Circular No. 65/2005/TT-BTC guides the implementation of the regulation on handling risky debts of the Social Policy Bank issued together with Decision No. 69/2005/QĐ-TTg dated April 4, 2005 of the Prime Minister.

CIRCULAR

Guidelines for implementing the mechanism for handling risky debts of the Social Policy Bank issued together with Decision No. 69/2005/QĐ-TTg

dated April 4, 2005 of the Prime Minister

Implementing Decision No. 69/2005/QĐ-TTg dated April 4, 2005 of the Prime Minister on the issuance of the mechanism for handling risky debts of the Social Policy Bank, after reaching consensus with the Minister of Planning and Investment, the Minister of Labor, Invalids and Social Affairs, the Governor of the State Bank of Vietnam, and the Ministry of Finance, guidelines for implementing certain contents are as follows:

1. The purpose of handling risky debts due to objective reasons at the Social Policy Bank:

This technical regulation sets out technical requirements, testing methods, sampling procedures; management requirements; responsibilities of organizations and individuals producing, trading, and importing cigarettes.

- To create conditions for borrowers from the Social Policy Bank to overcome difficulties and repay their loans in accordance with their financial capacity.

- To create conditions for handling debts that have become risky due to objective reasons and enhance the financial capability of the Social Policy Bank.

2. Borrowers who are poor households and policy beneficiaries borrowing from the Social Policy Bank and facing risks due to objective reasons leading to partial or total loss of capital or assets, resulting in financial difficulties, shall be considered for debt resolution according to the provisions of Decision No. 69/2005/QĐ-TTg dated April 4, 2005 of the Prime Minister on issuing the mechanism for handling risky debts of the Social Policy Bank (hereinafter referred to as Decision No. 69/2005/QĐ-TTg).

3. The Chairman of the Board of Directors and the General Director of the Social Policy Bank are responsible under the law and before state management agencies for the implementation of handling risky debts for borrowers at the Social Policy Bank.

II. SPECIFIC PROVISIONS

1. Scope of handling risky debts

1.1. This Circular stipulates the handling of debts that have become risky due to objective reasons of the Social Policy Bank.

For borrowers at the Social Policy Bank who have collateral assets as prescribed and face risks due to objective reasons, the Social Policy Bank has the right to proactively handle the collateral assets in agreement with the borrower and in accordance with the law to recover the capital. The amount obtained from the handling of the collateral assets is used to cover the costs of handling the collateral assets; repay the principal and interest of the loan to the bank; if there is a surplus, it will be returned to the borrower, and if there is a shortage, the shortage will be handled according to the provisions of Decision No. 69/2005/QĐ-TTg.

1.2. Debts that have become risky in lending to the poor and other policy beneficiaries of the Social Policy Bank due to subjective reasons of organizations or individuals must be compensated by the organizations or individuals causing the losses in accordance with the law. The Chairman of the Board of Directors of the Social Policy Bank decides on the compensation amounts for organizations or individuals causing losses and is responsible for his decisions.

1.3. Loans to poor households and other policy beneficiaries at the Social Policy Bank funded by entrusted investment capital from agreements or contracts signed with domestic and foreign organizations or individuals, where risk reserves are deducted, the handling of risky debts shall be carried out in accordance with the agreements or contracts signed with the entrusted organizations or individuals.

2. Principles for handling risky debts

2.1. The examination and handling of risky debts for customers can only be carried out when the following conditions are met:

a) The customer is a poor household or other policy beneficiary borrowing in accordance with Article 2 of Decree No. 78/2002/NĐ-CP dated October 4, 2002 of the Government, who has used the borrowed funds for the intended purpose;

b) The customer has suffered losses due to objective reasons leading to partial or total loss of capital or assets;

c) The customer faces financial difficulties and is unable to repay the debt to the bank.

Handling of risky debts for customers shall be examined on a case-by-case basis based on the causes of the risk, the degree of risk, and the customer's ability to repay, ensuring complete legal documentation, compliance with procedures, objectivity, and fairness among borrowers.

2.2. 3. Objective reasons directly damaging the capital and assets of customers as specified in Article 6 of Decision No. 69/2005/QĐ-TTg include the following specific cases:

3.1. Objective reasons directly damaging the capital and assets of customers eligible for exemption or reduction of interest on loans include:

a) Natural disasters including: typhoons, floods, flash floods, droughts, crop failures, earthquakes, lightning strikes, hailstorms, landslides, whirlwinds, tsunamis.

b) Plagues, wars.

c) Fires, forest fires.

d) Diseases related to humans, livestock, poultry, aquatic animals, and other animals and crops.

