Vietnam Development Bank empowered to waive guarantee fees for bankrupt or liquidated enterprises

Vice Prime Minister Ho Duc Pho has signed Decision No. 12/2026/QD-TTg, amending and supplementing provisions of the guarantee mechanism for small and medium-sized enterprises (SMEs) borrowing from commercial banks, originally issued under Decision No. 03/2011/QD-TTg dated January 10, 2011.

Key changes to guarantee fees and fee waivers

Under the amendment, all guarantee fees collected will be accounted as income of the Vietnam Development Bank (VDB). The decision also empowers VDB to consider and decide on waiving guarantee fees for enterprises that have gone bankrupt or dissolved after completing asset liquidation in accordance with the law.

For fees, the appraisal fee for guarantee loan applications is fixed at 500,000 VND per file, paid directly to VDB together with the loan application. The guarantee loan fee is set at 0.5% per year of the guaranteed loan amount.

Mandatory-guaranteed loan contract after fulfilling guarantee obligations

The new decision specifies that after fulfilling the guarantee obligation, VDB will require the guaranteed party to sign a contract for mandatory debt repayment. From the signing date, the enterprise becomes the party obliged to repay the loan to VDB.

The mandatory-guaranteed loan contract includes four main contents:

• Overdue interest rate: up to a maximum of 150% of the in-term interest rate, with the specific rate to be considered and decided by VDB.
• Interest rate: determined by the state-investment credit lending rate at VDB at the time of contract signing.
• Loan repayment term: considered by VDB based on the enterprise’s financial condition, business plan, and debt-service ability.
• Collateral revaluation and additional measures: VDB will revalue collateral. If the revalued collateral value is lower than the recorded balance of principal and interest at the time of signing, additional collateral measures will be considered based on the borrower’s financial capacity and debt-servicing ability.

Other contract contents related to the mandatory-guaranteed loan will be agreed and recorded by VDB and the debtor.

Interest waiver and limits on state budget support

Based on practical assessment, VDB may consider waiving or reducing interest on mandatory-guaranteed loans. However, the state budget will not provide interest and management fee subsidies for the residual debt of mandatory-guaranteed loans that have benefited from this waiver regime.

VDB will also provide guidance on documents and procedures for waiving interest on mandatory-guaranteed loans.

Provisioning and risk reserve adjustments

The decision adjusts provisions on provisioning and the use of risk reserves for mandatory-guaranteed loans. Accordingly, provisioning and use of risk reserves to handle risks for mandatory-guaranteed loans will be implemented in accordance with VDB’s financial management and performance evaluation regulations and the credit risk handling framework issued by competent authorities, as stated in Decision No. 12/2026/QD-TTg.

Policy objective and bad-debt handling

The Ministry of Finance is seeking to add legal basis to handle over 790 billion VND of bad debt at VDB.