Circular No. 36/2024/TT-NHNN dated June 30, 2024 on prescribing classification of assets of credit institutions that are cooperatives

THE STATE BANK OF VIETNAM -------	THE SOCIALIST REPUBLIC OF VIET NAM Independence-Freedom-Happiness -----------------
No. 36/2024/TT-NHNN	Hanoi, June 30, 2024

CIRCULAR

PRESCRIBING CLASSIFICATION OF ASSETS OF CREDIT INSTITUTIONS THAT ARE COOPERATIVES

Pursuant to the Law on the State Bank of Vietnam dated June 16, 2010;

Pursuant to the Law on Credit Institutions dated January 18, 2024;

Pursuant to the Government's Decree No. 102/2022/ND-CP dated December 12, 2022 prescribing functions, tasks, powers and organizational structure of the State Bank of Vietnam (SBV);

At the request of the Head of the SBV Banking Supervision Agency;

The Governor of the State Bank of Vietnam promulgates a Circular prescribing classification of assets of credit institutions that are cooperatives.

Chapter I

GENERAL PROVISIONS

Article 1. Scope

1. This Circular introduces regulations on classification of assets (hereinafter referred to as “debts”) arising from the following operations:

a) Lending;

b) Discounting and rediscounting of negotiable instruments and other valuable papers;

c) Credit extension by issuance of credit cards;

d) On-behalf payments under off-balance sheet commitments (including payments made on behalf of customers to fulfill their obligations under guarantee agreements and in letter of credit (L/C) operations (except for the cases specified in point i of this Clause) and other on-behalf payments under off-balance sheet commitments);

dd) Purchase of bonds issued by other credit institutions which have not yet been listed on securities market or have not yet been registered for trading on the Upcom trading system (hereinafter referred to as “unlisted bonds”);

e) Entrustment for credit extension;

g) Making deposits (except for demand deposits) at credit institutions and foreign bank branches (FBBs) as prescribed by law;

h) Purchase of certificates of deposit issued by other credit institutions and FBBs;

i) Issuance of deferred payment L/Cs containing a provision that the beneficiary is entitled to receive sight payment or advanced payment before the L/C due date, and L/C reimbursement in the form of an agreement with the customer to make payment using the reimbursing bank’s funds from the date on which the reimbursing bank pays the beneficiary; L/C payment by negotiation;

k) Outright purchase without recourse of sets of documents presented under L/Cs, except where the cooperative bank buys outright a set of documents presented under an L/C which it issued.

2. The cooperative bank shall classify debts arising from the operations specified in clause 1 and off-balance sheet commitments as prescribed in clause 4 of this Article.

3. People’s credit funds classify debts arising from the operation specified in point a clause 1 of this Article.

4. Guarantees, L/C operations (excepts those specified in point i clause 1 of this Article), payment acceptances, irrevocable loan commitments and other commitments that give rise to credit risks (hereinafter referred to as “OBS commitments”) must be classified according to the provisions of this Circular for management and supervision of the quality of credit extension activities of the cooperative bank.

5. Debts against which risk provisions have been used according to provisions of the Government’s Decree prescribing amounts and methods of establishing risk provisions, use of risk provisions for management of risks arising from operations of credit institutions and FBBs, and credit institutions’ allocation of forgivable interests (hereinafter referred to as “Decree on establishment of risk provisions”) shall be managed and monitored by credit institutions that are cooperatives according to provisions of the Decree on establishment of risk provisions, and shall not be classified according to provisions of this Circular.

6. If debts are governed by specific regulations of the Government or the Prime Minister on classification of debts, credit institutions that are cooperatives shall comply with these regulations.

Article 2. Regulated entities

1. Credit institutions that are cooperatives, including:

a) The cooperative bank;

b) People’s credit funds.

2. Other organizations and individuals involved in classification of debts of credit institutions that are cooperatives.

Article 3. Definitions

For the purposes of this Circular, these terms are construed as follows:

1. “credit risk from operations of a credit institution that is a cooperative” (hereinafter referred to as “risk”) means the possibility of loss resulting from a customer’s failure to partially or fully repay debts to that credit institution under a contract or agreement (hereinafter referred to as “agreement”) made by and between the customer and that credit institution.