đ) Adjustments in state policies directly affecting the production and business activities of customers such as the lack of supply of raw materials; products produced and traded being banned or restricted according to the law or customers having to change their production and business operations according to the decisions of competent state authorities.

e) Due to political, economic, and social changes in regions, internationally, and in countries receiving Vietnamese labor, directly affecting workers going abroad for a limited period, such as: enterprises receiving labor going bankrupt or dissolved; workers unilaterally terminated employment contracts losing their jobs; workers suffering work-related accidents during labor in foreign countries.

3.2. Objective reasons directly damaging the capital and assets of customers eligible for debt cancellation include:

a) Individual borrowers who lose civil capacity, suffer from chronic illness requiring long-term treatment, suffer from mental illness, have particularly difficult circumstances without support, die, go missing, or are declared dead or missing, leaving no assets to repay the debt or no heirs or heirs who truly cannot repay the debt on behalf of the borrower.

b) Legal entities or economic organizations that have been decided to be dissolved or declared bankrupt according to the law and have no capital or assets to repay the debt to the bank.

4. Provisions on widespread risks and individual, localized risks.

4. Provisions on wide-scale risks and individual, localized risks.

4.1. Risks arising from objective causes specified in Point 3.1, Section II occur for the majority of borrowers who have borrowed from five (5) communes or wards or more shall be considered as risks occurring on a wide scale.

4.2. Risks arising from objective causes specified in Point 3.1, Section II occur for borrowers not falling within the wide-scale category as defined in Point 4.1 shall be considered as risks occurring in individual and localized cases.

5. Time and authority to examine and handle debts affected by risks.

5.1. The Prime Minister examines and decides on the handling of debts affected by wide-scale risks due to objective causes and those due to objective causes specified in Point 3.2, Clause 3, Section II of this Circular. Examination and handling of debts affected by objective risks shall be carried out in batches based on the proposal of the People's Committee of the province or centrally-administered city and the assessment of relevant ministries.

5.2. The Chairman of the Board of Directors of the Social Policy Bank examines and decides on the handling of debts affected by individual and localized risks due to objective causes at the actual time of risk occurrence or in batches.

6. Measures to handle debts affected by risks.

6.1. Waiving interest on loans:

a) Conditions for waiving interest on loans:

- Borrowers affected by risks due to objective causes, experiencing financial difficulties leading to inability to repay debts to the Social Policy Bank but still having the ability to repay.

- The extent of damage to capital and assets of the borrower is specifically defined as follows:

+ For borrowers who are poor households, job creation loan recipients, slow-payment housing loan recipients, and clean water and environmental sanitation program loan recipients: The extent of damage to capital and assets due to causes specified in Points 3.1a to 3.1d, Section II, is 80% or more compared to the total project capital or business plan capital of the borrower.

+ For student and college student borrowers: The extent of damage to capital and assets of the family during the period when students and college students cannot find employment due to causes specified in Points 3.1a to 3.1d, Section II, is 80% or more compared to the total loan capital of the students and college students.

+ For policy beneficiaries working abroad under a fixed-term contract: The extent of income loss of the worker due to causes specified in Point 3.1e, Section II, is 80% or more compared to the total expected income of the worker according to the labor contract.

b) The amount of interest waived for each borrower shall be implemented as follows:

- In the case where the borrower's outstanding interest at the Bank is lower than or equal to the equivalent amount of interest calculated over the entire loan period within the term (excluding the grace period), the borrower shall be exempted from all outstanding interest owed to the Social Policy Bank.

- In the case where the borrower's outstanding interest at the Bank is higher than the equivalent amount of interest calculated over the entire loan period within the term (excluding the grace period), the borrower shall only be exempted from the equivalent amount of interest calculated over the entire loan period within the term.

6.2. Reducing interest on loans:

a) Conditions for reducing interest on loans:

- Borrowers affected by risks due to objective causes, experiencing financial difficulties leading to inability to repay debts to the Social Policy Bank but still having the ability to repay.

- The extent of damage to capital and assets of the borrower is specifically defined as follows:

+ For borrowers who are poor households, job creation loan recipients, slow-payment housing loan recipients, and clean water and environmental sanitation program loan recipients: The extent of damage to capital and assets due to causes specified in Points 3.1a to 3.1d, Section II, is between 40% and less than 80% compared to the total project capital or business plan capital of the borrower.

