministerial-level agencies, government-affiliated agencies, and People's Committees at all levels within their respective functions, tasks, and authorities shall direct subordinate agencies and enterprises, and cooperate with the Fund in debt recovery and management activities.
3. The Small and Medium Enterprise Development Fund is responsible for issuing regulations on authority in reviewing and deciding on risk management measures as stipulated in Clause 5, Article 7, Clause 5, Article 8, Point a, Clause 5, Article 10, and Point a, Clause 5, Article 11 of this Circular.
Article 16. Implementation Provisions
1. This Circular takes effect from February 25, 2021.
2. During implementation, if there are any difficulties, relevant organizations and individuals are requested to promptly reflect them to the Ministry of Planning and Investment for study and amendment.
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THE MINISTER (Signed) |
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