Press Release on the issuance of Circular No.20/2017/TT-NHNN
December 29, 2017 – The Governor of the State Bank of Vietnam (SBV) issued Circular No. 20/2017/TT-NHNN stipulating the sale of receivables from a finance leasing contract. The issuance of this Circular is aimed at providing guidance on the implementation of the Law on Credit Institutions and creating a legal framework for the sale of receivables from a finance leasing contract, thereby ensuring the safety, soundness, effectiveness and compliance with the applicable laws of the sale of receivables.
Circular No.20/2017/TT-NHNN takes effect from February 12, 2018 and shall replace Circular No.09/2006/TT-NHNN dated October 23, 2006 of the State Bank of Vietnam providing guidance on the sale of receivables from a finance leasing contract as stipulated in Decree No.65/2005/ND-CP dated May 19, 2005 of the Government on the amendments and supplements to a number of articles of Decree No.16/2001/ND-CP dated May 2, 2001 of the Government regulating the organization and operations of a leasing company.
Circular No.20/2017/TT-NHNN is composed of 14 articles, with several changes as compared to Circular 09/2006/TT-NHNN, specifically as follows:
- Firstly, amending the subjects allowed to perform the sale of receivables to include finance companies, licensed leasing companies in compliance with the Law on Credit Institutions and Decree No.39/2014/ND-CP dated May 7, 2014 on the operations of finance companies and leasing companies.
- Secondly, the sellers may sell the receivables irrespective of the category of the debt, and the determination of the selling prices of the receivables must be in line with the principles of publicity and transparency as prescribed by laws; the selling prices must be in accordance with the market principles.
- Thirdly, adding the principles for the selling of the receivables: the requirements when the buyer is a credit institution, a foreign bank branch; the separate accounting of the purchased receivables of a credit institution, a foreign bank branch; the calculation of the finance leasing outstandings to the total credit extension outstandings for the financial lessee in case of sale of the receivables with or without recourse; the issuance of the internal regulations before selling the receivables.
- Fourthly, supplementing and amending a number of substances in a receivable selling contract, which include the substances with regard to the arrangements for recovering the lease payment; the sale of the receivables with or without recourse.
- Fifthly, supplementing the regulation on resolving financial issues in case of the sale of the receivables with or without recourse, to be in line with Vietnamese accounting standards and the rule of prudence, to ensure the safety and effectiveness of the sale of the receivables.
Translated by Le Hang