On August 26, 2019, the Ministry of Finance issued Circular No. 57/2019 / TT-BTC providing guidance on the mechanism of handling credit risks of credit guarantee funds for small and medium-sized enterprises. This Circular takes effect from October 15, 2019.
Accordingly, Article 13 of Circular 57/2019 / TT-BTC stipulates the handling of security assets for the debts of the guaranteed party at the credit guarantee fund, specifically:
Credit guarantee funds may handle security properties to recover debts when:
a) Subjects considered are customers at risk due to one of the risk review cases specified in Article 7 of this Circular or according to the agreement between the Credit Guarantee Fund and customers in the Debt Collection Agreement and obligors in the signed Debt Guarantee Contract.
b) Debts of customers that have been restructured, frozen, written off, or not yet restructured, frozen, or written off, but the Credit Guarantee Fund has appraised and assessed if the restructuring measures are applied debt, freezing, debt write-off interest, customers also can not repay the principal to the Credit Guarantee Fund as committed.
For the difference between the proceeds from the disposal of security properties and the book value of debts (after subtracting expenses prescribed by law), it will be handled as follows:
a) If the proceeds from the handling of security assets are higher than the book value of debts: the credit guarantee fund shall handle the balance as agreed upon between the credit guarantee fund and customers at the Compulsory Debt Agreement and the guarantor of the signed Debt Guarantee Agreement (if any);
b) In case the proceeds from the handling of security assets are lower than the book value of debts: Credit guarantee funds shall have to continue monitoring and recovering the remaining debts (principals, interests) according to the prescribed regime or considering application of other risk handling measures as prescribed in this Circular.
4. In the case of general collateral for loans and guarantees, the disposal of security assets shall be in accordance with the agreement between the Credit Guarantee Fund and the guarantee accepting party in accordance with clause 3 of Article 33 Decree No. 34/2018 / ND-CP of the Government.
The promulgation of Circular No. 57/2019 / TT-BTC aims to create grounds, bases as well as compliance with the law on handling of security assets for debts of small and medium-sized enterprises at the Credit Guarantee Fund.