CIRCULAR

PROVIDING FOR REFINANCED LOANS ON THE BASIS OF SPECIAL BONDS OF COMPANY FOR ASSET MANAGEMENT OF VIETNAM CREDIT INSTITUTIONS

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

Pursuant to Law on credit institutions No. 47/2010/QH12, of June 16, 2010;

Pursuant to the Government's Decree No. 96/2008/ND-CP, of August 26, 2008, defining the functions, tasks, powers and organizational structure of the State bank of Vietnam; 

Pursuant to the Government's Decree No. 53/2013/ND-CP, of May 18, 2013, on establishment, organization and operation of company for asset management of Vietnam credit institutions;

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

The Governor of the State bank of Vietnam promulgates the Circular providing for refinanced loans on the basis of special bonds of company for asset management of Vietnam credit institutions,

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GENERAL PROVISIONS

Article 1. Scope of regulation

This Circular provides for the refinanced loans in Vietnam dong of the State bank of Vietnam (hereinafter referred to as state bank) for credit institutions on the basis of special bonds of the Company for asset management of Vietnam credit institutions (hereinafter referred to as special bonds) according to the Government’s Decree No. 53/2013/ND-CP, of May 18, 2013, on establishment, organization and operation of company for asset management of Vietnam credit institutions  (hereinafter referred to as the Decree No. 53/2013/ND-CP).

Article 2. Subject of application

1. Credit institutions established and operate under Law on credit institutions, except for credit institutions with 100% foreign capital, joint-venture credit institutions (hereinafter referred to as credit institutions).

2. Organizations and individuals related to the refinanced loans on the basis of special bonds (hereinafter referred to as refinancing) of state bank for credit institutions.

Chapter 2.

SPECIFIC PROVISIONS

Article 3. Purpose

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Article 4. Conditions of refinancing

The state bank shall consider and decide on refinancing when credit institutions meet full the following conditions:

1. They are credit institutions defined at Clause 1 Article 2 of this Circular, not be put into the special control situation.

2. They own special bonds which have not yet been paid by the Company for asset management of Vietnam credit institutions (hereinafter referred to as Asset Management Company).

3. They have conducted the setting up of risk provision for special bonds as prescribed in the Government’s Decree No. 53/2013/ND-CP and guides of state bank.

Article 5. Level of refinancing

The Governor of State bank shall, base on objective of monetary policy control, result of setting up of risk provision for special bond and result of handling bad debts, decide level of refinancing for credit institutions on the basis of special bond’ face value but not exceeding 70% of the special bond’ face value.  

Article 6. The refinancing interest rate

1. The Prime Minister shall decide the refinancing interest rates for credit institutions in each period.

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Article 7. Duration of refinancing

Duration of refinancing is less than 12 months but does not exceed the remaining duration of special bonds.

Article 8. Extension of refinancing

1. The State bank shall consider and decide on extension of refinancing for credit institutions, in compliance with Article 4, Article 5, Article 6 and  Article 7 of this Circular.

Extension time of each refinancing time does not exceed the duration at the first time of that refinanced loan.

Article 9. The order to consider refinancing or extend refinancing

1. When a credit institution wishes to borrow the refinanced loans or extend the refinanced loans, it may send 04 sets of dossier directly or via post office to the State bank (the Monetary Policy Department). In case of extension for refinancing, credit institutions may send dossier to the State bank before the expired day of the refinanced loans not less than 30 working days.

A dossier includes:

a) Request for refinancing or extension of refinancing, in which clearly stating: Name of credit institution, account number of deposit in Vietnam dong at the State bank; purposes of borrowing the refinancing loan (clearly stating each purpose); amount of the refinancing loan or amount  of refinancing in need of extension according to purposes; duration, total face values of special bonds; commitment on special bonds serving as basis for the refinanced loans or extension of refinancing which belong to legal ownership of credit institution.

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2. Within 02 working days after receiving full dossier of a credit institution, which requesting for refinancing or extension of refinancing, the Monetary Policy Department shall do as focal agency to consult relevant units.

3. Within 15 working days after receiving the document for consulting opinions sent from the Monetary Policy Department, units shall send comments to the Monetary Policy Department.

