Circular No. 15/2012/TT-NHNN on the State Bank of Vietnam providing refinancing in the form of relending based on credit files to credit institutions

CIRCULAR

Provisions on the State Bank of Vietnam providing refinancing in the form of relending based on credit files to credit institutions

Pursuant to the Law on the State Bank of Vietnam No. 46/2010/QH12 dated June 16, 2010;

Pursuant to the Law on Credit Organizations No. 47/2010/QH12 dated June 16, 2010;

Pursuant to Decree No. 96/2008/NĐ-CP dated August 26, 2008 of the Government stipulating the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;

Considering the proposal of the Director of the Monetary Policy Department;

The Governor of the State Bank of Vietnam issues this Circular stipulating the State Bank of Vietnam's provision of refinancing in the form of relending based on credit files to credit institutions for temporary liquidity support and economic development as directed by the Government during each period.

Section I

GENERAL PROVISIONS

Article 1. Scope of Regulation

1. This Circular stipulates the State Bank of Vietnam (hereinafter referred to as the State Bank) providing refinancing in the form of relending based on credit files to credit institutions for temporary liquidity support and economic development as directed by the Government during each period.

2. The State Bank’s provision of refinancing in the form of relending based on credit files to the Social Policy Bank shall be carried out according to the Prime Minister's decision.

Article 2. Applicability

Credit institutions eligible for the State Bank's consideration for refinancing in the form of relending based on credit files include:

1. Commercial banks;

2. Cooperative banks (Central Credit Funds during the transitional period before converting to cooperative bank models as prescribed by the Law on Credit Institutions);

3. Financial companies, financial leasing companies.

Article 3. Credit files and criteria for loans and financial leases in credit files

1. Credit files for refinancing at the State Bank include loan contracts, loan guarantee contracts, and financial lease contracts signed between credit institutions and customers in accordance with the law, and other necessary documents as required by the State Bank.

2. Criteria for loans and financial leases in credit files:

At the time of requesting refinancing at the State Bank, loans and financial leases in credit files must meet the following conditions:

a) Loans must be secured by assets in accordance with the law, and the value of the collateral must not be less than the outstanding loan balance.

b) Classified as category 1 under the State Bank's regulations on loan classification;

c) The remaining term must be at least 30 days longer than the requested refinancing term at the State Bank;

d) Excluding loans and financial leases in areas that the State Bank does not encourage.

Article 4. Authority to sign documents requesting the State Bank to provide refinancing

1. The person authorized to represent credit institutions in signing documents requesting the State Bank to provide refinancing is one of the following:

a) Chairman of the Board of Directors or Chairman of the Board of Members of the credit institution;

b) General Director (Director) of the credit institution.

2. The authority specified in Clause 1 of this Article may delegate their authority to a deputy to sign documents requesting refinancing at the State Bank, in compliance with the law and bear responsibility for such delegation. The delegatee may not further delegate this authority to a third party.

Article 5. Interest Rates

1. The interest rate for refinancing in the form of relending based on credit files is the refinancing interest rate published by the State Bank during each period.

2. The overdue interest rate is 150% of the refinancing interest rate stated in the loan contract between the State Bank and the credit institution.

Article 6. Term

1. The term for refinancing capital in the form of re-lending based on credit files shall be less than 12 months.

2. Based on the purpose of the request for refinancing capital from credit institutions, the State Bank shall decide the term of refinancing capital in each specific case.

3. In cases where credit institutions are unable to repay debts on time and have requested an extension, the State Bank may consider extending the loan term for refinancing capital based on the ability to restore liquidity and the monetary policy guidance of the State Bank during each period; the extension period shall not exceed the loan term for refinancing capital.

Article 7. Debt Repayment Method

1. Credit institutions shall repay principal and interest to the State Bank when due. In cases where the repayment date coincides with a weekend or public holiday, the repayment date shall be the next working day.

2. Where there are sources of income that can be used to repay refinanced capital debt, credit institutions shall proactively repay the State Bank ahead of schedule.

