Circular No. 18/2015/TT-NHNN on refinancing based on special bonds of the Vietnam Asset Management Company

CIRCULAR

Regulations on refinancing based on special bonds

of the Vietnam Asset Management Companyt s

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Camendpursuant to the Law on the State Bank of VietnamNo. No. 46/2010/QH12 dated December 16 organize credit institutions, foreign bank branches are responsible for organizing the implementation of this Circular.hJune 2024;energy 6 n, 2010;

Based on the Law on Credit Institutions No.No. 47/2010/QH12 dated December 16,June 2024;art. 6 year 2010;

Pursuant to Decree No. 156/2013/NĐ-CP dated November 11, 2013, of the Government stipulating the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;

Pursuant to Decree No. 53/2013/NĐ-CP dated May 18, 2013 of the Government on the establishment, organization, and operation of the Vietnam Asset Management Company (hereinafter referred to as Decree No. 53/2013/NĐ-CP);0Pursuant to Decree No. 34/2015/NĐ-CP dated March 31, 2015 of the Government amending and supplementing some articles of Decree No. 53/2013/NĐ-CP dated May 18, 2013 of the Government on the establishment, organization, and operation of the Vietnam Asset Management Company (hereinafter referred to as Decree No. 34/2015/NĐ-CP);

The Governor of the State Bank of Vietnam issues this Circular stipulating the provision of rediscounting based on special bonds of the Vietnam Asset Management Company.No. This Circular stipulates the provision of rediscounting in Vietnamese dong by the State Bank of Vietnam (hereinafter referred to as the State Bank) to credit institutions based on special bonds of the Vietnam Asset Management Company (hereinafter referred to as special bonds) according to Decree No. 53/2013/NĐ-CP and Decree No. 34/2015/NĐ-CP.intention 1. Vietnamese credit institutions include credit institutions established and operating in accordance with the Law on Credit Institutions, except for credit institutions with 100% foreign capital and joint venture credit institutions (hereinafter referred to as credit institutions).No. 2. Organizations and individuals related to the rediscounting based on special bonds (hereinafter referred to as rediscounting) of the State Bank to credit institutions.

Article 1.

The State Bank provides rediscounting to credit institutions to support their operational capital during the process of handling non-performing loans according to Decree No. 53/2013/NĐ-CP and Decree No. 34/2015/NĐ-CP.No.Article 4. Conditions for Rediscounting

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

The State Bank shall consider and decide to provide rediscounting when credit institutions meet all of the following conditions:

Article 2. Applicability

1. Being a credit institution as defined in Clause 1 of Article 2 of this Circular, legally owning special bonds deposited at the State Bank's Trading Center that have not been settled by the Vietnam Asset Management Company (hereinafter referred to as the Asset Management Company).

2. Establishing risk provisions for special bonds in accordance with Decree No. 53/2013/NĐ-CP, Decree No. 34/2015/NĐ-CP, and guidelines issued by the State Bank.

Chapter II

SPECIFIC PROVISIONS

3. To serve as a basis for evaluating and recognizing "Learning Communities" at the commune, district, and province levels.

Article 5. Amount of Rediscounting

The amount of rediscounting for credit institutions shall be decided by the Governor of the State Bank based on monetary policy objectives, the total face value of special bonds, the results of establishing risk provisions for special bonds, and the results of handling non-performing loans but shall not exceed 70% of the total face value of special bonds; for credit institutions implementing restructuring plans that have been approved, the amount of rediscounting shall be decided individually by the Governor of the State Bank but shall not exceed 100% of the total face value of special bonds.

Article 6. Rediscounting Interest Rate

1. The rediscounting interest rate for credit institutions shall be decided by the Prime Minister.

2. The overdue rediscounting interest rate shall be 150% of the rediscounting interest rate recorded in the credit agreement between the State Bank and the credit institution.

Article 5. Level of Refinancing Capital

The level of refinancing capital for credit institutions shall be decided by the Governor of the State Bank based on monetary policy management objectives, the total face value of special bonds, the results of risk reserve provisioning for special bonds, and the results of bad debt resolution, but shall not exceed 70% of the total face value of special bonds; for credit institutions implementing restructuring plans that have been approved, the level of refinancing capital shall be decided individually by the Governor of the State Bank but shall not exceed 100% of the total face value of special bonds.