4. Within 15 working days after receiving full comments of units, the Monetary Policy Department shall sum up them and submit to the Governor of State bank for consideration and decision.

5. Based on decision of the Governor of State bank, the Transaction Bureaus of the State bank shall sign credit contract, disbursement for refinancing or extension for refinancing for credit institution.

Article 10. Debt payment for the refinanced loans

1. When the refinanced loans due, credit institutions must pay all principal and interest to the State bank.  If the expired day is coincided with day off, holiday, duration of the refinanced loan is extended to the next working day.

2. Credit institutions must pay debt before due day for the State bank in the following cases:

a) Bad debt has been recovered with money in duration of the refinanced loan which credit institutions are enjoyed from the bad debt already been bought with special bond serving as basis for the refinanced loan at the State bank, the paid debt corresponds to the refinanced loan on basis of that special bond. Quarterly, on the basis of contracts of debt purchase and sale with special bond, the Asset Management Company shall pay debts of the refinanced loans before due day, in accordance with regulation of the State bank, on purchase, sale and handling of bad debts of the Asset Management Company; time limit of debt payment does not exceed 05 first working days of the next quarter.

b) The amount for risk provision already set up for special bond shall be not less than value recorded in accounting book of outstanding balance of originals of bad debts already been bought by that special bond as prescribed in Clause 1 Article 22 of the Decree 53/2013/ND-CP and guides of the State bank, on purchase, sale and handling of bad debts of the Asset Management Company. Time limit of debt payment will not exceed 05 working days from the day of setting up the risk provision for special bond not less than value recorded in accounting book of outstanding balance of originals of bad debts already been bought with special bond; the amount used for debt payment is the refinancing amount already been borrowed from the State bank on the basis of such special bond.

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Article 11. Handling in case where credit institutions fail to refund debt on time

In case where the refinanced loan is overdue but credit institution fails to refund debt and not be extended by the State bank, the State bank shall apply the following handling measures:

1. To change debt of credit institution into overdue debt and apply the overdue refinancing interest rate, from the overdue day.

2. To perform measures for debt recovery:

a) To deduct deposit of credit institutions at the State bank.

b) To request the Asset Management Company for using the recovered amount which credit institution is enjoyed from bad debt already been purchased with special bond so as to refund debt of refinanced loans to the State bank.

c) To collect debt from other sources of credit institutions.

d) To request credit institution for transferring ownership of valuable papers, which are used in transaction with the State bank and owned by credit institutions, for the State bank. 

e) To conduct procedures for changing the refinancing loan into the special loan or into contributed capital or amount of buying share owned by the State bank at credit institution as prescribed by law.

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ORGANIZATION AND PROVISIONS OF IMPLEMENTATION

Article 12. Responsibilities of credit institutions

1. To supply to the State bank fully, timely and exactly dossiers, documents as prescribed in this Circular and take responsibility before law on exactness, legality of the provided dossiers and documents. 

2. To use loan according to proper purpose and refund the refinanced loan as prescribed in this Circular.

3. To be inspected, examined, and supervised their compliance with provisions in this Circular by the State bank.

4. Monthly, to report State bank (agency of banking inspection and supervision, Department of Monetary policy, Transaction Bureaus of the State bank) about use of the refinanced loan and figures according to Annex No. 02 enclosed with this Circular.  

5. To transfer ownership of valuable papers, which are used in transactions with the State bank and owned by credit institutions, so as to perform obligation of debt payment to the State bank in case where credit institutions fail to refund debt of the refinanced loan.

6. To conduct responsibilities in accordance with relevant law.

Article 13. Responsibilities of the Asset Management Company

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2. To use amounts of debt recovery from bad debts already been purchased with special bond so as to refund debt of the refinanced loan of credit institutions at the State bank as prescribed in point a Clause 2 Article 10 and point b Clause 2 Article 11 of this Circular.

3. To notify the Transaction Bureaus of the State bank about amounts already refunded for debt of the refinanced loan as prescribed in point a Clause 2 Article 10 of this Circular for each special bond.

4. To assume the prime responsibility for, and coordinate with credit institutions and relevant units in implementing measures for handling debts, collateral of bad debts already been purchased with special bond so as to refund debt of refinanced loans to the State bank.