2. “debt” means an amount of money which a credit institution that is a cooperative remits, pays or disburses in installment under an agreement (in case the repayment term or due date varies with each disbursement), or an amount of money which a credit institution that is a cooperative already disburses under an agreement (in case the repayment term does not vary with multiple disbursements) with respect to a customer’s unpaid debt.

3. “overdue debt” means a part or the whole of loan principal and/or interest that a customer fails to pay by the due date as agreed upon with a credit institution that is a cooperative. As for loans granted in the form of a credit card, an overdue debt is a debt incurred when a cardholder fails to fulfill his/her debt repayment obligations by the due date specified in an agreement on issuance, use and payment of that credit card with a credit institution that is a cooperative.

4. “nonperforming loan (NPL)” means a bad debt which is recorded on the balance sheet (on-balance sheet bad debt) and classified into group 3, 4 or 5 according to provisions of this Circular.

5. “NPL ratio” means the ratio of the amount of NPLs to the total amount of debts from group 1 to group 5 as prescribed in this Circular.

6. “bad credit extension ratio” means the ratio of the total amount of NPLs and OBS commitments from group 3 to group 5 to the total amount of debts and OBS commitments from group 1 to group 5.

7. “rescheduled debt” means a debt of which the repayment term is rescheduled according to regulations adopted by the State Bank of Vietnam (hereinafter referred to as “SBV”).

8. “customer” means an organization (including credit institutions and FBBs), individual or any other entity bound by the civil legislation to incur or give rise to agreed-upon repayment or payment obligations to the cooperative bank or a people’s credit fund in accordance with SBV’s regulations on cooperative bank and people’s credit funds.

9. “other credit risk-bearing commitments” means OBS commitments under which the assets specified in clause 1 Article 1 of this Circular will be established when the cooperative bank fulfills its obligations to customers.

Article 4. Debt classification time

1. At least once a month, within the first 07 (seven) days of the month, each credit institution that is a cooperative shall, pursuant to provisions of clause 6 Article 1, Article 8, Article 9, Article 10 of this Circular, itself carry out classification of debts and OBS commitments by the end of the last day of the preceding month.

Apart from the abovementioned classification schedule, credit institutions that are cooperatives shall be allowed to themselves carry out classification of debts and OBS commitments according to their own internal regulations.

2. Based on inspection and supervision results and relevant credit information:

a) SBV (SBV Banking Supervision Agency) has the right to request credit institutions that are cooperatives to carry out assessment and re-classification of specific debts corresponding to their risk levels;

b) SBV’s provincial branches are entitled to request affiliated entities of the cooperative bank and people’s credit funds to carry out assessment and re-classification of specific debts corresponding to their risk levels.

Article 5. Internal credit rating systems

1. The cooperative bank must develop its own internal credit rating system to support its debt classification and management of credit quality in conformity with its scope of operations and actual conditions. Such internal credit rating system must contain at least:

a) Legal grounds relating to the establishment and business lines of customers;

b) General economic indicators relating to business, finance, assets and ability to fulfill agreed-upon obligations;

c) Customer’s reputation assessed by credit institutions with which the customer has conducted transactions;

d) Detailed, specific and systematic criteria for evaluation of customers (by their business lines and locations) which shall establish the basis for rating of customers.

2. People’s credit funds are allowed to apply the provisions of clause 1 of this Article.

3. At least once a year, internal credit rating systems must be reviewed and assessed on the basis of customer data and information collected during the entire year.

4. Within 10 (ten) days from the date on which their internal credit rating systems are promulgated, revised, updated or replaced, the cooperative bank shall send SBV (via SBV Banking Supervision Agency) and people’s credit funds (if any) shall send relevant SBV’s provincial branches their new or revised internal credit rating systems directly or by post.

