On 14/09/2018, the State Bank of Vietnam has issued Circular No. 23/2018/TT-NHNN regulating the reorganization, withdrawal of licenses and liquidation of assets of people’s credit fund. This Circular will take effect from 01/11/2018.
According to Circular No.23/2018/TT-NHNN, People’s Credit Funds may be restructured in the following forms: division, partial division, consolidation, acquisition. The reorganization of people’s credit fund shall be effected on the basis of the reorganization plans approved by the State Bank in accordance with the provisions of law.
Accordingly this Circular regulates on transfers, asset sale during the reorganization process People’s Credit Fund must ensure publicity, transparency, compliance with the law and the agreement of the parties, ensuring the safety of property and not affecting the interests of the parties. People’s Credit Fund after reorganizing the inheritance of rights and obligations of the previous People’s Credit fund according to the provisions of law and agreements between the parties.
At the same time, the liquidation period is 12 months from the date the decision approving the dissolution of the people’s credit fund of the State Bank branch takes effect. However, in order to create favorable conditions for people’s credit funds to liquidate their assets, the liquidation term may be extended with each extension not exceeding 12 months.
Whereas the responsibility of the liquidation council should be improved to ensure the implementation of the plan approved by the State Bank branch, finding all measures to recover debts and assets of people’s credit fund. All proceeds of the people’s credit fund must be used to pay the creditors according to regulations, etc.
In addition, Circular No. 23/2018/TT-NHNN also provides for seven cases where licenses may be revoked, including:
– People’s Credit Fund voluntarily apply for dissolution when they are able to repay all debts and other property obligations;
– The dossiers of application for People’s Credit Fund licenses contain fraudulent information so as to satisfy the conditions for being granted licenses;
– People’s Credit Fund operate not in accordance with the contents of the licenses.
– People’s Credit Fund seriously violates the provisions of the law on limits and prudential ratios in operation.
– People’s Credit Fund fail to perform or improperly implement the handling decisions of the State Bank’s branches so as to ensure safety in banking activities.
– People’s Credit Fund are divided, merged, consolidated or bankrupt.
– People’s Credit Funds whose duration of operation has not been extended or extended but are not approved by the State Bank branch in writing.
As such, Circular No. 23/2018/TT-NHNN with specific provisions on the reorganization of people’s credit funds is considered to contribute significantly to strengthen the power of the people credit system, to implement the Scheme on “Restructure the system of credit institutions associated with dealing with bad debts in the period 2016-2020” issued in conjunction with Decision No. 1058/QĐ-TTg dated 19/07/2017 of the Prime Minister cover.