Decision No. 149/QD-NH5 On the issuance of the Rules on Leasing Credit

DECISION

REGARDING THE ISSUANCE OF THE RENTAL CREDIT REGULATIONS

GOVERNOR OF THE STATE BANK

Pursuant to the Ordinance on the State Bank promulgated by Decree No. 37/LCT-HĐNN8; the Ordinance on Banks, Credit Cooperatives, and Financial Companies promulgated by Decree No. 38/LCT-HĐNN8 dated May 24, 1990 of the Chairman of the State Council of the Socialist Republic of Vietnam,
Pursuant to the Government's Decree No. 15/CP dated March 2, 1993 on the tasks, powers, and responsibilities for state management of Ministries and agencies at the ministerial level,
Based on the proposal of the Director of the Department of Financial Institutions:

DECISION:

Article 1:The "Rental Credit Regulations" are hereby issued pursuant to this Decision.

Article 2: This Decision takes effect from the date of signature.

Article 3: The Head of the Governor's Office, the Director of the Department of Financial Institutions, the Heads of units under the State Bank, the Directors of the State Bank Branches in Provinces and Cities, the General Directors of State-owned Commercial Banks, Joint Venture Banks, Commercial Banks with Share Capital, and Financial Companies shall be responsible for implementing this Decision./.

 

RENTAL CREDIT REGULATIONS
(Issued by Decision No. 149/QĐ-NH5 dated May 27, 1995 of the Governor of the State Bank)

I - GENERAL PROVISIONS

Article 1: Rental credit is an activity involving leasing machinery, equipment, and other chattels for production and business purposes purchased by financial institutions according to the lessee's requirements. The lessee pays rent to the financial institution throughout the agreed lease period and cannot cancel it. Upon completion of the lease term, the lessee has the right to own the leased asset, purchase the leased asset, or continue leasing the asset under the conditions agreed upon in the rental credit contract.

Article 2: Financial institutions (referred to as TCTD) conducting rental credit operations include: State-owned commercial banks, commercial banks with share capital, joint venture banks, and financial companies.

Article 3: Financial institutions conducting rental credit operations may establish a subsidiary leasing company or a rental credit department to manage and oversee such activities.

Article 4: The lessee is a legal entity established under Vietnamese law, an individual, or a direct user of the leased assets from financial institutions.

Article 5: Leased assets are machinery, equipment, and other chattels that meet the technological renewal requirements of the lessee, have a useful life of more than one year, are produced and traded within Vietnam, imported into, or exported out of Vietnam.

Article 6: Lease term: is the period agreed upon between the financial institution and the lessee in the rental credit contract.

Article 7: A rental credit transaction must satisfy at least one of the following requirements:

7.1. At the end of the lease term as stipulated in the rental credit contract, ownership of the leased asset is transferred to the lessee, or the lessee has the option to purchase the leased asset at a nominal price agreed upon in advance, which is lower than the actual value of the leased asset on the date of repurchase or continued lease.

7.2. The lease term must be at least 60% of the time required for the depreciation of the leased asset.

7.3. The total amount of rent paid by the lessee to the financial institution during the lease term must be at least equivalent to the market value of the leased asset at the time the contract was signed.

Article 8: Lease fee: Based on the ceiling interest rate for loans of the same term and leasing costs, the financial institution sets a lease fee appropriate to the market, which is accepted by the lessee.

II - SPECIFIC PROVISIONS:

Article 9: Conditions for leasing machinery, equipment, and other movable assets for production and business purposes through credit purchase leasing:

9.1. For legal entities established and operating under current Vietnamese laws:

9.1.1. Having sound financial status;

9.1.2. Having a need to update equipment and machinery to modernize and rationalize production;

9.1.3. Providing appropriate guarantees for the leased assets when requested by the Credit Institution (collateral, pledge, suretyship...).

9.2. For individuals and production households, in addition to the conditions stipulated in point 9.1, they must have a household registration within the same locality as the Credit Institution.

Article 10: Credit Institutions may only use their own capital and reserve funds, medium and long-term domestic and foreign loans to carry out leasing credit operations.