Article 6. Internal regulations on credit extension and debt management, and risk provision policies

1. Credit institutions that are cooperatives shall issue their written internal regulations on credit extension and debt management, and risk provision policies in conformity with provisions of this Circular, the Decree on establishment of risk provisions and relevant laws.

2. Internal regulations on credit extension and debt management of a credit institution that is a cooperative shall meet the following requirements as a minimum:

a) They are formulated on the basis of collected customer data and information and ratings given to customers according to its internal credit rating system (if any);

b) They must be applied consistently throughout its entire system as a basis for review and approval of credit extension and debt management for specific customers;

c) They must include regulations of credit policies applied to customers, including those related to credit extension conditions, credit limits, interest rates, application and documentation requirements, and procedures for review and approval of credit extension and debt management;

d) They must include management regulations to ensure compliance with SBV's regulations on prudential ratios and limits for the operations of credit institutions that are cooperatives;

dd) They must include regulations on responsibilities and powers of its departments, affiliates and individuals in the review and approval of credit extension, credit quality management and collateral management;

e) They must include regulations on procedures for inspection and control before, during and after credit extension;

g) They must include regulations on security interest, review and management of collateral;

h) They must include regulations on valuation of collateral, including principles, intervals, methods, procedures and responsibilities of each department, affiliate or individual involved in the valuation of collateral in accordance with the provisions of law to ensure that the value of the collateral corresponds to the market value when calculating the amounts set aside for specific provisions under the Decree on establishment of risk provisions;

i) They must include regulations on debt recovery measures.

3. Risk provision policies of a credit institution that is a cooperative shall meet the following requirements as a minimum:

a) They must be conformable with regulations of laws on accounting, financial, reporting and statistical regimes;

b) They must include procedures for collection of customer data and information to ensure accurate classification of debts, OBS commitments (if any), management of NPLs, management of bad credit balances and risk provisions that are duly set up in full;

c) They must include specific regulations on classification of debts and OBS commitments (if any), amounts and methods of establishing risk provisions and use of provisions against risks arising from its operations towards specific customers on a periodical or ad hoc basis;

d) They must include regulations on powers and responsibilities of its departments, affiliates and individuals involved in classification of debts and OBS commitments (if any), establishment and use of provisions for risks arising from its operations;

dd) It must include mechanisms for inspection, supervision and reporting on implementation of activities prescribed in points a through d of this Clause.

Article 7. Reporting on internal regulations on credit extension and debt management, and risk provision policies

1. Within 10 (ten) days from the date on which its internal regulations on credit extension and debt management, and risk provision policies are promulgated or modified as prescribed in Article 6 of this Circular, a credit institution that is a cooperative must send SBV directly or by post as prescribed in clause 2 of this Article the following documents:

a) In case of promulgation of new internal regulations on credit extension and debt management and risk provision policies: Internal regulations on credit extension and debt management and risk provision policies;

b) In case of modification of internal regulations on credit extension and debt management, and risk provision policies:

(i) Written report on modification of internal regulations on credit extension and debt management and risk provision policies, in which reasons for such modification must be clearly stated;

(ii) Written documents stating modifications to internal regulations on credit extension and debt management, risk provision policies.

2. Credit institutions that are cooperatives shall send reports to SBV as prescribed in clause 1 of this Article as follows:

a) The cooperative bank shall send its reports to SBV (via SBV Banking Supervision Agency);

b) A people’s credit fund shall send its reports the SBV’s branch of province or city where it is headquartered.

Chapter II

SPECIFIC PROVISIONS

Article 8. Classification rules

1. All outstanding debts and OBS commitments that a customer owes to a credit institution that is a cooperative must be classified into the same debt group which poses the highest risk level among debt groups of debts and/or OBS commitments of that customer.

2. As for a syndicated loan, each credit institution that is a cooperative involved in the grant of the syndicated loan shall notify credit institutions that are cooperatives and the syndicate members in writing of results of its debt classification which is carried out as according to Article 9 of this Circular.

