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THE
STATE BANK OF VIETNAM
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SOCIALIST
REPUBLIC OF VIETNAM
Independence - Freedom - Happiness
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No.
03/2005/TT-NHNN
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Hanoi,
May 25, 2005
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CIRCULAR
PROVIDING
GUIDANCE TO FINANCE LEASING COMPANIES ON THE RESTRUCTURING OF REPAYMENT PERIOD,
OVERDUE DEBTS CLASSIFICATION FOR FINANCE LEASING ACTIVITIES
With a view to implementing the
provision in Article 42 of the Decree No. 16/2001/ND-CP dated 2 May 2001 of the
Government on the organization and operation of finance leasing companies and
in order to ensure the unity of legal provisions for other forms of credit
extension, the State Bank of Vietnam provides guidance to the finance leasing
companies on the implementation of the restructuring of the repayment period,
the overdue debts classification in respect of the finance leasing activities
as follows:
1. The finance leasing companies
shall perform the restructuring of the repayment period for finance leasing
contracts under two following modes:
a. Adjustment of the repayment
period, which is an act where a finance leasing company accepts changes to
repayment periods within the finance leasing term as previously agreed in the
finance leasing contract and without any change to the last repayment period.
b. Debt rescheduling, which is
an act where a finance leasing company accepts the extension of the repayment
duration beyond the leasing term as previously agreed in the finance leasing
contract.
2. The finance leasing companies
shall perform the restructuring of the repayment period, overdue debts
classification in respect of finance leasing contract as follows:
a. The finance leasing companies
shall, based on their financial capacity and the revaluation of the repayment
ability of the lessee, make decision by themselves on the restructuring of the
repayment period for cases:
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- Where a finance lessee fails
to repay in full the principals and/or interests of the finance lease payments
on the due date as agreed in the finance leasing contract and is assessed by
the finance leasing company to be able to repay in a certain period of time
after the leasing term, the finance leasing company shall consider the
extension of the repayment term for a certain period commensurate with
repayment capability of the lessee.
The finance leasing companies
shall classify the entire outstanding principals of the lessees with
restructured repayment period to appropriate debt groups, make provisions and
use it for settlement of credit risks in accordance with applicable provisions
of the State Bank of Vietnam.
b. If a finance lessee fails to
duly repay debt as agreed in the finance leasing contract and is assessed by
the finance leasing company not to be able to repay in a certain period of time
after the leasing term and not accepted by it for the restructuring of the
repayment periods, the outstanding principals of that finance leasing contract
shall be classified as overdue debt; the finance leasing companies shall
classify the entire outstanding principals of the finance lease payment of the
lessee to the appropriate debt groups, make provisions and use it for settlement
of credit risks in accordance with applicable provisions of the State Bank of
Vietnam.
3. The finance leasing companies
must issue a procedure on the restructuring of the repayment period in line
with provisions of this Circular, of relevant laws on finance leasing
activities and submit to the State Bank Inspection right after its issuance.
4. Finance leasing companies
must report of finance leasing contracts with restructured repayment period in
accordance with provisions of the State Bank of Vietnam on the statistic
reporting regime applicable to credit institutions.
5. Implementing organization
a. This Circular shall be
effective after 15 days since its publication in the Official Gazette and
replace the Circular No. 01/2003/TT-NHNN dated 28 January 2003 guiding the
adjustment of debt repayment period, rescheduling of debt repayment,
classification of overdue debts in respect of finance leasing activities
b. Finance leasing companies
shall agree with finance lessees to supplement provisions on the restructuring
of repayment period to finance leasing contracts entered into prior to the
effective date of this Circular. In case where no agreement can be made with
the lessee, finance leasing companies shall consider and decide on the overdue
debt classification for the finance leasing contracts where repayments are not
duly made in accordance with provisions in this Circular to perform the
classification, provisioning and use of provisions against risks without making
change to other agreements in the finance leasing contract previously agreed.
c. The Director of the
Administrative Department, the Director of the Legal Department, the Director
of the Monetary Policy Department and Heads of units of the State Bank, General
Managers of the State Bank's branches in provinces, cities under the central
Governments management, the Board of Directors and General Directors
(Directors) of Finance Leasing Companies shall be responsible for the
implementation of this Circular.
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FOR
THE GOVERNOR OF THE STATE BANK
DEPUTY GOVERNOR
Phung Khac Ke