On May 20, 2014, the State Bank of Vietnam issued the Circular No. 14/2014/TT-NHNN amending, supplementing a number of Articles of the Regulations on classification of debts, appropriation, setting up and use of reserves for handling credit risks in banking activities of credit institutions promulgated together with the Decision No. 493/2005/QD-NHNN dated April 22, 2005 of the State Bank Governor.
In accordance with this Circular, Co-operative Bank, People Credit Fund shall be considered to reschedule debts and keep in the same group of debt as classified before rescheduling debts when debt granted credit that doesn’t violate regulations of the law; reschedule debts is in accordance with the purpose of project loan in the credit contract; customers using the loan in accordance with the purposes as agreed in the credit contract; reschedule debts and keeping in the same group of debt shall be only done when the customer is incapable of repaying debt principals and/or interests within the term as agreed in the credit contract, the plan for pay debt is feasible and in accordance with the production and business condition.
When rescheduling debts and keeping in the same group of debt, Co-operative Bank, People Credit Fund must meet the requirements of the State Bank on limit, prudential ratios in operations of Co-operative Bank, People Credit Fund including the maximum ratio of short-term capital source used to medium and long-term loans in the case of restructuring short-term debts into medium and long-term debts.
Besides, Co-operative Bank, People Credit Fund rescheduling debts and keeping in the same group of debt must promulgate the internal regulations on controlling and supervising debt rescheduling and classifying in the same debt groups to implement comprehensively in the whole system, forming the internal control mechanism for rescheduling debt and classifying in the same debt groups, ensuring the tight supervision, preventing credit quality from distortion; supervise the content, reason for rescheduling debt and keeping in the same group of debt for each debt.
The State Bank requests Co-operative Bank, People Credit Fund to make a specific report on the content, reasons for rescheduling debt and classifying in the same debt groups for each debt when necessary; being active, self-decisive and responsible for rescheduling debt and keeping in the same group of debt in accordance with the law under this Circular….within the first five days of the month or when being requested by the State Bank, Co-operative Bank, People Credit Fund must send the report to the State Bank ( Banking Inspection and supervision Agency) on the rescheduled debts and classifying in the same debt groups.
This Circular takes effect on May 22, 2014 and ceases its effect on April 01, 2015.