Article 8. Handling of Late Debt Repayment

In cases where credit institutions fail to repay principal and interest upon maturity and do not obtain an extension of refinancing capital from the State Bank, the State Bank shall transfer the overdue debt (principal and interest) to overdue debt and apply the overdue interest rate from the date of overdue. At the same time, the State Bank will implement measures to compulsorily recover principal and interest as follows:

1. Recovering principal and interest from other sources (if any) of credit institutions;

2. Withdrawing funds from credit institutions' deposit accounts at the State Bank to recover debt;

3. Requesting credit institutions to transfer ownership rights to the State Bank for remaining securities meeting transaction conditions with the State Bank owned by credit institutions;

4. Requesting credit institutions to establish a debt recovery team to recover overdue amounts within the list of credit files to repay the State Bank under the supervision of the State Bank branch in the province/city where the main office of the credit institution is located (hereinafter referred to as the State Bank branch in the province/city) and the Banking Supervisory Authority.

5. After implementing the provisions of Clause 1, 2, 3, and 4 of this Article, if credit institutions still cannot repay the debt or repay it fully, the State Bank will consider transferring the remaining balance to special loans according to the law.

PART II

REFINANCING CAPITAL IN THE FORM OF RE-LENDING BASED ON CREDIT FILES TO SUPPORT TEMPORARY PAYMENT CAPABILITY

Article 9. Purpose

The purpose of the State Bank's refinancing capital is to support temporary payment capability for credit institutions.

Article 10. Conditions for Refinancing Capital

The State Bank shall examine and decide to provide refinancing capital to credit institutions when they meet the following conditions:

1. They are credit institutions defined in Article 2 of this Circular, facing difficulties in payment capability but not yet placed under special control.

2. They do not have or no longer have securities to request refinancing capital in the form of collateralized loans according to the regulations of the State Bank.

3. They have loans and financial leasing transactions in credit files meeting the standards stipulated in this Circular.

Article 11. Level of Refinancing

1. Based on the actual need for payment capacity of credit institutions and the total actual outstanding debt of loan and financial lease transactions in the credit application at the time when the credit institution requests refinancing, the State Bank shall decide the level of refinancing for the credit institution;

2. The maximum level of refinancing is equal to 60% of the total actual outstanding debt of loan and financial lease transactions in the credit application at the time of requesting refinancing.

Article 12. Procedures for Considering Refinancing or Extending Refinancing

1. When there is a need for refinancing or extending refinancing, the credit institution shall submit four sets of applications directly or through postal service to the State Bank (Department of Monetary Policy). In the case of extending refinancing, the credit institution must send the application to the State Bank at least ten working days before the due date for refinancing repayment.

In cases of refusal, the State Bank will issue a document refusing approval to use foreign currency within the territory and clearly state the reasons.

a) A request for refinancing according to Form No. 01A/NHNN-HSTD or a request for extension of refinancing according to Form No. 01B/NHNN-HSTD;

b) A list of credit applications for refinancing from the State Bank according to Form No. 02/NHNN-HSTD;

c) Some indicators regarding sources and use of Vietnamese dong capital according to Form No. 03/NHNN-HSTD; Report on the situation of using securities according to Form No. 04/NHNN-HSTD; Forecasted demand for borrowing Vietnamese dong capital from the State Bank according to Form No. 05/NHNN-HSTD.

d) Specific measures to have funds to repay refinancing debt to the State Bank (applicable to requests for extension of refinancing).

2. Based on the request of the credit institution, within one working day from the date of receiving all the application documents for refinancing or extension of refinancing from the credit institution, the Department of Monetary Policy shall take the lead in soliciting opinions:

a) The banking inspection and supervision agency on the assessment of payment capacity and agreement (or disagreement) with the request for refinancing or extension of refinancing of the credit institution.

b) The State Bank branch in provinces and cities on the assessment of payment capacity; results of checking and verifying the rationality and appropriateness of the indicators listed in the credit application form prepared by the credit institution for refinancing at the State Bank and agreement (or disagreement) with the request for refinancing or extension of refinancing of the credit institution whose main office is located in that area (excluding credit institutions which are state-owned commercial banks, joint-stock commercial banks with state capital holding more than 50% of charter capital, cooperative banks, and central people's credit funds during the period not yet converted to the operation model of cooperative banks as stipulated in the Law on Credit Institutions).

c) The Credit Department on the results of checking and verifying the rationality and appropriateness of the indicators listed in the credit application form prepared by the credit institution for refinancing at the State Bank and agreement (or disagreement) with the request for refinancing or extension of refinancing of the credit institution.

