Banks banned from paying dividends if provision not deducted

The Governor of State Bank of Vietnam has ordered credit institutions not to raise salary, bonus, and remuneration for officials, especially managers and administrators, as well as not to advance or pay dividends and profits in fiscal year of 2013 if they have not deducted credit loss provision, classified debts and restructured debts in accordance with regulations.

The Governor ordered credit institutions to intensify deduction and use of credit loss provision to tackle bad debts and reduce operating expenses. He also ordered credit institutions to comply with Instructions No.4 on debt classification for debts which receive extension for repayment period.

When credit institutions restructure repayment period and keep debt category, they have to base on assessment of their clients’ business conditions and actual repayment ability and keep close watch on these debts. Credit institutions are not allowed to restructure repayment period and keep debt category for clients who misuse loans or violate terms in credit contract and other relevant regulations.

By Bao Minh – Translated by Thuy Doan

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