According to this Decree, the State Bank of Vietnam shall establish the Asset Management Company to handle bad debts, promote reasonable credit growth for the economy. Asset management company is a specialized enterprise and is organized in the form of a one-member limited liability company whereby the State owns 100% of charter capital and subject to the State management, inspection and monitoring conducted by the State Bank of Vietnam in operations such as purchase of bad debts of credit institutions; debt recovery, debt collection and handling, sale of debt and collateral; restructuring of debt, adjustment of debt repayment conditions, and conversion of debts into contributed capital, the capital stock of the loan customer; investment, repair, upgrade, exploitation, use and lease of collateral; management of bad debts; consultation, brokerage, debt and asset sales; financial investment and capital contribution, share purchase; organization of asset auction.

Within that, the Asset Management Company shall buy bad debts from credit institutions according to the book value of the outstanding debt minus the unused provisions for such bad debts or from credit institutions at market values based on the agreement and the bad debt value that is reassessed.

At the first method, special bonds are issued under forms of certificate, book entry or electronic data; par value of special bond is equal to purchase price of bad debts; special bonds are issued in VND with the maximal term of 05 years and interest of 0%;

However, at the method of buying bad debts from credit institutions at market values such as the credit institution’s bad debts; bad debts with collateral; bad debts and collateral must be legal with valid documents and papers; loan customer still exists; the balance of bad loans or outstanding of loan customer is not lower than the level prescribed by the State Bank of Vietnam.

This Decree takes effect July 09, 2013.

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