3. Within a maximum of two working days from the date of receiving the opinion solicitation document from the Department of Monetary Policy regarding the request for refinancing or extension of refinancing of the credit institution, the banking inspection and supervision agency, the State Bank branch in provinces and cities, and the Credit Department shall send their opinions to the Department of Monetary Policy for consolidation and submission to the Governor of the State Bank.

4. Based on the refinancing conditions, the application for refinancing or extension of refinancing, and the opinions of the units, within a maximum of two working days from the date of receiving the opinions of the aforementioned units, the Department of Monetary Policy shall submit to the Governor of the State Bank for consideration and decision.

5. Within a maximum of eight working days from the date of receiving all the documents of the credit institution as prescribed in this Circular, the State Bank shall issue a document approving or disapproving the request for refinancing or extension of refinancing of the credit institution.

Article 13. Implementation of Refinancing

1. Refinancing shall be implemented at the State Bank Trading Department or the State Bank Branch in provinces/cities upon authorization by the Governor of the State Bank.

2. Based on approval or authorization from the Governor of the State Bank, the State Bank Trading Department or the State Bank Branch in provinces/cities shall proceed to sign refinancing loan contracts, implement disbursement of refinanced funds, recover principal and interest when due according to this Circular and the authorized contents.

Section III

REFINANCING IN THE FORM OF RELOANING BASED ON CREDIT FILES TO SUPPORT ECONOMIC DEVELOPMENT IN EACH PERIOD

Article 14. Purpose

The purpose of the State Bank's refinancing is to provide capital support for economic development as directed by the Government in each period for credit institutions.

Article 15. Conditions for Refinancing

The State Bank shall consider and decide to implement refinancing when credit institutions meet the following conditions:

1. Credit institutions have provided loans and financial leasing and currently still have outstanding debts towards industries and sectors of the economy that the Government encourages to develop in each period.

2. Have plans to provide loans and financial leasing to industries and sectors of the economy that the Government encourages to develop in each period.

3. Credit institutions are not placed under special supervision and comply with the State Bank's regulations on maintaining safety ratios in operations.

4. There are loan and financial leasing items in the credit file meeting the standards stipulated in this Circular.

Article 16. Level of Refinancing

1. The State Bank shall consider and decide the level of refinancing for credit institutions based on:

a) The actual outstanding balance of loans and financial leasing provided by credit institutions up to the time of requesting refinancing for industries and sectors of the economy that the Government encourages in each period.

b) The total actual outstanding balance of loan and financial leasing items in the credit file at the time the credit institution requests refinancing.

2. The total outstanding balance of refinancing aimed at supporting economic development by the State Bank for credit institutions shall not exceed the outstanding balance of loans and financial leasing provided by credit institutions to customers for industries and sectors of the economy that the Government encourages in each period.

3. The maximum level of refinancing equals 80% of the total actual outstanding balance of loan and financial leasing items in the credit file at the time of requesting refinancing.

Article 17. Process for Reviewing Refinancing or Extending Refinancing

1. When there is a need for refinancing or extending refinancing, credit institutions shall submit three sets of files directly or through postal service to the State Bank (Monetary Policy Department). In cases of extending refinancing, credit institutions shall submit the files to the State Bank at least 15 working days before the refinancing repayment deadline.

In cases of refusal, the State Bank will issue a document refusing approval to use foreign currency within the territory and clearly state the reasons.

a) A request for refinancing according to Form No. 01A/NHNN-HSTD or a request for extension of refinancing according to Form No. 01B/NHNN-HSTD;

b) A list of credit files for refinancing loans at the State Bank according to Form No. 02/NHNN-HSTD;

c) Plans for providing loans and financial leasing to industries and sectors of the economy that the Government encourages to develop in each period;

d) Some indicators regarding sources and use of Vietnamese dong funds according to Form No. 03/NHNN-HSTD; Forecasted demand for Vietnamese dong loans from the State Bank according to Form No. 05/NHNN-HSTD.

2. Based on the refinancing conditions, the application files for refinancing or extending refinancing submitted by credit institutions, the Monetary Policy Department shall coordinate with the Credit Department and the Banking Supervision Authority to present to the Governor of the State Bank for review and decision.

3. Within a maximum of 15 working days from the date of receiving complete files from credit institutions as stipulated in this Circular, the State Bank shall issue a document approving or not approving the refinancing or extended refinancing request of credit institutions.