Article 14. Responsibilities of units under the State bank

1. The Monetary Policy Department shall:

a) Receive dossier of request for refinancing or extension of refinancing of credit institutions.

b) Assume the prime responsibility for, and coordinate with relevant units in submitting to the Governor of State bank for consideration and decision on refinancing or extension of refinancing for credit institutions.

c) Coordinate with relevant units in consulting the Governor of State bank about interest rate of the refinanced loans on the basis of special bond so as to submit to the Prime Minister for decision.

2. The agency of banking inspection and supervision shall

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b) Giving comments about request for refinancing or extension of refinancing of credit institutions at the request of the Monetary Policy Department.

c) Supervise, examine, inspect, and handle violations, applicable to credit institutions, involving their compliance with provisions in this Circular.

d) Assume the prime responsibility for, and coordinate with relevant units in doing procedures for changing the refinanced loans of credit institutions into the special loans or into contributed capitals or amounts of buying shares owned by the State bank at credit institution.

3. The Credit Department shall: Coordinate with the Monetary Policy Department in considering and submitting to the Governor of State bank for decision on refinancing or extension of refinancing for credit institutions.

4. Transaction Bureaus of the State bank shall:

a) Coordinate with the Monetary Policy Department in considering and submitting to the Governor of State bank for decision on refinancing or extension of refinancing for credit institutions.

b) Conduct signing credit contracts with credit institutions, disbursement, extension of refinancing, debt recovery of the refinanced loans as prescribed in this Circular and responsibilities related to special bonds when credit institutions borrow the refinanced loans at the State bank.

c) Notify the Asset Management Company about list of special bond serving as basis for refinancing, extension of refinancing after performing disbursement, refinancing, extension of refinancing for credit institutions. 

d) Monthly, report to the Governor of State bank about provision of loans, debt recovery, advance debt recovery involving credit institutions, and send it to the Monetary Policy Department, Agency of banking inspection and supervision, Credit Department. 

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6. The State bank's branches in provinces, cities shall: Supervise, examine, inspect and handle violations, applicable to credit institutions located head offices in their localities, involving compliance with provisions in this Circular.

Article 15. Provisions of implementation

1. This Circular takes effect on September 15, 2013.

2. The Chief of office, the Director of the monetary policy department and heads of units under the State bank; directors of State bank's branches in provinces, cities; chairperson of Member Assembly and General Director of Asset Management Company; chairpersons of Board of Directors, chairpersons of Member Assembly, General Directors (Directors) of credit institutions shall implement this Circular.    

FOR THE GOVERNOR OF STATE BANK
DEPUTY GOVERNOR

Dang Thanh Binh

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Credit institution:………

Number:…..

THE LIST OF SPECIAL BONDS SERVING AS BASIS FOR THE REFINANCED LOANS/ EXTENSION OF REFINANCING AT THE STATE BANK OF VIETNAM

Calculation unit: billion VND

No.

Sign of special bond

Date of issuance

Day of maturity

Face value of special bond

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Recovery of bad debts by money counted till day of requesting for   refinancing or extension of refinancing

Face value of special bond after deducting the risk provision and recovery of bad debts by money

(1)

(2)

(3)

(4)

(5)

(6)

(7)

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1

2

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Total

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Confirmation of the Asset Management Company
(Signature and Seal)

Composer

Controller  

…., date... month ... year ...
Legitimate representative of credit institution
(Signature and Seal)

ANNEX No. 02

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Number:…..  ....

REPORT ON USING THE REFINANCED LOANS ON THE BASIS OF SPECIAL BOND

(Month …… year…….)

Calculation unit: billion VND

Decision number of the Governor of State bank

The disbursed amounts

Outstanding balance of refinancing till the end of report month

Total debt outstanding balance

In which used for each purpose

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Purpose

Decision number…

2,000

2,000

1,000

Rural and agricultural loans

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Loans to the small- and medium-sized enterprises

Decision number…

1,000

800

800

Liquidity

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Total

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Composer

Controller  

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1. Time limit for sending report: Within 05 first working days of month following the report month.

2. Report form: in writing

3. Receivers: Agency of banking inspection and supervision, Department of Monetary policy, Transaction Bureaus of the State bank.