3. In case of discounting of negotiable instruments and other valuable papers:

a) Existing in the form of buying forward: The cooperative bank shall classify discounts in this form as loans granted to beneficiaries;

b) Existing in the form of buying with recourse: The cooperative bank shall classify discounts in this form as loans granted to beneficiaries as follows:

Before the cooperative bank exercises the right of recourse under the discounting contract, it shall, based on the issuer’s fulfillment of its obligations to repay debt or make payment under the agreement on issuance of negotiable instrument or valuable paper, and information/data on the beneficiary's solvency, classify the discount amount.

From the time the cooperative bank exercises the right of recourse under the discounting contract, it shall, based on the period during which the debt repayment or payment is past due under the agreement on issuance of negotiable instrument or valuable paper, and the beneficiary's solvency, further classify the discount amount into the debt group with appropriate risk level.

4. As for amounts used for purchasing unlisted bonds, the cooperative bank shall classify them as loans taken out by bond issuers; where bonds are issued by other credit institutions and guaranteed, such amounts shall be classified as secured loans taken out by bond issuers.

Amounts used for purchasing unlisted bonds whose term is extended in accordance with regulations of law shall be classified as loans with extended term.

5. In case of an entrusted loan where the trustee has not yet fully received the disbursement of trust funds under the entrustment contract, the cooperative bank shall classify the undisbursed amount of trust funds as a loan granted to the trustee. The period during which the loan is deemed past due starts from the time of the trustee’s failure to receive the disbursement of the loan by the disbursement deadline specified in the entrustment contract.

6. As for payments made for purchase of certificates of deposit issued by other credit institutions or FBBs, the cooperative bank shall classify such payments as loans granted to such issuing credit institutions or FBBs.

7. As for debts arising from L/C operations:

a) Regarding issuance of L/Cs:

(i) Where a sight or deferred payment L/C is issued (except the case specified in point a(ii) of this clause), the issuing bank shall classify the payment made on behalf of the applicant under commitments in the L/C according to provisions of clause 2 Article 10 of this Circular from the date on which the issuing bank pays the beneficiary;

(ii) In case of issuance of a deferred payment L/C containing a provision that the beneficiary is entitled to receive sight payment or advanced payment before the L/C due date, the issuing bank shall classify the debt arising from L/C operations as a loan granted to the applicant from the date on which the issuing bank pays the beneficiary;

b) Regarding confirmation of L/Cs:

The confirming bank shall classify the payment made on behalf of the issuing bank as committed in the L/C, and the issuing bank shall classify the payment made on behalf of the applicant as committed in the L/C according to clause 2 Article 10 of this Circular from the date on which the confirming bank pays the beneficiary;

c) Regarding L/C payment by negotiation:

The negotiating bank shall classify payments made to the beneficiary in performing L/C operations as discounts on negotiable instruments and other valuable papers prescribed in clause 3 of this Article;

d) Regarding reimbursement of L/Cs:

(i) In case of reimbursing an L/C in the form of issuing a reimbursement undertaking, the reimbursing bank shall classify the payment made on behalf of the issuing bank as committed in the L/C according to clause 2 Article 10 of this Circular from the date on which the reimbursing bank pays the beneficiary;

(ii) In case of reimbursing an L/C in the form of an agreement with the customer to make payment using the reimbursing bank’s funds (except the case prescribed in point d(i) of this clause), the reimbursing bank shall classify the debt arising from L/C operations as a loan granted to the issuing bank from the date on which the reimbursing bank pays the beneficiary;

dd) In case of outright purchase without recourse of sets of documents under L/Cs, the cooperative bank shall classify payments made for such purchase transactions as loans granted to issuing banks or confirming banks.

8. As for debts involved in the violation referred to in point c(iv) clause 1 Article 9 of this Circular, at the time of discovery of this violation, credit institutions that are cooperatives must immediately issue debt recovery decisions in accordance with regulations of law.

As for debts that need to be recovered according to inspection and examination conclusions or decisions on imposition of administrative penalties (hereinafter referred to as “inspection conclusions”), credit institutions that are cooperatives must immediately issue decisions to collect debts under these inspection conclusions.

