LEGAL UPDATE RELATING TO FINANCE AND CREDIT (MONTHLY LEGAL UPDATE – 05&06/2023)
1. LEGAL DOCUMENTS ARE EFFECTIVE FROM 01/05/2023
1.1. Directive No. 02/CT-NHNN on strengthening credit work and implementing the policy of rescheduling debt repayment and maintaining the same debt group in order to support customers in difficulty as prescribed in Circular 02/2023/ TT-NHNN April 23, 2023
v Name of
legal document: Directive No. 02/CT-NHNN issued on 23/05/2023 by the State Bank of Vietnam on strengthening credit
work and implementing the policy of rescheduling debt repayment and maintaining
the same debt group in order to support customers in difficulty as prescribed
in Circular 02/2023/ TT-NHNN April 23, 2023 (referred to as the “Directive No. 02/CT-NHNN”).
v
Effective date: 23/05/2023.
The content should be noted: Duties
for credit institutions.
Specifically, Section IV of Directive No. 02/CT-NHNN stipulates: “IV.
FOR CREDIT INSTITUTIONS
1. Continue to effectively
implement Directive 01/CT-NHNN dated January 17, 2023 of the Governor of the
State Bank on organizing the implementation of key tasks of the banking
industry in 2023; which focuses on implementing safe and effective credit
growth solutions, improving credit quality, controlling and handling bad debts.
2. Continue to reduce costs
to reduce lending interest rates, reduce fees to support businesses and people
to recover and develop production and business.
3. Actively implement credit
programs and policies for a number of sectors and fields under the direction of
the Government and the Prime Minister; including a credit package of VND
120,000 billion for investors and homebuyers of social housing projects, worker
housing, renovation and reconstruction projects of old apartment buildings
according to Resolution 33/NQ-CP dated 11/3/2023 of the Government; implemented
with the utmost determination the interest rate support program from the state
budget for loans of enterprises, cooperatives and business households according
to Decree 31/2022/ND-CP, without letting any an enterprise, cooperative or
business household that is subject to interest rate support and has a need but
is not supported in a timely manner.
4. Accelerating the effective
implementation of the Bank-enterprise connection program; promptly implement
solutions to remove difficulties and create favorable conditions for people and
businesses to access credit capital.
5. Regarding the
implementation of Circular 02/2023/TT-NHNN:
- Expeditiously promulgate
and immediately implement internal regulations on rescheduling debt repayment
and keeping the same debt group as prescribed in Circular 02/2023/TT-NHNN. It
is strictly forbidden to act causing difficulties or troubles, or to issue
additional conditions and procedures other than those prescribed in Circular
No. 02/2023/TT-NHNN.
- The Chairman of the Board
of Members/Board of Directors, the General Director of credit institutions
directly directs the implementation of restructuring the repayment term and
maintaining the debt group according to Circular 02/2023/TT - The State Bank
and take responsibility before the Governor of the State Bank for the
implementation results; take measures to strictly handle units and individuals
that deploy slowly, deliberately cause difficulties, irresponsibly, and do not
comply with regulations.
- Promote communication and
publicity on dossiers and procedures for rescheduling debt repayment and
keeping the debt group intact so that customers can grasp information, properly
understand and fully understand the policy; promptly respond to problems
related to documents and procedures for customers, create favorable conditions
to support customers to complete dossiers, get early access to support
policies.
- To organize the
implementation of the policy of restructuring the debt repayment term, keeping
the debt group unchanged in accordance with regulations; closely supervise,
safely, prevent and stop taking advantage of debt rescheduling and maintaining
debt groups to collude and take advantage of policies.
- Classify debts, make provision for risks and record accrued interest in
accordance with law.
- Timely and fully report on
the results of restructuring the repayment term and keeping the debt group
unchanged in accordance with the regulations and guidance of the State Bank.
- Proactively handle
difficulties and problems in the system and promptly report and propose to the
State Bank, ministries, branches and People's Committees of provinces and
cities to take measures to handle difficulties and problems beyond their
competence in the implementation process.”
v Name of
legal document: Decision No. 950/QĐ-NHNN issued on 23/05/2023 by the State Bank
of Vietnam refinancing interest rate, re-discount interest rate, interest rate
on overnight loans in interbank electronic payment and loans for making up fund
deficits in clearing payment given by the State bank of Vietnam to credit
institutions and foreign bank branches (referred to as the “Decision No. 950/QĐ-NHNN”).
v
Effective date: 25/05/2023.
The content should be noted: The
interest rates are adopted by the State Bank of Vietnam.
