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CIRCULAR

ON RECEIPTS AND ADVANCES RECEIVED BY VIETNAM ASSET MANAGEMENT COMPANY WHEN BUYING BAD DEBTS WITH SPECIAL BONDS

Pursuant to the Law on the State bank of Vietnam no. 46/2010/QH12 dated June 16, 2010;

Pursuant to the Law on credit institutions no. 47/2010/QH12 dated June 16, 2010;

Pursuant to the Government's Decree No. 156/2013/NĐ-CP dated November 11, 2013 defining the functions, tasks, entitlements and organizational structure of the State bank of Vietnam;

Pursuant to the Decree no. 53/2013/NĐ-CP dated May 18, 2013 of the Government defining the establishment, organization and operation of Vietnam Asset Management Company;

Follow the instruction of the Prime Minister given in the Official Dispatch no. 1760/TTg-KTTH dated October 31, 2013 and the Official Dispatch no. 3831/VPCP-KTTH dated May 27, 2014;

At the request of the Chief Inspector of the banking supervisory agency;

The Governor of the State bank of Vietnam promulgates the Circular receipts and advances received by Vietnam Asset Management Company when buying bad debts with special bonds.

Article 1. Scope and regulated entities

1. This Circular provides for receipts and advances received by Vietnam Asset Management Company (VAMC) when buying bad debts with special bonds, including:

a) The receipts in proportion to the recovered amount of bad debts bought with special bonds (hereinafter referred to as receipts from debt collection)

b) The annual advances in proportion to the actual annual average outstanding principal of bad debts bought with special bonds (hereinafter referred to as advances)

2. The regulated entities include:

a) Vietnam Asset Management Company (VAMC)

b) Vietnamese credit institutions that sell bad debts to VAMC for special bonds (hereinafter referred to as debt-selling credit institutions);

c) Other relevant entities

Article 2. Rules for determination and repayment of advances

1. The actual annual average outstanding principal of a bad debt bought with special bonds prescribed in Point b Clause 1 this Circular shall be determined according to the multiplication method applied to the outstanding principal of VAMC, which is an on-balance item.

2. An advance is an amount paid in advance by debt-selling credit institutions in order for VAMC to cover the expenditures on bad debt settlement.

3. VAMC shall repay the advances to debt-selling credit institutions with the receipts from debt collection and other lawful receipts.

Article 3. Amount of recovered debt

1. The receipts received by VAMC from recovery of bad debts bought with special bonds are derived from:

a) The receipts from selling debts, including the cases in which the debts is sold back to the debt-selling credit institutions before the due date of special bonds;

b) The receipts from using, renting out and selling collateral;

c) The repayments made by principal debtors (including principal and interest);

d) The amounts paid by guarantors, the parties responsible for paying the debt or other third parties who pay debts instead of principal debtors;

dd) The value of assets put up as collateral which are transferred to VAMC in order to fulfill the obligation to pay debts of the principal debtors, guarantors, which have been reassessed and agreed among the parties in accordance with regulations of the Law;

e) Value of the contribution to charter capital or capital stock of principal debtors if the debts are converted into charter capitals or capital stock of principal debtors.

2. The amount of recovered debt which is used for calculating receipts from debt collection mentioned in Point a Clause 1 Article 1 this Circular equals (=) the total value of the amounts and assets prescribed in Clause 1 this Article minus (-) the expenditure on handling collateral, other expenditures incurred by principal debtors, guarantors and parties responsible for paying the debts prescribed in agreements, regulations of the Law and the excess amounts refunded to the principal debtors, guarantors, and the parties responsible for paying the debts(if any).

Article 4. Proportion of receipts and advances received by VAMC when buying bad debts with special bonds

1. VAMC is entitled to an amount in proportion to the recovered debt prescribed in Clause 2 Article 3 this Circular.

2. Within the first 15 working days of January every year, debt-selling credit institutions must transfer the advances paid in the preceding year, which is in proportion to the actual annual average outstanding principal of bad debts bought with special bonds of the preceding year, to VAMC.

