Chỉ thị 04/CT-NHNN

DIRECTIVE

ON CLASSIFICATION OF RESTRUCTURED DEBTS AND HANDLING OF NPLS

The Governor of the State Bank issued the Decision No. 780/QD-NHNN dated 23 April 2012 on classification of restructured debts, rescheduled debts; Circular No. 02/2013/TT-NHNN dated 21 January 2013 on classification of assets, level, method of making risk provision and use of provision to deal with risks in operation of credit institutions, foreign bank branches (Circular 02); Circular No. 12/2013/TT-NHNN dated 27 May 2013 on amendment of Circular 02. In order to correctly reflect the credit quality of restructured debts in correspondence with the production, business condition of the enterprises and to implement the Circular 02 upon its effectiveness, the Governor of the State Bank hereby requires credit institutions, foreign bank branches and units of the State Bank to implement following details:

1. For credit institutions, foreign bank branches:

a) The restructuring of term of debt repayment and keeping in the same group of debts shall be based on the assessment of production, business condition, supply of services, and the actual solvency of the customers; inspecting, closely controlling the restructured debts, debts that are kept in the same group, ensuring that after the restructuring, the customer shall be able to pay debt upon expiry of the restructured term; for customers who use loan fund for the purpose that is contrary to the credit contract, or those who break other provisions of the credit contract and applicable regulations, relevant debts shall not be restructured and not be kept in the same group.

b) Credit institutions, foreign bank branches shall proactively, and on the own discretion, decide the restructuring of term of debt basing on the monitoring, assessment of production, business condition, financial capacity of the customers, in combination with reviewing the loan interest rate to be suitable to the financial condition of the customers, credit institutions and foreign bank branches as well as the actual situation of the money market so as to help the customers overcome their difficulty in doing business, production.

c) Such restructuring of debt term and keeping in the same group of debt shall only be proceeded where the customer is unable to make timely payment for the principal and/or interest of the loan within the scope of the loan term or unable to make full payment of the principal and/or interest of the loan at the due time as agreed in the credit contract, and has a feasible plan on business, production that is conformable to the business, production situation; also, the customer is assessed by the credit institution, foreign bank branch to have better ability to pay the debt with the restructured term or rescheduled term.

d) There must be internal regulations on the restructuring of term of debt repayment and on keeping in the same group of debt for consistent implementation in the entire system; there must be an internal control system for the restructuring of term of debt repayment, ensuring to closely, cautiously control and prevent from the any act of abusing the restructuring and keeping in the same group of debt for improperly reflecting the credit quality. Such internal regulation and internal control system shall be reported in writing to the State Bank (Banking Inspection and Supervision Agency) before 1^st November 2013.

dd) To draw up an implementation and an implementation commitment for reporting to the State Bank (Banking Inspection and Supervision Agency and State Bank branch in province, city where head office of the credit institution, foreign bank branch is located) before 1^st November 2013 to ensure full implementation of the Circular 02 upon its effectiveness. On a quarterly basis, before 25^th of the final month of the quarter, outcome of the implementation plan mentioned above shall be reported to the State Bank (Banking Inspection and Supervision Agency and State Bank branch in province, city where head office of the credit institution, foreign bank branch is located).

2. Banking Inspection and Supervision Agency:

a) To summarize and report to the Governor of the State Bank on the implementation of this Directive; the plan on implementation of Circular 02 stated in Item dd Clause 1 of this Directive by the credit institutions, foreign bank branches.

b) To supervise and inspect credit institutions, foreign bank branches in the performance of the implementation plan to ensure full implementation of the Circular 02 upon its effectiveness.

c) To strengthen the supervision, inspection and dealing with any act of violation against the credit institutions, foreign bank branches in the restructuring of debt term and keeping in the same group of debt in compliance with the Decision No. 780/QD-NHNN, this Directive and applicable regulations, ensuring that operation of the credit institutions, foreign bank branches is safe, effective and compliant with laws.

3. For State Bank branches in provinces, cities:

a) To strengthen the supervision, inspection and dealing with any act of violation against credit institutions, foreign bank branches whose head offices are located in the local area as to the restructuring of debt term and keeping in the same group of debt in accordance with the Decision No. 780/QD-NHNN, this Directive and applicable regulations of laws; ensuring that the restructuring of debt term and keeping in the same group of debt by the credit institutions, foreign bank branches are safe, effective and compliant with laws.

b) To proactively catch up with the socio-economic situation, the production, business operation of enterprises and banking operation in the local area for reporting to and recommending the local authorities and the Governor of the State Bank on the management measures, helping to solve the difficulty for enterprises, ensuring operation of credit institutions, foreign bank branches is safe, effective and compliant with laws.

c) To supervise the credit institutions, foreign bank branches in the local area in the performance of the implementation plan and commitment as stated in Item d Clause 1 of this Directive. On a quarterly basis, before the 30^th of the final month of quarter, outcome of the plan on implementation of Circular 02 by credit institutions, foreign bank branches shall be reported to the Governor of the State Bank.

4. This Directive shall come into effect from its signing date.

5. Director of State Bank’s Office, Director of the Banking Inspection and Supervision Agency, Head of units of the State Bank, General Manager of State Bank branches in provinces, cities under the central Government’s management, Chairman of Board of Directors, Chairman of Board of Members and General Director (Director) of credit institutions, foreign bank branches shall be responsible for implementation of this Directive.