Circular No. 14/2024/TT-NHNN on the classification of assets (loans) of microfinance organizations

CIRCULAR

Regulations on classification of assets held by microfinance organizations

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

Based on the Law on Credit Institutions dated 18  month 01 year 2024fiscal year 2024;

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

At the proposal of the Director of Banking Inspection and Supervision;

The Governor of the State Bank of Vietnam issues this Circular to regulate the classification of assets held by microfinance organizations. microfinance.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation and Applicability

1. Scope of regulation: This Circular regulates the classification of assets held (hereinafter referred to as debts) arising from the following activities of microfinance organizations:

a) Lending;

b) Entrusted lending;

c) Deposits (excluding demand deposits) at credit institutions and foreign bank branches in accordance with the provisions of the law.

第二条 组织和实施奖励工作的支出水平，如政府第152/2025/NĐ-CP号决定关于分级授权和奖励领域的分权规定

a) Microfinance organizations;

b) Other organizations and individuals related to the classification of debts of microfinance organizations.

Article 2. Interpretation of Terms

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

1. Debt classification is the process of categorizing principal debts into groups of debts as prescribed in Article 5 of this Circular.

2. A debt is the amount of money that a microfinance organization has deposited, disbursed in installments (in cases where each disbursement has different repayment terms), or disbursed according to an agreement (in cases where multiple disbursements have the same final repayment term) for a customer who has not yet repaid the debt.

3. An overdue debt is a debt where the customer fails to repay the principal and/or interest in full or in part as agreed with the microfinance organization within the due date.

4. Non-performing loans (NPLs) are on-balance sheet non-performing loans, including loans classified into Groups 3, 4, and 5 as stipulated in this Circular.

5. The ratio of non-performing loans is the ratio between non-performing loans and the total of all loans from Group 1 to Group 5 as stipulated in this Circular.

6. Restructured debt is debt that has been restructured in terms of repayment period in accordance with the regulations of the State Bank of Vietnam (hereinafter referred to as the State Bank).

7. A customer is a credit institution, a foreign bank branch, or a microfinance customer as defined by the State Bank who has an obligation or may incur an obligation to repay or settle debts to a microfinance organization under an agreement.

Article 3. Periodic Implementation of Debt Classification

At least once a month, within the first seven days of the month, microfinance organizations shall classify debts up to the end of the last day of the preceding month based on the provisions of Articles 4 and 5 of this Circular.

Chapter II

SPECIFIC PROVISIONS

Article 4. Principles of Debt Classification

1. The entire outstanding balance of a customer at a microfinance organization must be classified into the same group of debts. For customers with two or more debts at a microfinance organization, if any debt is classified into a higher risk group according to the provisions of Article 5 of this Circular, the microfinance organization must reclassify the remaining debts of the customer into the highest risk group.

2. For entrusted lending where the entrustee has not fully disbursed the entrusted amount according to the entrusted agreement, the entrusting microfinance organization must classify the undisbursed entrusted amount as a loan to the entrustee. The overdue period is determined from the date the entrustee fails to disburse the funds according to the disbursement deadline specified in the entrusted agreement.

Article 5. Debt Classification

Microfinance organizations shall classify debts into five groups as follows:

1. Group 1 (Standard Debts) includes:

a) Debts within their due dates;

b) Overdue debts under 10 days.

2. Group 2 (Debts Requiring Attention) includes:

a) Overdue debts from 10 to less than 30 days;

b) First-time restructured debts.

3. Group 3 (Substandard Debts) includes:

a) Overdue debts from 30 to less than 90 days;

b) First-time restructured debts overdue under 30 days according to the restructured repayment period;

c) Debts exempted or reduced in interest due to the customer's inability to pay the full agreed interest.

4. Group 4 (Doubtful Debts) includes:

a) Overdue debts from 90 to less than 180 days;

b) First-time restructured debts overdue from 30 to less than 90 days according to the restructured repayment period;

c) Second-time restructured debts.

5. Group 5 (Loss Debts) includes:

a) Overdue debts of 180 days or more;

b) First-time restructured debts overdue 90 days or more according to the restructured repayment period;

c) Second-time restructured debts overdue according to the second restructured repayment period;

d) Third-time or subsequent restructured debts, whether overdue or not.

Article 6. Reporting

Microfinance organizations must report on the results of loan classification, provision establishment, and utilization for risk management in accordance with the reporting and statistical system regulations applicable to microfinance organizations issued by the State Bank.

Chapter III

ORGANIZATION AND IMPLEMENTATION

Article 7. Responsibilities of the State Bank

1. The banking inspection and supervision agency, the State Bank branch in provinces and centrally-administered cities shall be responsible for:

a) Inspecting, supervising, and auditing the implementation of loan classification, provision establishment, and utilization for risk management by microfinance organizations within their authority and in accordance with the law;

b) Handling violations by microfinance organizations within their authority and in accordance with the administrative violation handling regulations in the monetary and banking sector.

2. The Forecasting and Statistics Department shall take the lead, coordinating with relevant units to submit to the Governor of the State Bank for issuance of regulations regarding the reporting and statistical system for loan classification, provision establishment, and utilization for risk management in the operations of microfinance organizations.

3. The Finance and Accounting Department shall base on this Circular to develop and submit to the Governor of the State Bank guiding documents for implementing related accounting systems in accordance with the law.

Article 8. Implementation clause

1. This Circular takes effect from August 12, 2024.

2. This Circular abolishes Circular No. 15/2010/TT-NHNN dated June 16, 2010, of the Governor of the State Bank on loan classification, provision establishment, and utilization for risk management in lending activities of small-scale financial organizations.

Article 9. Implementation responsibilities

The Head of the Office, the Head of Banking Inspection and Supervision, the Heads of relevant units under the State Bank, and microfinance organizations are responsible for implementing this Circular./.