Decision No. 69/2005/QD-TTg on the issuance of the Regulation on handling risky debts of the Social Policy Bank

DECISION

Regarding the issuance of the Rules on Handling Risky Debts

of the Social Policy Bank

PRIME MINISTER

Pursuant to the Law on Organization of the Government dated December 25, 2001;

Pursuant to Decree No. 78/2002/NĐ-CP dated October 4, 2002 of the Government on credit for the poor and other policy beneficiaries;

At the proposal of the Minister of Finance,

DECISION:

Article 1. The Rules on Handling Risky Debts of the Social Policy Bank are promulgated together with this Decision.

Article 2. The Minister of Finance shall be responsible for guiding the implementation of this Decision.

Article 3. Abolish the provisions on handling risks for borrowing subjects of the Social Policy Bank including:

1. Circular Joint Circular No. 08/1999/TTLT/BLĐTBXH-BTC-BKHĐT dated March 15, 1999 of the Ministry of Labor, War Invalids and Social Affairs - Ministry of Finance - Ministry of Planning and Investment guiding the resolution of projects borrowing from the National Employment Support Fund (National Employment Resolution Fund) that have encountered risks.

2. Circular Joint Circular No. 16/2000/TTLT/BLĐTBXH-BTC-BKHĐT dated July 5, 2000 of the Ministry of Labor, War Invalids and Social Affairs - Ministry of Finance - Ministry of Planning and Investment guiding amendments and supplements to some points in Circular No. 08/1999/TTLT/BLĐTBXH-BTC-BKHĐT dated March 15, 1999 regarding guidance on resolving projects borrowing from the National Employment Support Fund (National Employment Resolution Fund) that have encountered risks.

3. Circular No. 97/1998/TT-BTC dated July 11, 1998 of the Ministry of Finance guiding financial management regulations for the Training Credit Fund.

4. Provisions of the Social Policy Bank on handling risky debts due to force majeure for poor people and other policy subjects.

For debts of poor people and other policy subjects borrowed from the Social Policy Bank currently being set aside according to decisions of competent authorities, they will continue to be implemented until the end of the debt set-aside period as stipulated in those decisions.

Article 4. This Decision takes effect fifteen days from the date of publication in the Official Gazette.

Ministers, Heads of ministerial-level agencies, Heads of agencies under the Government, Chairmen of Provincial People's Committees directly under the Central Government, Chairmen of the Board of Directors, General Directors of the Social Policy Bank are responsible for implementing this Decision.

REGULATIONS

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)
ngày 04 tháng 4 năm 2005 của Thủ tướng Chính phủ)

PART I
GENERAL PROVISIONS

Article 1. Applicability

Article 3. Creditors

2. Borrowers who borrow capital from the Social Policy Bank in accordance with Article 2 of Decree No. 78/2002/NĐ-CP dated October 4, 2002 of the Government on credit for poor people and other policy subjects include:

a) Poor households;

b) Students and college students with difficult circumstances currently studying at universities, colleges, vocational high schools, and vocational training programs;

c) Subjects requiring loans to solve employment issues pursuant to Resolution No. 120/HĐBT dated April 11, 1992 of the Council of Ministers (now replaced by Decree No. 39/2003/NĐ-CP dated April 18, 2003 of the Government detailing and guiding the implementation of certain articles of the Labor Code on employment);

d) Policy subjects going abroad for temporary work;

đ) Economic organizations and production and business households located in islands; in areas II, III of mountainous regions and in special difficulties communes in mountainous, remote, and far-flung areas (if applicable);

e) Other subjects when there is a decision by the Prime Minister.

Article 2. Scope of Handling Risky Debts

1. These Rules regulate the handling of risky debts due to objective reasons of the Social Policy Bank.

2. Debts of the Social Policy Bank to poor people and other policy subjects that are risky due to subjective reasons of organizations or individuals must be compensated by the organization or individual causing the loss in accordance with the law. The Chairman of the Board of Directors of the Social Policy Bank decides on the compensation amount for organizations or individuals causing losses and bears responsibility for such decisions.

3. Loans to poor people and other policy subjects 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 agreement or contract signed with the entrusted organization or individual.

