DECISION

ON THE AMENDMENT, SUPPLEMENT OF SEVERAL ARTICLES OF THE REGULATION ON LENDING BY CREDIT INSTITUTIONS TO CUSTOMERS ISSUED IN CONJUNCTION WITH THE DECISION NO. 1627/2001/QD-NHNN DATED 31 DECEMBER 2001 OF THE GOVERNOR OF THE STATE BANK

THE GOVERNOR OF THE STATE BANK

- Pursuant to the Law on the State Bank of Vietnam No. 01/1997/QH10 dated 12 December 1997 and the Law on the amendment, supplement of several Articles of the Law on the State Bank of Vietnam No. 10/2003/QH11 dated 17 June 2003;
- Pursuant to the Law on Credit Institutions No. 02/1997/QH10 dated 12 December 1997 and the Law on the amendment, supplement of several Articles of the Law on Credit Institutions No. 20/2004/QH11 dated 15 June 2004;
- Pursuant to Decree No. 86/2002/ND-CP dated 5 November 2002 of the Government providing for the function, assignment, authority and the organizational structure of the ministries and ministerial-level agencies.
- Pursuant to the Decree No. 52/2003/ND-CP dated 19 May 2003 of the Government providing for the function, assignment, authority and organizational structure of the State Bank of Vietnam;
- Upon the proposal of the Director of the Monetary Policy Department,

DECIDES:

Article 1. To amend, supplement several Articles of the Regulation on the lending by credit institutions to customers issued in conjunction with the Decision No. 1627/2001/QD-NHNN dated 31 December 2001 of the Governor of the State Bank as follows:

1. Paragraph 2, Article 2 shall be amended, supplemented as follows:

2. Customers borrowing from credit institutions shall be Vietnamese and foreign organizations, individuals that are capable of repayment and have demand for funds borrowing to perform investment projects, plan of production, business and service activity or investment projects, plan of domestic and overseas living standard improvement. The State Bank of Vietnam shall issue a separate provision for cases where customers borrow funds for performing investment projects, plan of production, business, service overseas.

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4. Restructuring of the repayment period is the adjustment of repayment period, debt rescheduling made by credit institutions for customers loans in accordance with 2 following methods:

a. Adjustment of repayment period is the approval by credit institutions of the change in repayment period of loan principals and/or interests within the term of lending previously agreed in a credit contract where the last repayment period is not changed.

b. Debt rescheduling is the approval by credit institutions of the extension of the repayment period of loan principals and/or interests beyond the term of lending previously agreed in the credit contract.

3. Paragraph 6, Article 3 shall be amended, supplemented as follows:

6. Investment project, plan of production, business, service activity or living standard improvement sent to credit institution by customers is a set of proposals which include among others those on funds requirement, funds borrowing, the way how to use these funds and to make repayment of the funds borrowed in a defined period of time

4. Paragraph 2, Article 13 shall be amended, supplemented as follows:

2. For loans which are not duly repaid, considered by the credit institutions as not able to be duly repaid and not accepted by them for the restructuring of the repayment period, the outstanding principals of that credit contract shall be considered as overdue debt and the credit institutions shall take measures for debt recovery; the late repayment penalty imposed on overdue debts and loan interests shall be agreed upon by two parties on the basis of provisions of applicable laws. Credit institutions shall classify the total outstanding principals of the customer, who have overdue debts, to appropriate lending accounts in accordance with applicable provisions of the State Bank of Vietnam.

5. Article 21 shall be amended as follows:

Article 21. Monitor and supervision of the borrowed funds

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2. Credit institutions shall work out the procedures and carry out the monitor and supervision of the borrowing process, the use of borrowed funds and repayment of customers in line with the operational characteristics of credit institutions, the nature of loans in order to secure the efficiency and recoverability of loans, then submit the procedures for the monitor, supervision of borrowed funds of customers to the State Bank Inspector.

6. Article 22 shall be amended as follows:

Article 22. Restructuring of repayment period

1. Credit institutions shall, based on their financial capacity and the revaluation result of the repayment ability of borrowing customers, make decision by themselves on the restructuring of the repayment period. The entire outstanding principals of customers whose loans repayment period is restructured shall be considered as overdue debt and classified as debts in the group 2 to group 5 in accordance with applicable provisions on the debt classification of the State Bank of Vietnam.

a. If a customer fails to duly repay the loan principals and/or interests within the lending period agreed in the credit contract and is assessed by the credit institutions to be able to repay in the following periods, credit institutions shall consider the adjustment of repayment period of loan principals and/or interests. The entire outstanding principals of this customer shall be classified as debts in the group 2 to group 4.

b. If a customer fails to repay in full the loan principals and/or interests on the due date agreed in the credit contract and is assessed by the credit institutions to be able to repay in a certain period of time after the term of lending, credit institutions shall consider the debt rescheduling with the period in line with repayment source of customer. The entire outstanding principals of this customer shall be classified as debts in the group 3 to group 5.

2. Credit institutions must issue provisions on the restructuring of repayment period in line with provisions of the State Bank of Vietnam; the decentralization, delegation of authority to their branches to make decision on the restructuring of the repayment period must ensure the Head office of the timely, full and accurate understanding of loans, the repayment period of which is restructured within the entire system. Credit institutions shall send their regulation on the restructuring of the repayment period to the State Bank Inspector right after its issuance.

3. For borrowed loans the repayment period of which is restructured, credit institutions must make report in accordance with provisions of the State Bank of Vietnam on the statistic reporting regime applicable to credit institutions.

7. Paragraph 1 Article 23 shall be amended as follows:

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Article 2. The words legal entity mentioned in Article 7 and Article 10 of the Regulation on the lending by credit institutions to customers issued in conjunction with the Decision No. 1627/2001/QD-NHNN dated 31 December 2001 of the State Bank shall be replaced by the word organization

Article 3. Periodically, credit institutions shall base on the repayment status, result of business, financial and repayment capacity of borrowing customers to classify loans of customers in accordance with provisions of the State Bank of Vietnam on debt classification, provisioning and use of provisions for dealing with risks in banking activities of the credit institutions.

Article 4. This Decision shall be effective after 15 days since its publication in the Official Gazette. To repeal provisions in following documents: Decision No. 688/2002/QD-NHNN dated 1 July 2002 of the Governor of the State Bank on the implementation of overdue debt classification for loans of customers at credit institutions; Official Dispatch No. 405/NHNN-CSTT dated 16 April 2002 guiding the implementation of the provisions of overdue debt classification; Official Dispatch No. 950/NHNN-CSTT dated 3 September 2002 on the carrying over of overdue debts in respect of the late payment of principals and loan interest; Official Dispatch No. 1140/NHNN-CSTT dated 29 September 2003 on the application of the overdue interest rate and the timing for the calculation of overdue interest; and other provisions in contrary to this Decision.

Article 5. 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 Credit Institutions shall be responsible for the implementation of this Decision.