Specifically, Article 1 of
Decision No. 950/QĐ-NHNN stipulates: “Article 1. The following
interest rates are adopted by the State Bank of Vietnam, including:
1. Refinancing interest rate:
5,0%/year.
2. Re-discount interest rate:
3,5%/year.
3. Interest rate on overnight
loans in interbank electronic payment and loans for making up fund deficits in
clearing payment given by the State Bank of Vietnam to credit Institutions and
foreign bank branches: 5,5%/year.”
v Name of
legal document: Decision No. 951/QĐ-NHNN issued on 23/05/2023 by the State Bank
of Vietnam on maximum interest rates of deposits in Vietnam Dong of
organizations and individuals at credit institutions and foreign bank branches
according to Circular No. 07/2014/TT-NHNN dated March 17, 2014 (referred to as the
“Decision No. 951/QĐ-NHNN”).
v
Effective date: 25/05/2023.
The content should be noted: Maximum
interest rates of deposits in Vietnam Dong (VND) of organizations and
individuals at credit institutions and foreign banks branches according to
Circular No. 07/2014/TT-NHNN dated
March 17, 2014.
Specifically, Article 1 of
Decision No. 951/QĐ-NHNN stipulates: “Article 1. Maximum interest rates
of deposits in Vietnam Dong (VND) of organizations (except credit institutions
and foreign bank branches) and individuals at credit institutions and foreign
banks branches according to Circular No. 07/2014/TT-NHNN dated March
17, 2014 are as follows:
1. The maximum interest rate
of demand deposits and deposits with a term less than 1 month is 0,5%/year.
2. The maximum interest rate
of deposits with a term from 1 month to less than 6 months is 5,0%/year.
Particularly, people's credit funds and microfinance institutions shall apply
the maximum interest rate of 5,5%/year with respect to deposits with a term
from 1 month to less than 6 months.”
v Name of
legal document: Circular No. 17/2022/TT-NHNN issued
on 23/12/2022 by the State Bank of Vietnam providing guidelines on
environmental risk management in credit extension by credit institutions and
foreign bank branches (referred to as the “Circular No. 17/2022/TT-NHNN”).
v
Effective date: 01/06/2023.
The content should be noted: Internal
regulations on environmental risk management in extending credit.
Specifically, Article 6 of
Circular No. 17/2022/TT-NHNN stipulates: “Article 6. Internal regulations
on environmental risk management in extending credit
1. Each credit institution
shall formulate its own internal regulations on environmental risk management
in extending credit which may be separated from or included in its internal
regulations on credit extension and internal control, and must be conformable
with regulations of law on credit extension and credit risk management.
2. Internal regulations on
environmental risk management in extending credit of a credit institution
shall, inter alia, have the following contents:
a) Identification and
classification of applications for credit extension which require environmental
risk assessment in extending credit;
b) Information to be
collected to serve the environmental risk management in extending credit;
c) Environmental risk
assessment in extending credit that is carried out in conformity with the
provisions of this Circular;
d) Environmental risk
management in extending credit during the consideration, appraisal, approval
and management of credit amounts extended;
dd) Internal reporting on
environmental risk management in extending credit.”
2. LEGAL DOCUMENTS ARE ISSUED IN 03/2023
2.1. Circular No. 02/2023/TT-NHNN providing instructions for credit institutions and foreign branch banks on debt rescheduling and retention of debt category to assist borrowers in difficulties
v Name of
legal document: Circular No. 02/2023/TT-NHNN issued
on 23/04/2023 by the State Bank of Vietnam providing instructions for credit
institutions and foreign branch banks on debt rescheduling and retention of
debt category to assist borrowers in difficulties (referred to as the “Circular
No. 02/2023/TT-NHNN”).
v
Effective date: 24/04/2023.
The content should be noted:
·
Firstly, stipulating
on debt rescheduling.
Specifically, Article 4 of
Circular No. 02/2023/TT-NHNN stipulates: “Article 4. Debt rescheduling
A credit institution or foreign
branch banks may consider rescheduling outstanding debt, including the
principal and/or interest (including the debts regulated by the Government’s
Decree No. 55/2015/ND-CP dated June 09, 2015 on credit policies
serving development of agriculture and rural areas (with amendments)) on the
basis of borrowers’ requests, its financial capacity and compliance with the
following regulations:
1. The outstanding debt is
principal of a loan or finance lease granted before the effective date of this
Circular, and from lending and finance lease.
2. The principal and/or
interest have to be paid within the period from the effective date of this
Circular to June 30, 2024 inclusive.
3. The outstanding debt to be
rescheduled is undue or up to 10 (ten) days overdue according to the loan/finance
lease agreement.