+ For student and college student borrowers: The extent of damage to capital and assets of the family during the period when students and college students cannot find employment due to causes specified in Points 3.1a to 3.1d, Section II, is between 40% and less than 80% compared to the total loan capital of the students and college students.

+ For policy beneficiaries working abroad under a fixed-term contract: The extent of income loss of the worker due to causes specified in Point 3.1e, Section II, is between 40% and less than 80% compared to the total expected income of the worker according to the labor contract.

b) The amount of interest reduction for each borrower shall be implemented as follows:

- In the case where the borrower's outstanding interest at the Bank is lower than or equal to the equivalent amount of 50% of the interest calculated over the entire loan period within the term (excluding the grace period), the borrower shall be reduced from all outstanding interest owed to the Social Policy Bank.

- In the case where the borrower's outstanding interest at the Bank is higher than the equivalent amount of 50% of the interest calculated over the entire loan period within the term (excluding the grace period), the borrower shall only be reduced from the equivalent amount of 50% of the interest calculated over the entire loan period within the term.

6.3. Writing off debt (principal and interest):

- Debt write-off for borrowers can only be applied in cases where borrowers encounter risks due to causes specified in Point 3.2, Section II of this Circular.

- The Social Policy Bank has the responsibility to apply all collection measures against the borrower before submitting to relevant authorities for consideration of debt write-off for the borrower.

- The amount of debt write-off for the borrower is the amount the borrower still owes the Bank after applying all collection measures.

7. Legal documents for examining and handling debts affected by risks.

7.1. For waiving or reducing interest on loans.

a) The borrower's application for debt handling (according to Model No. 01 attached to this Circular), in which the borrower clearly states the cause of damage to capital and assets; the extent of damage to capital and assets; repayment capacity; outstanding loan interest owed to the bank; the amount of interest requested to be waived or reduced.

b) A record of damage to capital and assets determined by the Social Policy Bank that provided the loan and the borrower, with confirmation from competent authorities as follows:

- For poverty-stricken household loans: The damage assessment record regarding capital and assets (according to Model No. 02 attached to this Circular) must be confirmed by the Group Leader of the savings and loan group; the local political and social organization leader entrusted with poverty-stricken household loans; the leader of the People's Committee of the commune, ward where the customer resides. Confirmation from the specialized agency at the commune, ward level (if any) such as flood control agencies; fire prevention and firefighting agencies; veterinary agencies. In places without specialized agencies, the People's Committee of the commune, ward shall confirm that there is no specialized agency.

- For job creation loans: The damage assessment record regarding capital and assets (according to Model No. 03 attached to this Circular) must be confirmed by the leader of the People's Committee of the commune, ward, town where the customer resides or where the project is implemented; confirmation by the leader of the Labor, Invalids and Social Affairs agency or the association or organization where the customer resides or where the project is implemented.

- For student loans for students from difficult circumstances: The damage assessment record regarding capital and assets (according to Model No. 04 attached to this Circular) must be confirmed by the leader of the People's Committee of the commune regarding the family of the student encountering risks during the period when the student has not yet found employment.

- For policy-targeted laborers going abroad for a limited time: The income loss assessment record (according to Model No. 05 attached to this Circular) must be confirmed by the leader of the People's Committee of the commune, ward, town where the customer resides; confirmation by the agency handling the export of labor (if still operational); confirmation by the authority confirming the policy-targeted laborer going abroad for a limited time; related documents concerning the foreign laborer encountering risks due to objective reasons as specified in Point 3.1.e Section II (if any).

- For housing purchase loans with deferred payments and rural clean water and environmental sanitation loans and other loan programs according to the decision of the competent authority: The damage assessment record regarding capital and assets (according to Model No. 06 attached to this Circular) must be confirmed by the Group Leader of the savings and loan group; the leader of the People's Committee of the commune, ward, town where the customer resides.

c) A copy of the credit agreement, promissory note, or savings account loan book (signed by the Social Policy Bank where the loan was granted).

d) In cases where the customer is an economic organization, in addition to the above documents, they must also provide the following files: Damage assessment record regarding capital and assets as prescribed by law; financial reports of the economic organization for the two most recent years; business recovery plan of the economic organization.