3. The Governor of the State bank of Vietnam shall decide the proportions prescribed in Clause 1, 2 of this Article after reaching an agreement with the Minister of Finance according to the following principles:

a) VAMC can adequately cover its operating cost;

b) The bad debt settlements are expedited;

c) Risks and expenditure on settling bad debts are limited;

dd) The expenditures incurred by debt-selling credit institutions is reduced.

Article 5. Repayment of advances

1. VAMC shall use the receipts from debt collection to repay the advances in the following order:

a) Within the first 05 working days of a quarter, VAMC must notify debt-selling credit institutions of the receipts from debt collection in the preceding quarter (if any)

b) Within 05 working days from the receipt of VAMC’s notification mentioned in Clause 1 this Article, debt-selling credit institutions shall check the figures and notify the VAMC of any difference in the amounts of debt recovery (if any)

c) Within first 15 working days of a quarter, VAMC shall use the receipt from the collection of each bad debt in the last quarter to repay the advance.

2. When special bonds are due or VAMC unilaterally terminate debt purchase contracts, VAMC shall use the receipt from debt collection and other legal receipts to repay the advances corresponding to such special bonds according to the regulations of the Ministry of Finance on financial mechanism of VAMC.

3. If the VAMC suffers a loss at the end of the financial year in which special bonds are due and the total amount of recovered debt is smaller than the total amount of advances given by credit institutions, which must be repaid, VAMC shall request the State bank of Vietnam and the Ministry of Finance to handle the case according to the regulations of the Ministry of Finance on the financial mechanism of VAMC.

Article 6. Recording receipts and advances received by VAMC when buying bad debts with special bonds

VAMC and debt-selling credit institutions shall record the receipts and advances received by VAMC when buying bad debts with special bonds according to the instructions of the State bank of Vietnam.

Article 7. Responsibilities of affiliates of the Vietnam State bank

1. Banking Supervisory Agency must:

a) Supervise, carry out inspections and take handling measures for violations of debt-selling credit institutions and VAMC in implementing the regulations of this Circular.

b) Take charge and cooperate with relevant units in assisting the Governor of the State bank of Vietnam in providing guidance on the implementation of this Circular.

2. Finance and Accounting Department must:

a) Take charge and cooperate with Banking Supervisory Agency and relevant units in requesting the State bank of Vietnam to give advice on annual financial plans of VAMC.

b) Take charge and cooperate with Banking Supervisory Agency and relevant units in requesting the State bank of Vietnam to reach an agreement with the Minister of Finance on the proportion mentioned in Clauses 1, 2 Article 4 of this Circular for each period.

3. The branches of the State bank in central-affiliated cities and provinces shall supervise, carry out inspections and take handling measures for violations of local debt-selling credit institutions in implementing the regulations of this Circular.

Article 8. Responsibilities of VAMC

1. VAMC must supervise and carry out inspections of debt-selling credit institutions in determining, paying the revenues and advances when buying bad debts with special bonds according to the regulations of this Circular.

2. VAMC shall take on the responsibilities prescribed in this Circular and other responsibilities according to the regulations of the Law.

Article 9. Responsibilities of debt-selling credit institutions

1. Every debt-selling credit institution shall cooperate with VAMC in determining, calculating and paying sufficiently and in a timely manner revenues and advances when buying bad debts with special bonds according to the regulations of this Circular.

2. Every debt-selling credit institution shall take on the responsibilities prescribed in this Circular and other responsibilities according to the regulations of the Law.

Article 10. Effect

1. This circular takes effect on September 26, 2014.

2. With regard to bad debts bought with special bonds in years 2013 and 2014, VAMC and debt-selling credit institutions shall determine the receipts, advances and repayment thereof in accordance with this Circular; The time for receiving receipts, paying advances and repaying advances shall be decided by the Governor of the State bank of Vietnam.

Article 11. Implementation

The Office manager, the Chief inspector of banking supervisory agency, the Heads of affiliates of the Vietnam State bank, Directors of Vietnam State bank branches of provinces, cities, Presidents of the Board of Directors, Presidents of the Member assembly and General Directors (Directors) of Vietnamese credit institutions, President of the Member assembly and General Director of VAMC are responsible for implementing this Circular.

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