VALUATION STANDARDS CREDIT DEBTS

I. GENERAL PROVISIONS

Article 1. Scope

This standard stipulates and guides the valuation of debts arising from lending operations in credit activities and is not required to apply to debt settlement activities within credit institutions.

Article 2. Subjects of application

1. Price appraisers, price appraisal enterprises, other organizations and individuals shall conduct price appraisal activities in accordance with the provisions of the Law on Prices.

2. The customer appraises the price and the third party uses the appraisal results (if any) according to the price appraisal contract.

Article 3. Interpretation of terms

1. Credit debt (hereinafter referred to as debt) in this Standard is understood as an obligation to pay in cash or property of an individual or organization (referred to as a debtor) to a creditor being a credit institution. Debt can be secured or unsecured.

Collateralized debts are debts with assets used to secure the performance of attached obligations.

Unsecured debts are debts without assets used to secure the performance of attached obligations.

2. Credit debt in this Standard is understood as the outstanding balance of the credit extension contract or agreement, including the amount of principal, interest and other financial obligations related to the debt under the credit contract. or credit agreement.

II. SPECIFIED

Article 4. Selection of value basis

The value basis of debt valuation is the market value or other types of value bases as prescribed in the Vietnam Valuation Standards System.

Article 5. Documents and records to be collected

The customer is responsible for the accuracy and truthfulness of the documents and records to be collected in the debt valuation, including:

1. Legal documents of debtors.

2. A loan application file includes a credit contract or credit extension agreement, a debt receipt agreement, and an appendix to the credit contract (if any).

3. Customers confirmation of the amount of principal, interest and other financial obligations related to the debt that the debtor has not yet paid according to the credit contract or credit extension agreement, debt receipt agreement, and annexes. credit contract (if any) at the time of valuation.

4. Financial and business records (if any) of the debtor.

5. Loan security documents include legal documents of collateral, guarantee commitment, papers and documents related to the process of receiving security (if any).

6. Other relevant documents (if any) include the creditors assessment report related to the debt settlement (legal documents, factors affecting debt collection, time and possibility of debt collection). debt recovery capacity); report on the book value of the debt, business operation capacity and financial capacity of the debtor; report assessing risks that may arise in the sale of debt, payment method, debt transfer.

7. Other relevant documents.

Article 6. Bases for valuation

Based on the debt sale/liquidation scenario, the debt value is determined based on one or more of the following bases:

1. Debt balance at the time of valuation according to the applicable interest rate on the credit contract or credit extension agreement, debt receipt agreement, credit contract appendix (if any) of the customer.

2. Value of collateral (if any)

3. Value of receivables from debtors (if any)

4. Interest is expected to arise until the full value of the purchased debt is fully paid at the expected interest rate specified in the credit contract or credit extension agreement, debt receipt agreement, and contract appendices. credit (if any) or other interest rates may apply to debtors.

5. Expenses incurred in the process of debt management and other related expenses.

6. Costs for handling security assets (if any), expenses for handling other recoverable sources (if any).

Article 7. Approaches and methods of valuation

1. The methods applied in the debt valuation activities belong to: the market approach, the cost approach and the income approach as prescribed in the Vietnam Valuation Standard System or use a combination of approaches.

2. Debt valuation methods are selected on the basis of the value of the debt valuation and assessment of the debts recoverability at and after the time of valuation through documents and dossiers. loans, commitments, terms between the debtor and the creditor, the assessment of the creditors ability to recover debts and other relevant factors.

3. For debtors being enterprises, the debt value is determined based on the enterprise value and there is an assessment of the order of priority for debt repayment according to the commitments and terms of debt repayment between the creditor and the base enterprise. according to the civil law provisions, the Bankruptcy Law and other relevant regulations.

Article 8. Value and recoverable value of collateral

1. The expected time of settlement of the security property is determined based on the customers confirmation and documents and records to be collected in the debt valuation specified in Article 5 of this Standard.