Article 18. Implementation of refinancing capital

1. Refinancing shall be implemented at the State Bank Trading Department or the State Bank Branch in provinces/cities upon authorization by the Governor of the State Bank.

2. Based on the approval of the Governor of the State Bank of Vietnam, the State Bank of Vietnam Branches or the State Bank of Vietnam provincial branches authorized may examine and conclude refinancing capital contracts, implement disbursement of refinancing capital, recover principal and interest when due according to this Circular and the authorized contents.

Chapter IV

IMPLEMENTATION

Article 19. Responsibilities of credit institutions

1. Use capital for the intended purpose and repay debts to the State Bank of Vietnam on time.

2. Bear legal responsibility for the accuracy and legality of data and documents provided to the State Bank of Vietnam.

3. Bear responsibility for loans and financial leasing transactions in credit files proposed for refinancing in the form of re-lending according to the credit files meeting the standards stipulated in this Circular; organize the preservation and storage of these credit files separately.

4. During the period of refinancing at the State Bank of Vietnam, credit institutions must monitor and evaluate the standards of loans and financial leasing transactions in credit files for refinancing loans and must immediately supplement loans and financial leasing transactions that meet the required standards to replace those that do not meet the standards stipulated in this Circular, while reporting to the State Bank of Vietnam (Department of Monetary Policy, Banking Supervision Agency, Department of Credit, State Bank of Vietnam Branches or the State Bank of Vietnam provincial branches). The actual total outstanding balance of loans and financial leasing transactions after changes shall not be lower than the actual total outstanding balance of loans and financial leasing transactions already used to borrow refinancing capital from the State Bank of Vietnam.

5. Be subject to inspection, examination, and supervision by the State Bank of Vietnam according to the general and surprise inspection plans during the borrowing period.

6. Implement the transfer of ownership of securities remaining to be traded with the State Bank of Vietnam belonging to credit institutions to fulfill the obligation of repaying debt to the State Bank of Vietnam in case of inability to repay refinancing capital on time.

7. Establish a debt collection team to collect overdue debts listed in the credit file statement to repay the State Bank of Vietnam.

8. Implement other directives of the Governor of the State Bank of Vietnam.

9. Report on the use of refinancing capital funds according to Form No. 06/NHNN-HSTD; report on lending and debt recovery situations for economic sectors according to Form No. 07/NHNN-HSTD.

Article 20. Liability of units under the State Bank of Vietnam

1. Monetary Policy Department

a) Advise the Governor of the State Bank of Vietnam to determine and announce refinancing interest rates in each period;

b) Receive refinancing requests and refinancing extension requests from credit institutions;

c) Take the lead and coordinate with relevant units to examine refinancing requests and refinancing extension requests from credit institutions to support temporary payment capacity, support economic development according to government directives in each period, and submit to the Governor of the State Bank of Vietnam for consideration and approval;

d) Transfer the refinancing request and refinancing extension request of credit institutions, the results of checking and comparing the rationality and suitability of indicators on the credit file statement according to the Governor's decision approving refinancing and refinancing extensions to the State Bank of Vietnam Branches or the State Bank of Vietnam provincial branches for implementation of refinancing and refinancing extensions;

đ) Take the lead and coordinate with relevant units to submit to the Governor of the State Bank of Vietnam for handling difficulties and obstacles arising during the implementation of refinancing;

e) Summarize the implementation situation of refinancing from the State Bank of Vietnam Branches and the State Bank of Vietnam provincial branches periodically to report to the Governor of the State Bank of Vietnam.

g) Take the lead and coordinate with relevant units to submit to the Governor of the State Bank of Vietnam for converting refinancing capital into special loans according to regulations.

h) Coordinate with relevant units to handle difficulties and obstacles arising when credit institutions fail to repay debts on time.

2. Banking Inspection and Supervision Authority

a) Advise the Governor of the State Bank of Vietnam on establishing a supervisory team at credit institutions if necessary when credit institutions request refinancing to support payment capacity.

b) Coordinate with the Department of Monetary Policy to examine and submit to the Governor of the State Bank of Vietnam regarding credit institution refinancing requests and refinancing extension requests and convert refinancing loans into special loans;

c) Inspect, examine, and supervise the use of refinancing capital during the refinancing period and loans and financial leasing transactions in credit files for refinancing at the State Bank of Vietnam;

d) Handle according to authority and recommend the Governor of the State Bank of Vietnam to handle cases violating provisions in this Circular and related regulations;

đ) Coordinate with relevant units to handle difficulties and obstacles arising during the implementation of refinancing and debt recovery.

