Circular No. 02/2007/TT-NHNN amends Clause 5 of Circular No. 07/2006/TT-NHNN, providing for the purchase and re-leasing activities under financial leasing in Vietnamese dong or foreign currency. The main contents include conditions for foreign exchange transactions and payment procedures.
Scope of application
Financial leasing companies, banks, foreign exchange trading organizations, and financial lessees.
Key points
- Financial leasing company → may only conduct transactions to purchase and re-lease using foreign currency when ensuring conditions such as imported machinery and equipment, the financial leasing company having the right to operate foreign exchange, and the lessee having foreign currency income or debt.
- Financial leasing company → proceeds with payment for purchasing leased assets in foreign currency after receiving legal documentation on the asset and agreeing with the bank or foreign party managing the asset.
- Financial leasing company → directly pays the price of purchasing leased assets to the bank or foreign party in foreign currency, and settles the difference in Vietnamese dong if the repurchase price exceeds the loan balance or foreign debt.
- Lessee → receives debt and pays lease payments in foreign currency or Vietnamese dong according to current regulations on financial leasing.
- This Circular shall take effect fifteen days from the date of publication in the Official Gazette.
🌐 Social impact of this document
- Positive impact: Ensures transparency and compliance with laws in purchase and re-leasing financial leasing activities, helping to improve the quality of financial leasing services.
- Negative impact: May increase transaction costs for the lessee when making payments in foreign currency.
❓ Frequently asked questions
What conditions must a financial leasing company meet to conduct transactions to purchase and re-lease in foreign currency?
A financial leasing company must ensure that the imported machinery and equipment have the right to operate foreign exchange according to the law on foreign exchange.
What conditions must a lessee meet to conduct transactions to purchase and re-lease in foreign currency?
The lessee must have legitimate foreign currency income or debt, or be importing leased assets and still owe unpaid amounts to foreign parties.
How will a financial leasing company proceed with the payment for purchasing leased assets?
A financial leasing company will proceed with payment after receiving legal documentation on the asset and agreeing with the bank or foreign party managing the asset.
If the repurchase price of the leased asset is higher than the loan balance, how will the financial leasing company handle it?
The financial leasing company will pay the lessee the difference in Vietnamese dong at the commercial bank's transaction rate chosen by both parties on the payment date.
When does this Circular take effect?
This Circular takes effect fifteen days from the date of publication in the Official Gazette.
Full text
CIRCULAR
Amend Clause 5 of Circular No. 07/2006/TT-NHNN dated September 7, 2006
of the State Bank guiding on purchasing and leasing activities
under financial leasing as prescribed in Decree No. 16/2001/NĐ-CP dated May 2, 2001
and Decree No. 65/2005/NĐ-CP dated May 19, 2005 of the Government
___________________________
On September 7, 2006, the State Bank issued Circular No. 07/2006/TT-NHNN guiding on purchasing and leasing activities under financial leasing as prescribed in Decree No. 16/2001/NĐ-CP dated May 2, 2001 and Decree No. 65/2005/NĐ-CP dated May 19, 2005 of the Government (hereinafter referred to as Circular No. 07/2006/TT-NHNN). To ensure uniform implementation, the State Bank amends the content of Clause 5 of Circular No. 07/2006/TT-NHNN as follows:
1. Clause 5 is amended as follows:
"5. Currency used in transactions for purchasing and leasing, and transactions for purchasing and leasing in foreign currency
5.1. The currency used in transactions for purchasing and leasing shall be the Vietnamese dong.
5.2. Transactions for purchasing and leasing in foreign currency may only be carried out when the following requirements are met:
5.2.1. Conditions
a) The conditions stipulated in Clause 2 of Circular No. 05/2006/TT-NHNN dated July 25, 2006 of the State Bank guiding certain contents on financial leasing activities and entrusted financial leasing services as prescribed in Decree No. 16/2001/NĐ-CP dated May 2, 2001 and Decree No. 65/2005/NĐ-CP dated May 19, 2005 of the Government.
b) For leased assets: they must be machinery, equipment, transportation means, and other movable assets imported.
c) For financial leasing companies: they must be financial leasing companies permitted to conduct financial leasing transactions in foreign currency according to the laws on foreign exchange.
d) For lessees:
- Lessees have legitimate foreign currency income or are entitled to purchase foreign currency from credit institutions authorized to deal in foreign exchange;
- Lessees have outstanding foreign currency debts at banks for importing leased assets, or lessees import or entrust the import of leased assets and still owe unpaid debts to foreign parties.
5.2.2. Payment for repurchasing leased assets in foreign currency
a) Financial leasing companies proceed with purchasing and leasing when lessees present complete legal documents regarding the assets. In cases where banks or foreign parties manage or hold related documents on the assets, financial leasing companies will make payment after reaching an agreement with banks or foreign parties to retrieve the leasing asset documents upon repurchase.
b) Financial leasing companies directly pay the price of leased assets to banks or foreign parties in the corresponding foreign currency value. If the repurchase price of leased assets exceeds the bank loan debt or foreign party debt, the financial leasing company will pay the difference to the lessee in Vietnamese dong based on the commercial bank transaction rate chosen by both parties on the payment date.
c) After the financial leasing company has paid for the leased asset and signed a financial leasing contract, the lessee assumes the debt and pays rent in foreign currency or Vietnamese dong according to current regulations on financial leasing."
2. This Circular takes effect fifteen days after its publication in the Official Gazette.
3. The Director of the Office, Heads of Departments of Commercial Banks and Non-Bank Credit Institutions, Heads of Units under the State Bank of Vietnam, Governors of the State Bank Branches in provinces and centrally-administered cities, Chairmen of Management Boards, General Directors (Directors) of financial leasing companies are responsible for implementing this Circular./.
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