4. The credit institution or foreign
branch banks determines that the borrower is unable to repay the principal
and/or interest on schedule under the signed agreement due to decrease in
revenue or income compared to that specified in the principal and/or interest
repayment plan under the signed agreement.
5. The credit institution or foreign
branch banks determines that the borrower is able to fully repay the principal
and/or interest after the debt is rescheduled.
6. Debts that violate
regulations of law shall not be rescheduled.
7. Rescheduling time
(including repayment deadline extension) shall vary according to the degree of
difficulty facing the borrower and shall not exceed 12 months from the due date
of the outstanding debt to be rescheduled.
8. Debt rescheduling under
regulations of this Circular shall be carried out from the effective date of
this Circular to June 30, 2024 inclusive.”
·
Secondly, stipulating
on retention of debt category and debt classification.
Specifically, Article 5 of
Circular No. 02/2023/TT-NHNN stipulates: “Article 5. Retention of debt
category and debt classification
1. Credit institutions and Foreign
branch banks may retain the debt categories with respect to the debt whose
principal and/or interest has been rescheduled (hereinafter referred to as
“rescheduled debt”) under regulations of this Circular in the same manner as
the debt categories that have been assigned in accordance with SBV Governor’s
regulations on classification of assets, rates and methods of making loan loss
provision and use of loan loss provision for handling of risks arising from
operations of credit institutions and Foreign branch banks at the nearest time
before prior to the debt rescheduling according to regulation of this Circular.
2. After debt rescheduling and
retention of debt categories are carried out as prescribed in clause 1 of this
Article within the time limit for rescheduling, credit institutions and Foreign
branch banks are not required to put these debts into a higher-risk category
according to SBV Governor’s regulations on classification of assets, rates and
methods of making loan loss provision and use of loan loss provision for
handling of risks arising from operations of credit institutions and Foreign
branch banks.
3. If the outstanding debts
after rescheduling and retention of debt categories prescribed in clause 1 of
this Article are not granted another debt rescheduling by the credit
institution or foreign branch banks according to regulations of this circular,
the credit institution or foreign branch banks shall carry out debt
classification in accordance with SBV Governor’s regulations on classification
of assets, rates and methods of making loan loss provision and use of loan loss
provision for handling of risks arising from operations of credit institutions
and Foreign branch banks.
4. From the rescheduling date,
credit institutions and foreign branch banks shall not record the interests on
the outstanding debts that are rescheduled and debts that remain current
non-performing loans (Category 1) as prescribed in this Circular as revenue
(estimated). Instead, they shall be monitored off-balance sheet and recorded as
revenue when they are collected in accordance with regulations of law on
financial regimes applicable to credit institutions and foreign branch banks.”
v Name of
legal document: Circular No. 03/2023/TT-NHNN issued
on 23/04/2023 by the State Bank of Vietnam providing on ceasing the
implementation effective of Clause 11 Article 4 Circular No. 16/2021/TT-NHNN
date November 10, 2021 of the Governer of the State bank of Vietnam on
corporate bond trading of credit institutions and branches of foreign banks
(referred to as the “Circular No. 02/2023/TT-NHNN”).
v
Effective date: 24/04/2023.
The content should be noted: Stipualting
on cessation of effect from April 24, 2023 to the end of December 31, 2023 for
the provisions of Clause 11 Article 4 of Circular No. 16/2021/TT-NHNN.
Specifically, Article 1 of
Circular No. 03/2023/TT-NHNN
stipulates: “Article 1. Cessation of effect from April 24, 2023 to
the end of December 31, 2023 for the provisions of Clause 11 Article 4 of
Circular No. 16/2021/TT-NHNN.
During the cessation period
of Clause 11 Article 4 of Circular No. 16/2021/TT-NHNN as prescribed in this
Article, credit institutions, foreign bank branches (hereinafter referred to as
credit institutions) may redeem corporate bonds that have not been listed on
the stock market or have not been registered for trading on the Upcom trading
system (hereinafter referred to as unlisted corporate bonds) that have been
sold by a credit institution and/or Unlisted corporate bonds may be issued in
the same lot/phrase as unlisted corporate bonds sold by a credit institution
when:
a) Satisfy the provisions of
Article 4 of Circular No. 16/2021/TT-NHNN;
b) The buyer of this corporate bond from a credit institution shall pay the entire amount of the purchase of corporate bonds at the time the credit institution signs a contract to sell corporate bonds to the bond buyer;
c) The bond issuer is rated at the highest level according to the credit institution’s internal credit rating regulations at the latest time before the credit institution purchases corporate bonds.”
