Bad debt ratio over 3% must sell the bad debts to AMC

 State Bank of Vietnam has issued Circular 19/2013/TT-NHNN dated 06 Sept 2013 regulating on purchasing, selling bad debts of credit institutions of Vietnam. This circular applies for Vietnamese credit institutions except for 100% foreign capital banks, Join venture banks and foreign bank branches as well.

 This Circular provides the guidance on the purchase, selling, dealing with bad debts, issuance, management and payment of special bond by the Asset Management Corporate (AMC).

       Bad debt ratio over 3% must sell the bad debts to AMC

 With respect to the purchase, selling bad debts between AMC and credit institutions (CIs), this circular regulates the principles of bad debt trading, rights and responsibilities between parties; issuance of special bonds by AMC to purchase bad debts; conditions and procedures of bad debt trading between AMC and CIs; loan restructure and supporting borrower. This circular also regulates the prudential ratios, risk control of AMC.

 The most importance point is that if CIs have bad debt ratio over 3%, they must sell their bad debts to AMC, if they do not, SBV shall apply the provisions of point 5, article 14 Decree 53/2013/ND-CP of Government (that means they shall be inspected by SBV or audited by an independent audit to determine whether selling bad debt to AMC or not for ensuring their safety operation).

 With respect to bad debt and security assets by AMC, this circular regulates in detail the measures to deal with bad debts, mortgage assets includes selling bad debts, security assets, contribution to the borrower’s equity, buying shares of borrower which is enterprise.

 Moreover, this circular regulates the dealing with the proceeds from bad debts, the procedures of payment of special bonds issued by AMC, risk provisions and use, the responsibilities of related organizations and individuals.

                                                                                                                                                                                                                                                              Lawyervn.net