AMC is entitled to purchase debts of other credit institutions

	Dealing with bad debts after one year of Resolution 42
	Financial statements of weak credit institutions must be publicized
	Bad debt ratio at 2.3% by end 2017

Illustrated photo. Source: internet.

Ministry of Finance said that over the past time, the regulations on management for these companies has had many changes. A number of specialized financial provisions for AMCs have been stipulated in other legal documents (such as about regulations on brokerage commissions, legal documents on tax, that no longer have regulated norms on brokerage commissions; the cost accounting must match with the revenue prescribed in the accounting standards ...). However, some regulations are no longer appropriate with AMC’s current operation.

Therefore, this draft circular guides the implementation of the financial regime for AMCs with the objectives of creating a legal corridor for their financial management in accordance with the law; facilitating units to take initiative in the management and use of capital and assets to ensure efficient business operations; and solving some problems arising on the basis of perfecting AMC’s financial regulations.

Accordingly, AMCs are permitted to use capital for their business activities as prescribed in this Circular, and relevant law provisions on the principle of ensuring capital safety and development.

In other words, an AMC is entitled to use its legal capital to purchase debts owed by other credit institutions, by other AMCs under commercial banks, to monitor accounts of purchased debts in accordance with law.

AMCs are allowed to actively use their capital to repair and upgrade assets gained from debt collection in the purpose of increasing the value, facilitating the disposal of assets for debt recovery. Investments in repairing and upgrading assets belonging to capital construction investment must strictly abide by the State's regulations on investment and construction management.

According to the draft circular, an AMC is not allowed to use its capital to buy debt from its parent bank; to invest and contribute capital, or buy shares in its parent bank and its subsidiaries, joint-venture companies in which its parent bank contributed capital to, or bought shares from. The provisioning and use of reserves for debts purchased by AMC shall comply with the law regulations on bad debts of enterprises.

Regarding the brokerage commissions, the draft circular stipulates that an AMC shall pay brokerage fees for debt recovery, debt sale, asset sale and exploitation in the following principles: AMC's payment for brokerage fees must bring economic benefit. Membership Council or the Director General of AMC shall base on current law, and AMC’s specific characteristics to issue regulations on payment for brokerage commissions for unified and public application.

VAMC targets US$6.15 billion bad debts this year By the end of 2018, the Việt Nam Asset Management Company (VAMC) must handle at least VNĐ140 ...

For AMCs established by commercial banks with 100% charter capital owned by the State: brokerage commissions for asset leasing (including assets for foreclosure and debt bondage), brokerage commissions for leasing of each AMC asset shall not exceed 5% of the total amount gained from the leasing of such assets through brokers during the year.

For brokerage commissions for the sale of mortgaged or pledged assets, AMC's commission level shall not exceed 1% of the actual value gained from the sale ofthose assets through brokers.