Article 3. Measures for Handling Risky Debts

1. Exemption or reduction of interest on loans.

2. Write-off of debts.

Article 4. Principles for Handling Risky Debts

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

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. Handling of risky debts for customers shall be considered on a case-by-case basis based on the cause 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.

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 customers borrowing from the Social Policy Bank.

Article 5. Time for Considering and Handling Risky Debts

Considering and handling risky debts due to objective reasons shall be carried out at the actual time of occurrence of the risk or in batches based on the customer's request, the Social Policy Bank's proposal, and approval by the competent authority.

PART II
SPECIFIC PROVISIONS

Article 6. The following causes are considered objective causes:

1. Natural disasters, enemy attacks, fires, epidemics occurring and directly causing damage to the customer's capital or assets or the project.

2. The State adjusting policies directly affecting the customer's production and business activities such as: no longer having sources of raw materials; products produced or traded are banned.

3. Individual customers borrowing capital losing civil capacity, borrowers frequently ill, suffering from mental illness, in particularly difficult circumstances without support, death, disappearance, or declared dead, missing, without property to repay the debt or without heirs or heirs truly unable to repay the debt on behalf of the customer.

4. Corporate or economic organization customers that have been decided to be dissolved or bankrupted according to the law and no longer exist as a legal entity, without capital or assets to repay the debt to the Bank.

Article 7. Measures for Handling Risky Debts

1. Exemption or reduction of interest on loans is the act of the Social Policy Bank exempting or reducing part of the interest on loans for customers according to the conditions and time specified.

a) Conditions for waiving interest on loans:

- The borrower is at risk due to the causes specified in Clause 1 and Clause 2 of Article 6, Chapter II of this Regulation.

- The borrower encounters financial difficulties leading to inability to repay the debt to the Bank but still has the ability to repay.

- The level of risk of capital and asset loss of the borrower due to the aforementioned causes ranges from 80% to 100% compared to the total amount of capital implemented for the project or production and business plan of the borrower.

The amount of interest waived by the Social Policy Bank for each borrower shall not exceed the amount of interest on the loan calculated for the period within the term of the loan (excluding the extension period).

b) Conditions for reducing interest on loans:

- The borrower is at risk due to the causes specified in Clause 1 and Clause 2 of Article 6, Chapter II of this Regulation.

- The borrower encounters financial difficulties leading to inability to repay the debt to the Bank but still has the ability to repay.

- The level of risk of capital and asset loss of the borrower due to the aforementioned causes ranges from 40% to less than 80% compared to the total amount of capital implemented for the project or production and business plan of the borrower.

The amount of interest reduction by the Social Policy Bank for each borrower shall not exceed 50% of the interest on the loan calculated for the period within the term of the loan (excluding the extension period).

2. Debt write-off (principal, interest).

a) Writing off principal and interest is the act of the Social Policy Bank not collecting part or all of the outstanding principal and interest (if any) of the borrower who is facing risks after exhausting all available sources of repayment;

b) Conditions for writing off debts: the borrower is at risk due to the causes specified in Clause 3 and Clause 4 of Article 6, Chapter II of this Regulation;

c) The amount of debt write-off (principal, interest) for the borrower is equal to the amount that the borrower still needs to pay to the Bank after the Bank has applied all collection measures.

Article 8. Legal documents for handling risks

1. For waiving or reducing interest on loans

a) The borrower's application for waiving or reducing interest on loans. In the application, the borrower clearly states the cause of damage; the extent of damage to capital and assets; repayment capacity; the amount of interest still owed to the Bank; the amount of interest requested to be waived or reduced;

b) A record confirming the extent of damage to capital and assets prepared by the Social Policy Bank and the borrower with confirmation from authorized individuals or organizations;

c) A copy of the credit agreement, promissory note, or savings account loan (signed by the lending branch of the Social Policy Bank);

d) In cases where the borrower is an economic organization, in addition to the above documents, the following documents are required:

- A record confirming the extent of loss and damage to capital and assets according to the provisions of the law accompanied by the financial statements of the economic organization for the two most recent years;

- A plan to restore production and business operations of the economic organization.