Article 11: The total value of assets leased to one customer shall not exceed 10% of the Credit Institution's own capital and reserve funds; the total value of assets leased to the ten largest customers shall not exceed 30% of the Credit Institution's total outstanding debt.

Credit Institutions shall not grant preferential treatment in leasing to customers specified in Article 30 of the Banking Ordinance, Cooperative Credit Societies, and Financial Companies.

Article 12: Rights and obligations of Credit Institutions.

12.1. Shall be responsible for commitments made to customers.

12.2. Request lessees to present relevant documents, files, and provide information on production conditions, financial capacity, and other relevant materials.

12.3. Refuse to engage with customers if leasing assets is deemed ineffective, the lessee lacks the ability to pay lease payments on time, or is not truthful in providing data.

12.4. Have the right to affix a stamp confirming the Credit Institution's ownership of leased machinery, equipment, and assets.

12.5. Have the right to inspect the production and business situation of the lessee before and during the lease period.

12.6. Upon payment due date, if the lessee fails to make lease payments, the Credit Institution has the right to deduct from the lessee's deposit account at the Credit Institution to settle the overdue lease payments.

12.7. The Credit Institution may consider extending the payment period for lease payments when the lessee temporarily encounters difficulties due to objective reasons and fails to make timely payments for one period, but the lessee must commit to making up the payment in the following period.

12.8. If the extension is not granted and the lessee still breaches the payment agreement, or after the extension of the payment period, the lessee still lacks the ability to pay, the Credit Institution has the right to convert the unpaid lease amount into overdue debt, recover all leased assets, auction collateral assets, and demand the guarantor to fulfill their obligations.

III - LEASING CREDIT CONTRACT:

Section I: LEASING CREDIT CONTRACT

Article 13: The Leasing Credit Contract (hereinafter referred to as the Contract) is a contract signed between the Credit Institution and the lessee and serves as the legal basis determining the rights and responsibilities of the Credit Institution and the lessee in a leasing credit transaction.

Article 14: The Contract must clearly reflect one of the basic principles of the leasing credit operation as stated in Article 7 of these Regulations.

Article 15: The Contract should include the following main contents:

15.1. Contract number; date and year of signing the contract;

15.2. Name of the Credit Institution and its representative, name of the lessee and its representative;

15.3. Leased asset: Name, technical characteristics, place of manufacture, specifications, serial number, purpose, quantity of leased assets;

15.4. Lease term;

15.5. Installation location;

15.6. Purchase price of the asset;

15.7. Useful life of the asset;

15.8. Collateral or guarantor;

15.9. Rights and responsibilities of the parties in the Contract;

15.10. Commitments and agreements of the parties;

15.11. Total lease payment amount (principal, fees); lease payment due date;

15.12. Effective date of the Contract;

15.13. Termination of the Contract before the end of the lease term;

15.14. Handling when the Contract is terminated before the end of the lease term;

15.15. Handling of leased assets upon termination of the asset lease Contract.

Article 16:

16.1. The Contract must be notarized at a notary office and registered with the State Bank where the leasing Credit Institution is headquartered.

16.2. The leasing Credit Institution is responsible for notarizing and registering the Contract. The lessee bears all costs for notarization and registration of the Contract.

Article 17: The contract becomes effective from the date agreed upon by the parties in the contract.

Mục II: RIGHTS AND OBLIGATIONS OF THE PARTIES IN THE CONTRACT

Article 18: Rights and obligations of the Financial Leasing Company (FLC).

18.1. The FLC shall be responsible for signing the contract and paying the purchase price for leased assets to the supplier according to the conditions agreed upon in the purchase contract.

18.2. The FLC shall be responsible for supervising and inspecting the delivery and receipt of goods between the supplier and the lessee in accordance with the committed conditions.

18.3. The FLC shall not be liable for the failure to deliver or incorrect delivery of assets that do not conform to the conditions agreed upon by the lessee with the supplier.

18.4. In case the supplier breaches the sales contract, the FLC has the right to request the supplier to fulfill their obligations or demand a refund of the purchase price already paid and jointly with the lessee declare termination of the Contract and require the supplier to compensate for all losses.