3. Department of Credit

a) Advise the Governor of the State Bank of Vietnam on programs and goals for economic and social development that need encouragement in each period.

b) Coordinate with the Department of Monetary Policy to examine and submit to the Governor of the State Bank of Vietnam regarding credit institution refinancing requests and refinancing extension requests and convert refinancing loans into special loans;

c) Coordinate with relevant units to handle difficulties and obstacles arising during the implementation of refinancing and debt recovery.

4. Department of Finance - Accounting: Guide accounting procedures related to refinancing capital.

5. State Bank of Vietnam Trading Department

a) Based on the Governor's Decision approving refinancing and refinancing extensions for credit institutions, the refinancing request and refinancing extension request of credit institutions, and the results of checking and comparing the rationality and suitability of indicators on the credit file statement, sign refinancing contracts, disburse refinancing capital, extend loan repayment deadlines, and recover principal and interest according to this Circular;

b) Regularly report to the Governor of the State Bank of Vietnam on the refinancing situation at the Trading Department (simultaneously send to the Department of Monetary Policy, Banking Supervision Agency, Department of Credit) according to Form No. 08/NHNN-HSTD;

c) Take the lead and coordinate with relevant units to submit to the Governor of the State Bank of Vietnam measures for handling the recovery of refinanced debt in cases where credit institutions fail to repay on time;

d) Coordinate with the Monetary Policy Department to examine and submit to the Governor of the State Bank of Vietnam the conversion of refinanced loans into special loans;

6. The State Bank of Vietnam branch in provinces and cities

a) Coordinate with the Monetary Policy Department to examine and submit to the Governor of the State Bank of Vietnam the requests for refinancing and extension of refinancing from credit institutions aimed at supporting their liquidity and converting refinanced loans into special loans;

b) Based on the Decision approving refinancing and extension of refinancing issued by the Governor of the State Bank of Vietnam for credit institutions, the requests for refinancing and extension of refinancing from credit institutions, and the results of reviewing and verifying the rationality and compliance of indicators on the Credit File Statement, implement the signing of refinancing contracts, disbursement of refinancing funds, extension of refinancing loans, recovery of principal and interest according to the provisions of this Circular;

c) Regularly report to the Governor of the State Bank of Vietnam on the situation of refinancing at the State Bank of Vietnam branch in provinces and cities (simultaneously send to the Monetary Policy Department, the Banking Inspection and Supervision Agency, the Credit Department) using Form No. 08/NHNN-HSTD;

d) Coordinate with units under the State Bank of Vietnam to conduct inspections, audits, and supervision of the use of refinanced funds by credit institutions, handle according to their authority, and recommend to the Governor of the State Bank of Vietnam to deal with violations according to current regulations;

đ) Take the lead and coordinate with relevant units to submit to the Governor of the State Bank of Vietnam measures for handling the recovery of refinanced debt in cases where credit institutions fail to repay on time.

Article 21. Handling Violations.

Credit institutions violating the provisions of this Circular shall be subject to penalties for violations according to current laws and other measures depending on the nature and degree of violation;

Article 22. Effectiveness

1. This Circular takes effect from May 16, 2012;

2. Refinancing loans in the form of re-lending based on credit files with outstanding balances as of the date this Circular takes effect shall continue to be implemented according to signed contracts until maturity. Collection of refinanced loans, extension of refinancing, and resolution of issues arising before this Circular takes effect shall be handled according to decisions of the Governor of the State Bank of Vietnam and the provisions of this Circular;

3. The Director of the Office, Heads of the Monetary Policy Department, the Banking Inspection and Supervision Agency, the Credit Department, the Trading Department of the State Bank of Vietnam, the Financial Accounting Department, and Heads of units under the State Bank of Vietnam, Directors of State Bank of Vietnam branches in provinces and cities; Chairmen of Management Boards, Chairmen of Member Councils, General Managers (Directors) of credit institutions, Central Credit Funds shall be responsible for implementing this Circular./.