2. For debt write-off

a) The debt write-off file for the borrower must clearly reflect the reasons leading to the inability to repay the debt due to risks; the extent of damage to capital and assets; repayment capacity; the amount of principal and interest still owed to the Bank; the amount of principal and interest requested to be written off;

b) In cases where the borrower is an individual who has lost civil capacity, died, disappeared, or been declared dead or missing, a death certificate or confirmation of disappearance issued by the leader of the People's Committee of the commune, ward, or other competent authority is required;

c) In cases where the borrower is a legal entity or economic organization that has gone bankrupt or dissolved, a decision by the competent state agency or declaration by the Court and related documents regarding the liquidation of assets is required;

d) A copy of the credit agreement, promissory note, or savings account loan (signed by the lending branch of the Social Policy Bank);

đ) Other relevant documents (if any).

Article 9. Authority and responsibility for handling risky debts

1. The Prime Minister.

The Prime Minister examines and decides on the waiver, reduction of interest, and write-off of debts for borrowers from the Social Policy Bank who are at risk due to widespread objective causes based on the proposal of the Chairman of the People's Committees of provinces and centrally-administered cities and the assessment of the relevant ministries.

2. The Ministry of Finance, in collaboration with the Ministry of Planning and Investment, the Ministry of Labor, Invalids and Social Affairs, and the State Bank of Vietnam:

- Verify the files requesting the waiver, reduction of interest, and write-off of debts for borrowers from the Social Policy Bank who are at risk due to widespread objective causes to report to the Prime Minister for examination and decision;

- Inspect the implementation of debt handling for borrowers at the Social Policy Bank who are at risk due to widespread objective causes in accordance with this Regulation.

3. The Social Policy Bank

- The Board of Directors of the Social Policy Bank examines and decides on the handling of debts for borrowers at the Social Policy Bank who are at risk due to objective causes for individual and localized cases; examines and decides on the extension of debts for borrowers at the Social Policy Bank who are at risk due to widespread objective causes.

- The Board of Directors of the Social Policy Bank is responsible for guiding units within the Social Policy Bank system and borrowers in preparing files to request the handling of risky debts in accordance with this Regulation.

- The Board of Directors of the Social Policy Bank is responsible for verifying the level of risk of the borrower; confirming the accuracy and legality of the borrower's debt handling request file to decide on debt handling within its authority or reporting to the relevant ministries for verification and submission to the Prime Minister for examination and decision.

Article 10. Procedure for handling risky debts

1. Borrowers facing risks with debts requiring handling must prepare the file in accordance with regulations and submit it to the Social Policy Bank where they borrowed the funds for the Bank to check the legality and validity of the file and compile it for submission to the competent authority and send it to the provincial branch of the Social Policy Bank.

2. The provincial branch of the Social Policy Bank verifies the accuracy and legality of the borrower's debt handling request file, compiles it, and provides comments in writing on the borrower's risk handling request for submission to the competent authority and sends it to the Social Policy Bank along with the borrower's debt handling file.

3. The Social Policy Bank is responsible for checking and compiling the requests of the borrower and the branch of the Social Policy Bank to examine and handle them within its authority for individual and localized risks or report to the relevant ministries for examination and submission to the Prime Minister for decision in cases of widespread risks.

4. Based on the decision to handle risky debts issued by the competent state agency, the Social Policy Bank shall guide and implement in accordance with the regulations.

Article 11. Sources of funds for handling risky debts

1. The source of funds for handling risky debts of borrowers at the Social Policy Bank due to widespread objective reasons shall be decided by the Prime Minister.

2. The source of funds for handling individual and localized risky debts of borrowers at the Social Policy Bank due to objective reasons shall be taken from the Social Policy Bank's Credit Risk Reserve Fund. (The establishment and use of the Credit Risk Reserve Fund of the Social Policy Bank are regulated in separate documents).

CHAPTER III
IMPLEMENTATION

Article 12. The Minister of Finance shall take the lead and coordinate with the Minister of Planning and Investment, the Minister of Labor, Invalids and Social Affairs, and the Governor of the State Bank of Vietnam to organize inspections of the Social Policy Bank's implementation.

The Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies, Chairpersons of People's Committees of provinces and centrally governed cities, Heads of central organizations involved in credit activities for the poor and policy targets, and the Chairman of the Board of Directors and General Director of the Social Policy Bank are responsible for implementing this Regulation./.