On March 20, the State Bank announced to collect opinions from organizations and individuals on the Draft Circular amending and supplementing a number of articles of Circular 19/2013 dated September 6, 2013 of the Governor of the State Bank of Vietnam regulating the purchase, sale and settlement of bad debts by VAMC. Accordingly, the Circular supplements regulations on the principles of purchasing and selling bad debts by VAMC.
VAMC is allowed to sell bad debt at a price lower than the original debt.
Specifically, the Draft Circular supplements the regulation that when VAMC sells bad debt, the collateral of the bad debt may be higher or lower than the principal balance of the bad debt. VAMC also conducts or hires an organization with the function of price appraisal to determine the offering price in case of competitive bidding, and the expected debt selling price in case of direct agreement with the debt buyer.
If deemed necessary, VAMC shall refer to the purchase and sale prices of similar bad debts on the market (if any) to determine the offering price and expected debt sale price. In case of auctioning bad debts, VAMC shall comply with the provisions of law on asset auctions.
In addition, the State Bank has revised and added a number of other regulations such as VAMC's purchase of bad debts from banks is only carried out at market value. Borrowers with bad debts sold to VAMC and having effective production, business and investment plans will be considered and granted credit by credit institutions according to agreements and regulations of law.
The conditions for bad debts purchased by VAMC at market value are: VAMC assesses that the debt purchase amount is fully recoverable; the collateral of the bad debt can be auctioned or the borrower has the prospect of recovering the debt repayment ability. In case of converting bad debts purchased with special bonds into bad debts purchased at market value, the special bonds corresponding to that bad debt must also meet the conditions of not being due for payment and not being frozen at the State Bank...
VAMC is only allowed to buy bad debt at market value after assessing that the bad debt meets the prescribed conditions; determining the market value of the bad debt (must appraise or hire an organization with the function of appraising the value of the bad debt and collateral); Assessing the economic efficiency, risks and ability to recover capital to buy bad debt; Analyzing and evaluating the current situation and prospects of bad debt, borrowers, guarantors, parties with debt repayment obligations and the conditions of debt purchase agreements with debt-selling credit institutions; Anticipating feasible measures to handle debt, collateral of bad debt...
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