Article 6. Interest Rate on Refinancing Capital

1. The interest rate on refinancing capital for credit institutions shall be decided by the Prime Minister.

2. The overdue interest rate on refinancing capital shall be 150% of the interest rate on refinancing capital stipulated in the credit agreement between the State Bank and the credit institution.

Article 7. Term for Refinancing

The term for refinancing shall be less than one year but not exceed the remaining term of special bonds.

Article 8. Extension of Refinancing

1. The State Bank shall consider and decide on the extension of refinancing for credit institutions in accordance with the provisions of Articles 4, 5, and 6 of this Circular.

2. Each extension period shall not exceed the initial term of refinancing for that refinancing amount and shall not exceed the remaining term of special bonds.

Article 9. Procedures for Considering Refinancing and Extension of Refinancing

1. When there is a need to borrow refinancing or extend refinancing, credit institutions shall submit five sets of application documents directly or through postal service to the State Bank (Department of Monetary Policy). The application includes:

a) A request for refinancing or extension of refinancing, specifying: the name of the credit institution, the account number for deposit in Vietnamese dong at the State Bank Trading Department, the amount, purpose (specify the specific purpose), the requested term for refinancing or extension of refinancing, the total face value of special bonds serving as the basis for borrowing refinancing or extension of refinancing, and the commitment that the special bonds serving as the basis for borrowing refinancing or extension of refinancing are legally owned by the credit institution;

b) A list of special bonds serving as the basis for borrowing refinancing or extension of refinancing at the State Bank, confirmed by the Asset Management Company according to Appendix I issued together with this Circular.

2. Within two working days from the date of receiving complete application documents for refinancing or extension of refinancing as stipulated in Clause 1 of this Article, the Department of Monetary Policy shall seek opinions from the Banking Supervision Authority, the State Bank Trading Department, and the Asset Management Company.

3. Within five working days from the date of receiving the opinion document from the Department of Monetary Policy as stipulated in Clause 2 of this Article:

a) The State Bank Trading Department: Confirm the balance sheet of special bonds deposited at the State Bank Trading Department serving as the basis for refinancing or extension of refinancing according to Appendix II issued together with this Circular, send it to the Department of Monetary Policy, and simultaneously send it to the Banking Supervision Authority;

b) The Asset Management Company: Send the list of special bonds serving as the basis for refinancing or extension of refinancing for credit institutions according to Appendix III issued together with this Circular to the Department of Monetary Policy, and simultaneously send it to the Banking Supervision Authority;

c) The Banking Supervision Authority: Evaluate whether the credit institution meets the conditions for refinancing as stipulated in Article 4 of this Circular, financial capacity, risk reserve establishment capability for special bonds, credit institution's refinancing needs based on proposed purposes, propose the level of refinancing, extension of refinancing, term of refinancing, and extension period for each credit institution, and send it to the Department of Monetary Policy.

4. Within five working days from the date of receiving complete opinions from relevant units as stipulated in Clause 3 of this Article, the Department of Monetary Policy shall compile and base on monetary policy objectives to propose handling the refinancing or extension of refinancing requests of credit institutions and issue a document seeking opinions from the Banking Supervision Authority, the State Bank Trading Department, the Department of Credit for Economic Sectors, and the Asset Management Company.

5. Within five working days from the date of receiving the opinion document from the Department of Monetary Policy as stipulated in Clause 4 of this Article, the Banking Supervision Authority, the State Bank Trading Department, the Department of Credit for Economic Sectors, and the Asset Management Company shall provide their opinions and send them to the Department of Monetary Policy.

6. Within two working days from the date of receiving complete opinions from relevant units as stipulated in Clause 5 of this Article, the Department of Monetary Policy shall compile and submit to the Governor of the State Bank for consideration and decision regarding the refinancing or extension of refinancing requests of credit institutions.

7. Within five working days from the date of receiving the Decision of the Governor of the State Bank on refinancing or extension of refinancing for credit institutions, the Director of the State Bank Trading Department shall sign the loan agreement, disburse refinancing or extend refinancing for credit institutions.

