To implement the Directive No. 11/CT-TTg on March 04th 2020 of the Prime Minister, the State Bank of Vietnam issued Circular No. 01/2020/TT-NHNN on March 12th 2020 (“Circular 01”) regulating the credit institutions, foreign bank branches to reschedule the repayment, exempt, reduce interest and fees, maintain debt groups to support customers affected by the epidemic acute respiratory infection due to new strain of coronavirus (Covid – 19).
Circular 01 regulates the cases and conditions for rescheduling the repayment, exemption and reduction of interest and fees, maintaining the debt group, and clearly guiding the implementation and responsibilities of credit institutions, foreign bank branches, units of the State Bank of Vietnam and borrowers when implementing this support policy, ensuring the right subjects, objectivity and the provisions of law.
Any content related to rescheduling, exemption, reduction of interest, fees, debt classification that are not prescribed in Circular 01 shall be implemented in accordance with other relevant documents.
REMARKABLE REGULATIONS IN CIRCULAR 01:
Debts with restructured repayment term are the debts balance and/or interest (including the debt balance of debts within the scope of regulation of Decree No. 55/2015/ND-CP on June 9th 2015 of the Government on the credit policy for agricultural and rural development (amended and supplemented)) meeting the following three conditions:
- Arising out of lending activities, financial leasing.
- There is an obligation to repay the principal debts and/or interest within the period from January 23rd 2020 to the first after 03 months from the date the Prime Minister announces the end of the Covid-19 pandemic.
- Customers are not able to repay their principal debts and/or interest on time as a result of a decrease in revenue and income due to Covid-19.
Regarding the exemption and reduction of interests and fees, Circular 01 prescribes that credit institutions and branches of foreign banks shall decide on the exemption and reduction of interests and fees according to their internal regulations for the debts arising from credit-granting activities. (except for the purchase and investment of corporate bonds) for which the principal debts and/or interest within the period from January 23rd 2020 to the first day after 03 months from the date of Prime Minister’s announcement the end of the Covid-19 pandemic were unable to pay on time as a result of a decrease in revenue and income due to Covid-19.
Regarding maintaining the debt group, Circular 01 stipulates that credit institutions and branches of foreign banks are allowed to keep the classified debts group according to the State Bank’s regulations at the latest time before January 23rd 2020. Accordingly, credit institutions and foreign bank branches must classify debts and set up risk provisions according to the restructured term as prescribed in the provisions of law on debt classification, setting up and using reserve funds to deal with risks in operations of credit institutions and foreign bank branches without having to apply the adjustment principle to debt groups with higher risk levels.
Also according to Circular 01, credit institutions and branches of foreign banks shall take responsibility for rescheduling the repayment, exemption and reduction of interest and fees, maintaining the debt group, and issuing internal regulations on the above-mentioned contents in accordance with the provisions of Circular 01 to uniformly implement throughout the system.
Circular 01 takes effect from March 13th 2020.