Following the latest legal updates on issues related to the COVID-19 pandemic, Victory LLC would like to share several important contents of Circular 01/2020/TT-NHNN (“Circular 01”) dated 13 March 2020 of the State Bank of Vietnam (“SBV”) on debt rescheduling, exemption or reduction of interest and fees, retention of debt category to assist customers affected by COVID-19 pandemic by credit institutions, branches of foreign bank (“CIs”) and Official Letter No. 1680/NHNN-TT dated 13 March 2020 of the State Bank of Vietnam on application of policy on exemption and reduction of service fee.
I. DEBT RESCHEDULING, EXEMPTION, REDUCTION OF INTERESTS AND FEES, RETENTION OF DEBT CATEGORY
1. Debt rescheduling
Debts arising from lending, financial leasing activities; incurred debt repayment obligations from 23 January 2020 to the date immediately after 3 months from the date the Prime Minister announced the end of the COVID-19 pandemic; and customers who are unable to pay their debts on time due to decline in revenue and income due to the COVID-19 pandemic shall have their debt rescheduled.
Such debt rescheduling as mentioned above shall be implemented in the following cases:
+ Debt that are due or overdue for up to 10 (ten) days from the due date of payment, term of debt payment under contracts, loan or financial leasing agreements;
+ Overdue debt (except for the case specified above) within the period from 23 January 2020 to the date immediately following 15 (fifteen) days from 13 March 2020.
The time for debt rescheduling is based on the customer’s request and the CI’s assessment but must not exceed 12 (twelve) months from the last day of the debt or financial leasing term.
2. Exemption and reduction of interests and fees
CIs may decide on the exemption and reduction of interests and fees according to their internal regulations for outstanding debts arising from credit extension activities (except for buying and investing in corporate bonds) that the debt repayment obligation is within the period from 23 January 2020 to the date immediately following 3 months since the announcement of termination of pandemic and customers are unable to pay their debts on time due to decline in revenue and income due to COVID-19 pandemic.
3. Retention of debt category
CIs are allowed to retain the debt categories as classified under the State Bank’s regulations at the latest time prior to 23 January 2020 during the restructuring period for the debts subject to rescheduling, exemption and reduction of interest rates as prescribed in this Circular 01 and the CIs must classify debts, set up risk provisions according to the restructured time limit pursuant to the laws on debt classification, setting up and usage of risk provisions to handle risks in their operations without having to apply the adjustment principle to debt groups with higher risk level.
II. EXEMPTION AND REDUCTION OF SERVICE FEE
The SBV has instructed National Payment Corporation of Vietnam (“NAPAS”) to reduce the service fee of fast inter-bank money transfer service from VND 1,800/transaction to VND 900/transaction for transaction ranging from VND 500,001 to VND 2,000,000 from 25 March 2020 to the end of 31 December 2020; The National Credit Information Center (“CIC“) offers a 50% discount on the total amounts for exploitation and use of credit information by CIs from March 2020 to December 2020.
Therefore, the SBV required CIs to reduce the service fee of fast inter-bank money transfer service for transactions ranging from VND 500,001 to VND 2,000,000 for customers, with the minimum reduction rate equal to the fee reduction that NAPAS has provided (VND 900/transaction); encouraged CIs to provide bigger fee reduction than that of NAPAS. Implementation period is from 25 March 2020 to the end of 31 December 2020. At the same time, CIs shall implement reduction of the price for using credit information services to customers, corresponding to the discount deduction rate implemented by CIC to the CIs.