Article 10. Authority to Sign Documents of Credit Organizations

The person authorized to sign documents regarding borrowing of refinancing funds or extension of refinancing funds on behalf of credit organizations at the State Bank shall be the legitimate representative of such credit organization.

Article 11. Repayment of Refinancing Loan

1. When the refinancing loan matures, the credit organization shall repay the principal and interest to the State Bank. In case the repayment date coincides with a holiday or public holiday, the refinancing loan period will be extended until the next working day.

2. Early repayment of refinancing loan:

a) Within five working days at the beginning of the following quarter, based on the bond purchase and sale contract, the Asset Management Corporation shall use the amount of recovered debt in cash that the credit organization receives from each non-performing loan purchased with special bonds serving as the basis for refinancing to repay the State Bank and issue a notification to the State Bank Trading Department, the credit organization regarding the repayment amount according to each special bond;

b) Within five working days from the due date of the special bond serving as the basis for refinancing loan repayment according to the State Bank's regulations on the purchase, sale, and handling of non-performing loans by the Asset Management Corporation, the credit organization must repay the State Bank in advance, the principal amount of the refinancing loan to be repaid for each special bond due by its face value after deducting risk provisions and non-performing debt recovery in cash recorded in the special bond schedule attached to the refinancing decision minus the amount already repaid by the Asset Management Corporation as stipulated in point a of this clause;

c) Within five working days from receiving the Asset Management Corporation's notice unilaterally terminating the bond purchase and sale contract for non-performing debt serving as the basis for refinancing loan according to the Asset Management Corporation's regulations on the purchase, sale, and handling of non-performing loans, the credit organization must fully repay the principal and interest of the refinancing loan to the State Bank;

d) When the amount to be prepaid to the State Bank equals the amount of refinancing provided by the State Bank, the credit organization shall fully repay the principal and interest of the refinancing loan.

Article 12. Handling of Credit Organizations Not Repaying Loans on Time

In case the refinancing loan matures and the credit organization cannot repay the debt and does not receive an extension from the State Bank, the State Bank shall apply the following measures:

1. Transfer the credit organization’s principal debt to overdue debt and apply the overdue refinancing interest rate from the overdue date.

2. Implement measures to recover the debt:

a) Deduct from the credit organization's deposit account at the State Bank;

b) Require the Asset Management Corporation to use the amount of recovered debt in cash that the credit organization receives from non-performing loans purchased with special bonds to repay the refinancing loan to the State Bank;

c) Recover debt from other sources of the credit organization;

d) Require the credit organization to transfer ownership to the State Bank of securities used in transactions with the State Bank owned by the credit organization;

đ) Implement procedures to convert the refinancing account into a special loan or equity investment in the credit organization by the State Bank according to the law.

Chapter III

IMPLEMENTING PROVISIONS

Article 13. Responsibilities of credit institutions

1. Provide complete, timely, and accurate documents and information about refinancing and refinancing extensions to the State Bank and the Asset Management Corporation.

2. Update data on special bonds during the refinancing request period and refinancing extension period according to Appendix IV issued together with this Circular when there is a change in special bond data serving as the basis for refinancing requests and extensions or upon request.

3. Bear legal responsibility for the accuracy and legality of the submitted documents and information.

4. Use borrowed funds for their intended purpose and repay refinancing loans according to this Circular. Issue a report to the State Bank Trading Department, Banking Supervision Agency, and Asset Management Corporation regarding early repayment of refinancing loans as stipulated in point b of Clause 2 of Article 11 of this Circular.

5. Be subject to inspection and supervision by the State Bank in compliance with the provisions of this Circular.

6. Regularly submit reports monthly to the State Bank (Banking Supervision Agency, Monetary Policy Department, State Bank Trading Department) according to Appendix V issued together with this Circular.

7. Transfer ownership of securities used in transactions with the State Bank owned by the credit organization to fulfill the obligation to repay the State Bank in case of inability to repay the refinancing loan after receiving the State Bank's notice requesting debt resolution.

8. Fulfill other responsibilities as prescribed by relevant laws.

Article 14. Responsibilities of the Asset Management Corporation

1. Confirm and reconcile the list of special bonds as the basis for borrowing refinancing or extending refinancing at the State Bank according to Appendix I issued together with this Circular.