18.5. Throughout the lease period, ownership of the leased asset remains with the FLC.

18.6. The FLC has the right to claim compensation from the lessee for any damages arising from the lessee's failure or inadequate performance of their responsibility to maintain, repair, insure the leased asset, or risks during the lease period.

18.7. The FLC may transfer its rights under the lease contract to another FLC but must notify the lessee in writing beforehand.

18.8. The FLC shall be liable to compensate the lessee for any damages arising from the FLC's breach of contract.

Article 19: Rights and obligations of the lessee.

19.1. The lessee shall select the supplier, negotiate and agree with the supplier on the technical characteristics, type, price, insurance, method and time of delivery, installation, warranty, and other issues related to the leased asset.

19.2. The lessee shall directly receive the asset from the supplier.

19.3. In case the Contract is terminated before the leased asset is delivered to the lessee due to the lessee's fault, the lessee shall return to the FLC all costs incurred by the FLC and the contract will be terminated.

19.4. The lessee has the right to request the FLC to perform its obligations or terminate the contract if the leased asset is not delivered on time to the lessee due to the FLC's breach of the Purchase Contract.

19.5. The lessee shall be obligated to use the leased asset in accordance with the purpose agreed upon in the contract.

19.6. The lessee shall be obligated to purchase insurance for the leased asset as agreed by both parties, with the FLC as the beneficiary.

19.7. The lessee shall bear all risks of loss or damage to the leased asset and any risks caused by the leased asset to third parties.

19.8. The lessee shall be responsible for maintaining, servicing, and repairing the leased asset during the lease period.

19.9. The lessee shall not transfer the right to use the leased asset to a third party.

19.10. The lessee shall be obligated to return the leased asset to the FLC at the end of the lease period, except where the lessee has the right to own the leased asset or repurchase it as stipulated in the Contract.

Article 20: Termination of the Contract before the end of the lease period.

20.1. The FLC may terminate the Contract before the end of the lease period in the following cases:

20.1.1. The lessee fails to pay the lease payment as agreed in the Contract.

20.1.2. The lessee breaches one of the agreements in the Contract.

20.1.3. The lessee loses the ability to pay, goes bankrupt, liquidates, or dissolves.

20.1.4. The guarantor of the lessee loses the ability to pay, goes bankrupt, liquidates, or dissolves, but the lessee cannot find another guarantor acceptable to the FLC.

20.2. The lessee may terminate the Contract before the end of the lease period if the FLC breaches the contract.

20.3. The Contract shall be terminated before the end of the lease period if the leased asset is lost, damaged, and cannot be restored or repaired.

Article 21: Handling of the Contract terminated before the end of the lease period.

21.1. In case the Contract is terminated prematurely as per Article 20.1, the lessee shall pay the entire remaining lease payments to the FLC. The FLC has the right to immediately reclaim the leased asset.

21.2. The FLC's ownership of the leased asset shall not be affected in case the lessee goes bankrupt, dissolves, loses the ability to pay, or liquidates. The leased asset shall not be considered the lessee's property when dealing with the lessee's assets to repay other creditors.

21.3. In case the Contract is terminated as per Article 20.3, the lessee shall immediately pay the entire remaining lease payments and the residual value of the leased asset to the FLC. The FLC will refund the lessee the insurance amount received from the insurer, if the lessee has fully paid the FLC the amount due.

IV - ACCOUNTING AND REPORTING:

Article 22: The FLC shall conduct accounting for leasing credit operations according to the accounting system issued by the State Bank.

Article 23:

Monthly, the FLC must report to the State Bank on the operation of leasing credit business in accordance with current regulations of the State Bank.

V - EFFECTIVE DATE:

Article 24: Based on these rules, the FLCs are responsible for guiding and organizing implementation within their systems.

Article 25: Heads of functional units under the Central State Bank, Branch Directors of the State Bank in provinces and cities are responsible for inspecting and supervising the enforcement of these rules.

Article 26: Amendments and supplements to these Regulations shall be decided by the Governor of the State Bank of Vietnam.