Under the new circular, the State Bank requires credit institutions and branches of foreign banks themselves to classify debts and off-balance-sheet undertakings on a quarterly basis and report the results to the Credit Information Centre (CIC).
Debts shall be classified into five categories: Standard Debt, Debt Needing Special Attention, Subprime Debt, Doubtful Debt, and Potentially Irrecoverable Debt.
Within three days of receiving the results, the CIC shall summarize a list with the most risky debts classified by credit institutions, making this list available upon the request of credit institutions.
The State Bank has also requested credit institutions to create an internal credit rating system for rating customers as a foundation for evaluating credit worthiness and for creating a risk reserve policy in conformance with the actual circumstances of the credit institution.
The Circular takes effect on June 1, 2013.
|Published||Vietlaw's Newsletter No. 82|