2. Value and recoverable value of security assets in this Standard are understood as part of value and recoverable value of security assets used to fulfill debt repayment obligations for debts being appraised. price.

3. The value of the collateral is estimated at the time of disposal of the collateral by applying the appropriate valuation method of the market approaches, the cost approach, and the cost approach. from income as prescribed in the Vietnam Valuation Standard System.

4. The recoverable value of the security property is estimated by the value of the security asset after deducting the expenses incurred as prescribed in Clause 6, Article 7 of this Standard (expenses incurred up to the time of disposal). collateral) and converted to the time of valuation through the use of an appropriate discount rate.

Article 9. Debt repayment ability of debtors

The debtors ability to repay is determined based on the customers confirmation of the debtors ability to repay, the assessment of related parties and the basis of documents and records to be collected in the valuation. debt specified in Article 5 of this Standard.

Article 10. In case the debtor is able to repay the debt

1. The value of the debt is estimated from the revenues from the debtor according to the debt repayment plan after deducting the expenses incurred as prescribed in Clause 5, Article 6 of this Standard and converted to the time of appraisal for approval. the use of an appropriate discount rate.

2. Revenues from debtors include principal, interest and other financial obligations related to the debt, based on the credit contract or credit extension agreement, debt receipt agreement, and appendix to the credit contract. use (if any) of the customer to the time the debt buyer pays the debt seller the value of the debt.

Article 11. In case the debtor is unable to repay the debt and the recovery value of the collateral is greater than the book value of the debt

1. The recovery value of the security property is estimated according to the provisions of Clause 3, Article 8 of this Standard.

2. Book value of debt including principal, interest and other financial obligations related to the debt at the time of valuation is determined based on customers confirmation and financial statements. Data and documents to be collected in debt valuation are specified in Article 5 of this Circular.

3. The estimated value of the debt is the amount of principal, interest and other related financial obligations after deducting incurred expenses as prescribed in Clauses 5 and 6, Article 6 of this Standard up to the date of purchase debt to pay the debt seller the value of the debt and convert it to the time of valuation through the use of an appropriate discount rate.

Article 12. In case the debtor is unable to repay the debt and the recovery value of the security property is smaller than the book value of the debt

1. The recovery value of the security property is estimated according to the provisions of Clause 3, Article 8 of this Standard.

2. The book value of the debt shall comply with the provisions of Clause 2, Article 11 of this Circular.

3. The debt value is estimated by the recovery value of the security property, the recovery value from other recoverable sources.

4. The value recovered from other recoverable sources is estimated by the value of other recoverable sources after deducting the costs incurred as prescribed in Clause 5, Article 6 of this Circular up to the time of settlement. manage other recoverable sources and convert to valuation time using an appropriate discount rate.

5. The determination of other sources of recovery from the debtor is based on the customers confirmation, the assessment of relevant parties and the documents and records that need to be collected in the debt valuation specified in Clause 1 of this Article. Article 5 of this Circular.

Article 13. In case the debtor is unable to repay the debt and has no collateral

The value of the debt is estimated by the recovery value from other recoverable sources as prescribed in Clause 4, Article 12 of this Standard.

Article 14. Discount rate

1. The discount rate must reflect the risk of the cash flows received and be consistent with the timing of the cash flow collection and reasonably expected return for the purchase of the debt.

2. The determination of the discount rate must be consistent with the estimation of the cash flows arising from the debt.

3. The risk of recoverable cash flows is assessed on the following bases: Terms and conditions attached to the debt; Credit risk; Liquidity and marketability of the debt at the time of valuation and after the time of valuation; Risks of changes in the relevant regulatory or regulatory environment; financial obligations related to the debt; Similar debts in the market; Other grounds (if any).

4. Credit risk in this Standard is the risk that the debtor fails to perform or is unable to fulfill part or all of his debt repayment obligations under the contract or agreement with the creditor.

Ministry of Finance