In accordance with the Circular No. 20/2014/TT-NHNN dated August 12, 2014 of the State Bank of Vietnam on receipts and advances from Vietnam Asset Management Company (VAMC) for the bad debts bought by special bonds, an advance is an amount paid in advance by debt-selling credit institutions in order for VAMC to cover the expenditures on bad debt settlement.
Within the first 15 working days of January every year, debt-selling credit institutions must transfer the advances paid in the preceding year, which is in proportion to the actual annual average outstanding principal of bad debts bought with special bonds of the preceding year, to VAMC. The Governor of the State Bank of Vietnam shall decide the proportions after reaching an agreement with the Minister of Finance when VAMC can adequately cover its operating cost; the bad debt settlements are expedited; risks and expenditure on settling bad debts are limited; and the expenditures incurred by debt-selling credit institutions is reduced.
The receipts received by VAMC from recovery of bad debts bought with special bonds are derived from the receipts from selling debts, including the cases in which the debts is sold back to the debt-selling credit institutions before the due date of special bonds; the receipts from using, renting out and selling collateral; the repayments made by principal debtors; the amounts paid by guarantors, the parties responsible for paying the debt or other third parties who pay debts instead of principal debtors and value of the contribution to charter capital or capital stock of principal debtors if the debts are converted into charter capitals or capital stock of principal debtors.
This Circular takes effect on September 26, 2014.