2. Coordinate with the Monetary Policy Department to handle credit institutions' requests for refinancing or extending refinancing; submit opinions in accordance with point b, Clause 3, Clause 5, Article 9 of this Circular.

3. Repay the State Bank in accordance with point a, Clause 2, Article 11 and point b, Clause 2, Article 12 of this Circular.

4. Notify the State Bank Trading Office and the Banking Supervision Authority about unilaterally terminating the bond-based debt purchase and sale contracts serving as the basis for refinancing.

5. Lead and coordinate with credit institutions and related units to implement measures to handle bad debts and collateral assets purchased with special bonds to repay refinancing loans from the State Bank.

Article 15. Responsibilities of units under the State Bank

1. Monetary Policy Department

a) Receive applications for refinancing and extending refinancing from credit institutions;

b) Lead and coordinate with related units to handle credit institutions' requests for refinancing and extending refinancing, submitting them to the Governor of the State Bank for consideration and decision;

c) Coordinate with related units to advise the Governor of the State Bank on interest rates for refinancing based on special bonds to be submitted to the Prime Minister for decision.

2. Banking Inspection and Supervision Authority

a) Coordinate with the Monetary Policy Department to handle credit institutions' requests for refinancing and extending refinancing; provide opinions to the Monetary Policy Department in accordance with point c, Clause 3, Clause 5, Article 9 of this Circular;

b) Supervise, inspect, audit, and handle violations within its authority regarding credit institutions and the Asset Management Corporation in implementing the provisions of this Circular;

c) Lead and coordinate with related units to implement procedures to convert credit institutions' refinancing loans into special loans or equity contributions/purchases of shares of the State Bank in credit institutions.

3. State Bank of Vietnam's Trading Department

a) Coordinate with the Monetary Policy Department to handle credit institutions' requests for refinancing and extending refinancing; provide opinions to the Monetary Policy Department in accordance with point a, Clause 3, Clause 5, Article 9 of this Circular;

b) Implement loan agreements with credit institutions, disburse, extend refinancing, recover refinancing loans in accordance with this Circular, record and monitor special bonds as the basis for refinancing and other responsibilities related to special bonds when credit institutions borrow refinancing from the State Bank;

c) Notify the Asset Management Corporation about disbursement and recovery of refinancing loans for credit institutions along with a list of frozen and unfrozen special bonds within five working days from the date of disbursement and recovery of refinancing loans;

d) Notify credit institutions about fulfilling the obligation to repay refinancing loans to the State Bank;

đ) Report monthly to the Governor of the State Bank data on loan disbursements, loan recoveries, and refinancing balances for credit institutions, simultaneously sending to the Banking Supervision Authority, the Asset Management Corporation, the Monetary Policy Department, and the Credit Department for Economic Sectors;

4. The Credit Department for Economic Sectors: Coordinate with the Monetary Policy Department to handle credit institutions' requests for refinancing and extending refinancing; provide opinions to the Monetary Policy Department in accordance with Clause 5, Article 9 of this Circular.

5. The Finance and Accounting Department: Guide accounting entries related to the State Bank's refinancing of credit institutions in accordance with this Circular.

6. Branches of the State Bank in provinces and cities: Supervise, inspect, audit, and handle violations within their authority regarding credit institutions in complying with the provisions of this Circular.

Article 16. Implementation Provisions

1. This Circular takes effect from December 10, 2015, and replaces Circular No. 20/2013/TT-NHNN dated September 9, 2013, of the Governor of the State Bank on refinancing loans based on special bonds of the Asset Management Corporation of Vietnamese credit institutions.

2. Refinancing balances based on special bonds of the Asset Management Corporation remaining until the effective date of this Circular shall continue to be implemented according to the contracts signed between the State Bank and credit institutions.

2. The Director of the Office, Heads of the Monetary Policy Department, Heads of units under the State Bank; Governors of State Bank branches in centrally governed provinces and cities; Chairmen of the Board of Members and General Directors of the Asset Management Corporation; Chairmen of the Board of Members, Chairmen of the Board of Directors, and General Directors (Directors) of Vietnamese credit institutions are responsible for organizing the implementation of this Circular./.