As for debts involved in the violation referred to in point c(iv) clause 1 Article 9 of this Circular and debts that need to be recovered according to inspection conclusions, credit institutions that are cooperatives shall not be allowed to reschedule debt repayment terms and, pending the recovery of debts according to recovery decisions, shall classify such debts in accordance with this Circular.

9. As for a rescheduled debt, the number of debt rescheduling times shall be counted over the period from the time the debt is incurred until it is fully paid by the customer to the cooperative bank or people’s credit fund.

Article 9. Debt classification

1. Credit institutions that are cooperatives shall classify debts (except on-behalf payments under OBS commitments) into the following 05 groups:

a) Group 1 (Standard debts), including:

(i) Any unmatured debt with principal and interest which are rated likely to be fully recovered by due date;

(ii) Any debt which is less than 10 days past due and whose overdue principal and interest are rated likely to be fully recovered while its remaining principal and interest are rated likely to be fully recovered by due date;

(iii) Any debt classified into group 1 as prescribed in clause 2 of this Article;

b) Group 2 (Debts needing attention), including:

(i) Any debt which is up to 90 days past due, except the debts specified in point a(ii) of this clause, and clause 3 of this Article;

(ii) Any debt with first-time adjusted repayment terms that is unmatured, except the debts specified in point b clause 2, and clause 3 of this Article;

(iii) Any debt classified into group 2 as prescribed in clauses 2, 3 of this Article;

c) Group 3 (Substandard debts), including:

(i) Any debt which is from 91 to 180 days past due, except the debts specified in clause 3 of this Article;

(ii) Any debt with first-time extended repayment term that is unmatured, except the debts specified in point b clause 2, and clause 3 of this Article;

(iii) Any debt on which interest is exempted or reduced due to the customer’s inability to pay the agreed-upon interest in full, except the debts specified in clause 3 of this Article;

(iv) Any debt which falls in one of the following cases and has not yet been recovered within a period of less than 30 days from the date on which the credit institution that is a cooperative signs the debt recovery document (hereinafter referred to as “debt recovery decision"):

- A debt violating provisions of clauses 1, 3, 6 Article 134 of the Law on Credit Institutions;

- A debt violating provisions of clauses 1, 2, 3, 4 Article 135 of the Law on Credit Institutions;

- A debt violating provisions of clauses 1, 5, 9 Article 136 of the Law on Credit Institutions;

- A debt violating SBV’s regulations on lending operations of people’s credit funds;

(v) Any debt which is being recovered according to inspection conclusions;

(vi) Any debt which needs to be recovered under a premature debt recovery decision issued by a credit institution that is a cooperative due to the customer’s breach of agreements made with that credit institution but is not yet recovered within a period of less than 30 days from the effective date of the debt recovery decision;

(vii) Any debt classified into group 3 as prescribed in clauses 2, 3 of this Article;

(viii) Any debt which must be classified into group 3 as prescribed in clause 2 Article 4 of this Circular;

d) Group 4 (Doubtful debts), including:

(i) Any debt which is from 181 to 360 days past due, except the debts specified in clause 3 of this Article;

(ii) Any first-time rescheduled debt which is up to 90 days past due from the first-time rescheduled maturity date, except the debts specified in clause 3 of this Article;

(iii) Any second-time rescheduled debt which is unmatured, except the debts specified in point b clause 2, and clause 3 of this Article;

(iv) The debt specified in point c(iv) clause 1 of this Article which is not yet recovered in a period of 30 to 60 days from the effective date of the recovery decision;

(v) Any debt which needs to be recovered under an inspection conclusion but is not yet recovered in a period of up to 60 days after the expiration of the prescribed recovery deadline;

(vi) Any debt which needs to be recovered under a premature debt recovery decision issued by a credit institution that is a cooperative due to the customer’s breach of agreements made with that credit institution but is not yet recovered within a period of 30 to less than 60 days from the effective date of the debt recovery decision;

(vii) Any debt classified into group 4 as prescribed in clauses 2, 3 of this Article;

(viii) Any debt which must be classified into group 4 as prescribed in clause 2 Article 4 of this Circular;

dd) Group 5 (Debts giving rise to loss), including:

(i) Any debt which is more than 360 days past due;

(ii) Any first-time rescheduled debt which is at least 91 days past due from the first-time rescheduled maturity date;

(iii) Any second-time rescheduled debt which is past due from the second-time rescheduled maturity date;

(iv) Any third- or more-time rescheduled debt, except the debts specified in point b clause 2 of this Article;

(v) The debt specified in point c(iv) clause 1 of this Article which is not yet recovered in a period of more than 60 days from the effective date of the recovery decision;

(vi) Any debt which needs to be recovered under an inspection conclusion but is not yet recovered in a period of more than 60 days after the expiration of the prescribed recovery deadline;

(vii) Any debt which needs to be recovered under a premature debt recovery decision issued by a credit institution that is a cooperative due to the customer’s breach of agreements made with that credit institution but is not yet recovered within a period of more than 60 days from the effective date of the debt recovery decision;

(viii) Any debt owned by a customer that is a credit institution placed under special control, or FBB of which capital and assets are frozen;

(ix) Any debt classified into group 5 as prescribed in clause 3 of this Article;

(x) Any debt which must be classified into group 5 as prescribed in clause 2 Article 4 of this Circular;

2. A debt may be classified into a debt group with lower risk level in the following cases:

a) For an overdue debt, the credit institution that is a cooperative may reclassify it into a group with lower risk level (including group 1) when the following conditions are met:

(i) The customer has fully paid the overdue principal and interest (including interest on overdue principal), and those in the next repayment terms (if any) within at least 03 (three) months, for medium- and long-term debts, or 01 (one) month, for short-term debts, from the date on which the overdue principal and interest has been fully repaid;

(ii) Documentary evidences of the customer’s debt repayment are available;

(iii) The credit institution that is a cooperative has sufficient information and documents to evaluate the customer’s ability to fully pay the remaining principal and interest by the predetermined due date;

b) For a rescheduled debt, the credit institution that is a cooperative may reclassify it into a group with lower risk level (including group 1) when the following conditions are met:

(i) The customer has fully paid the principal and interest varying according to the rescheduled repayment term in at least 03 (three) months, for medium- and long-term debts, or 01 (one) month, for short-term debts, from the start date of full repayment of the principal or interest according to the rescheduled repayment term, or, if both principal and interest have the same repayment term, from the start date of full repayment of such principal and interest;

(ii) Documentary evidences of the customer’s debt repayment are available;

(iii) The credit institution that is a cooperative has sufficient information and documents to evaluate the customer’s ability to fully pay the remaining principal and interest by the rescheduled due date;

c) For a debt on which interest is exempted or reduced according to the SBV’s regulations on debt rescheduling, interest exemption and reduction, and retention of debt groups to assist customers affected by Covid-19 pandemic, the credit institution that is a cooperative may reclassify it into a group with lower risk level (including group 1) when the following conditions are met:

(i) The customer has fully paid the principal and interest in at least 03 (three) months, for medium- and long-term debts, or 01 (one) month, for short-term debts, from the start date of full repayment of the principal or interest of the last repayment term after the expiration of interest exemption/reduction period, or, if both principal and interest have the same repayment term, from the start date of full repayment of such principal and interest of the last repayment term after the expiration of interest exemption/reduction period;

(ii) Documentary evidences of the customer’s debt repayment are available;

(iii) The credit institution that is a cooperative has sufficient information and documents to evaluate the customer’s ability to fully pay the remaining principal and interest by the predetermined due date.

3. A debt may be classified into a debt group with higher risk level in the following cases:

a) The indicators such as profitability, solvency, debt-to-capital ratio and cash flows affecting the customer's debt repayment ability decrease progressively after 03 continual evaluation or debt classification sessions;

b) The customer fails to provide sufficient, timely and truthful information at the request of the credit institution that is a cooperative to serve its evaluation of the customer’s debt repayment ability;

c) A debt has been classified into group 2, group 3 or group 4 as prescribed in points a and b of this clause for 01 (one) year or longer, but fails to meet conditions for being reclassified into a group with lower risk level;

d) Any debt arising from the act of credit extension for which a decision on imposition of administrative penalties is issued in accordance with regulations of law;

dd) Debts classified by other credit institutions or FBBs into debt groups with higher risk level (if information is available).