7.2. Regarding debt write-off.

a) Customer's application for debt resolution (according to Model No. 01 attached to this Circular), in which the customer or the person authorized to represent them under the law clearly states the cause of damage to capital and assets; the extent of damage to capital and assets; ability to repay debt; amount of loan still owed to the bank; amount of principal and interest requested for write-off.

b) The damage assessment record regarding capital and assets established by the Social Policy Bank where the loan was granted and the customer or the person authorized to represent them under the law, confirmed by the leader of the People's Committee of the commune, ward, town where the customer resides, according to Models No. 02 to 06 attached to this Circular.

- In cases where the customer is an individual borrower who has lost civil capacity, suffers from chronic illness, or suffers from mental illness, there must be a confirmation from the local health agency.

- In cases where the customer is an individual borrower who has died, disappeared, or is considered dead or missing, there must be a death certificate or disappearance confirmation from the competent authority as prescribed by law.

- In cases where the customer is a legal entity or economic organization that has gone bankrupt or been dissolved, there must be a bankruptcy or dissolution decision from the competent state agency or a declaration from the Court and related documents on the liquidation of the assets of the dissolved entity as prescribed by law.

c) A copy of the credit agreement, promissory note, or savings account loan book (signed by the Social Policy Bank where the loan was granted).

d) Other related documents (if any).

8. Procedures for implementing risk debt resolution:

8.1. The customer or the person authorized to represent them with debts requesting resolution is responsible for preparing the application and resolution file according to regulations and sending it to the branch of the Social Policy Bank where the loan was taken. The Social Policy Bank where the loan was granted is responsible for checking the legality and validity of the file; cooperating with the customer to establish a damage assessment record regarding capital and assets, with the participation of confirmation from relevant authorities as prescribed by this Circular; compiling the resolution request file and submitting it to the provincial Social Policy Bank.

8.2. The provincial branch of the Social Policy Bank checks and confirms the level of risk of the customer; confirms the accuracy and legality of the customer's debt resolution request file; compiles and provides written comments on the customer's risk debt resolution request and sends it to the Vietnam Social Policy Bank along with the customer's debt resolution file. For widespread risk debts caused by objective factors, in addition to reporting to the Vietnam Social Policy Bank, the provincial branch of the Social Policy Bank reports to the Chairman of the Provincial People's Committee for consideration and to report to the Prime Minister for consideration and decision.

8.3. The Vietnam Social Policy Bank is responsible for checking and compiling the requests of customers and provincial branches of the Social Policy Bank to consider and resolve cases of isolated local risks or reporting to the Ministry for joint examination and approval for cases of widespread risks.

The procedure for reporting to the Ministry for joint examination and approval for widespread risk debt resolution caused by objective factors is as follows:

- For risks related to loans for poor households; loans for students and trainees with difficult circumstances; loans for policy beneficiaries working abroad for a limited period; loans for clean water and environmental sanitation; and loans for purchasing houses on installment and other policy beneficiaries, the Social Policy Bank shall prepare reports to submit to the Ministry of Finance, the Ministry of Planning and Investment, and the State Bank of Vietnam.

- For risks related to loans from the National Fund for Employment, the Social Policy Bank shall prepare reports to submit to the Ministry of Finance, the Ministry of Planning and Investment, and the Ministry of Labor, Invalids and Social Affairs.

8.4. Based on the decision on handling risky debts made by the competent state agency, the Social Policy Bank shall guide and organize implementation according to the regulations.

9. Sources of funds for handling risky debts.

- The source of funds for handling risky debts of customers borrowing from the Social Policy Bank due to widespread objective reasons shall be decided by the Prime Minister.

- The source of funds for handling risky debts of customers borrowing from the Social Policy Bank due to individual and localized objective reasons shall be taken from the Social Policy Bank's Credit Risk Reserve Fund. In cases where the Credit Risk Reserve Fund is insufficient to cover the losses, the Chairman of the Management Board of the Social Policy Bank shall report to the Ministry of Finance and the Ministry of Planning and Investment for submission to the Prime Minister for consideration and decision.

III. IMPLEMENTATION

1. The Chairman of the Management Board and the General Director of the Social Policy Bank shall guide and organize the implementation of this Circular.

2. For cases where customers encounter risks due to objective reasons occurring before the effective date of this Circular, the customers and the Social Policy Bank shall have the responsibility to prepare applications for debt resolution and implement debt resolution according to previous guiding documents.

3. This Circular takes effect fifteen days from the date of publication in the Official Gazette.

4. Any difficulties encountered during the implementation process should be reported to the Ministry of Finance for review and resolution./.