Article 10. Classification of OBS commitments and on-behalf payments under OBS commitments

The cooperative bank shall classify OBS commitments and on-behalf payments under OBS commitments into the debt groups specified in Article 9 of this Article as follows:

1. Classification of OBS commitments:

a) They are classified into group 1 if the cooperative bank judges that their customers are able to fulfill their agreed-upon obligations;

b) They are classified into group 2 or the following groups if the cooperative bank judges that their customers are unable to fulfill their agreed-upon obligations;

c) Those falling in the case specified in point c(iv) clause 1 Article 9 of this Circular shall be classified into group 3 or the following groups.

2. Classification of on-behalf payments under OBS commitments:

a) Days past due are counted immediately after the cooperative bank performs its promised obligations;

b) On-behalf payments under OBS commitments are classified into:

(i) Group 3 if they are less than 30 days past due;

(ii) Group 4 if they are 30 to less than 90 days past due;

(iii) Group 5 if they are at least 90 days past due.

If an on-behalf payment is classified into a group with a risk level lower than the group into which the OBS commitment under which the on-behalf payment is made is classified as prescribed in points b and c clause 1 of this Article, it must be transferred to the latter.

Article 11. Reporting

Credit institutions that are cooperatives shall submit reports on classification of debts and OBS commitments, and establishment and use of risk provisions in accordance with SBV’s regulations on statistical reporting applicable to credit institutions that are cooperatives.

Chapter III

IMPLEMENTATION ORGANIZATION

Article 12. Responsibilities of SBV

1. The SBV Banking Supervision Agency shall:

a) Receive internal regulations on credit extension and debt management, and risk provision policies of the cooperative bank as prescribed in Article 7 of this Circular to serve the performance of microprudential supervision and inspection activities;

b) Carry out inspection and supervision, and take actions against violations against regulations on classification of debts and OBS commitments, establishment and use of risk provisions of the cooperative bank and people’s credit funds within its jurisdiction and in accordance with regulations of law;

2. The Finance and Accounting Department shall, according to the provisions of this Circular, develop and submit guidelines for implementation of relevant accounting policies to the SBV’s Governor for consideration in accordance with regulations of law.

3. Each SBV’s provincial branch shall:

a) Receive internal regulations on credit extension and debt management, and risk provision policies of local people’s credit fund as prescribed in Article 7 of this Circular to serve the performance of microprudential supervision and inspection activities;

b) Carry out inspection and supervision, and take actions against violations against regulations on classification of debts and OBS commitments, establishment and use of risk provisions of affiliated units of the cooperative bank and people’s credit funds in its province or city within its jurisdiction and in accordance with regulations of law.

Article 13. Transition

As for payments made for purchase of exchange bills or treasury bills issued by other credit institutions or FBBs before the effective date of this Circular, the cooperative bank shall classify them as payments made for purchase of certificates of deposit as prescribed in clause 6 Article 8 of this Circular.

Article 14. Implementation

1. This Circular comes into force from August 15, 2024.

2. This Circular nullifies:

a) The Decision No. 493/2005/QD-NHNN dated April 22, 2005 of the SBV’s Governor promulgating Regulations on debt classification, establishment and use of risk provisions for managing risks arising from banking operations of credit institutions;

b) The Decision No. 18/2007/QD-NHNN dated April 25, 2007 providing amendments to Regulations on debt classification, establishment and use of risk provisions for managing risks arising from banking operations of credit institutions enclosed with the Decision No. 493/2005/QD-NHNN dated April 22, 2005.

Article 15. Responsibility for implementation

The Chief of Office, Head of SBV Banking Supervision Agency, heads of units affiliated to SBV, the cooperative bank and people’s credit funds are responsible for the implementation of this Circular./.

PP. GOVERNOR DEPUTY GOVERNOR Dao Minh Tu