Circular No. 21/2017/TT-NHNN on the methods of disbursing loan funds by credit institutions and foreign bank branches to customers

CIRCULAR

Regulations on the disbursement methods for loan capital

of credit institutions and foreign bank branches to customers

foreign entities for customers

 

Pursuant to the Law on the State Bank of Vietnam dated June 16, 2010;

Pursuant to the Law on Credit Institutions dated June 16, 2010 and the Law Amending and Supplementing Certain Articles of the Law on Credit Institutions dated November 20, 2017;

Pursuant to Decree No. 101/2012/ND-CP dated November 22, 2012 of the Government on non-cash payment transactions and Decree No. 80/2016/ND-CP dated July 1, 2016 of the Government amending and supplementing certain articles of Decree No. 101/2012/ND-CP dated November 22, 2012 of the Government on non-cash payment transactions;

Pursuant to Decree No. 222/2013/NĐ-CP dated December 31, 2013 of the Government on cash payments;

Pursuant to Government Decree No. 16/2017/NĐ-CP dated February 17, 2017 on the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;

Article 1.

The Governor of the State Bank of Vietnam issues this Circular regulating the disbursement methods for loan capital of credit institutions and foreign bank branches to customers. Article 1. This Circular regulates the disbursement methods for loan capital including the use of non-cash payment services and cash to disburse loan capital of credit institutions and foreign bank branches to customers.

Article 1. Scope of Regulation

Article 2. This Circular does not regulate the disbursement of loan capital by policy banks.

1. Credit institutions and foreign bank branches conducting lending activities in accordance with the regulations of the State Bank of Vietnam (hereinafter referred to as the lending credit institution).

Article 2. Applicability

2. Borrowers obtaining loans from credit institutions and foreign bank branches (hereinafter referred to as the borrower).

3. Beneficiary.

4. Other credit institutions, foreign bank branches, service providers, and intermediary service providers related to the lending activities of the lending credit institution.

1. The beneficiary is a legal entity, individual, household, cooperative, or other organization without legal status that has the right to receive payments and remittances from the borrower in the purchase and sale of assets, asset formation, provision of services, and other lawful relationships, which are part of the loan needs under the loan agreement signed between the borrower and the lending credit institution (hereinafter referred to as the loan agreement).

Article 3. Explanation of Terms

In this Circular, the following terms are understood as follows:

2. Disbursement of loan capital is the act of the lending credit institution transferring a sum of money to the borrower through the use of non-cash payment services and cash to pay and remit to the beneficiary according to the purpose of the loan stated in the loan agreement.

3. Centralized financial management is the act of the borrower using payment services through an account at a credit institution or foreign bank branch to manage their own capital flow.

4. Financial management credit institution is a credit institution or foreign bank branch providing centralized financial management services to the borrower.

Article 4. Disbursement Methods for Loan Capital Using Non-Cash Payment Services

Clause 1. The lending credit institution must use non-cash payment services in accordance with the law to disburse loan capital into the beneficiary's settlement account at the service provider, except as provided in Clause 2 of this Article. The transfer of the disbursed amount into the beneficiary's settlement account at the service provider shall be carried out by the lending credit institution on the same day of loan disbursement according to the purpose recorded in the loan agreement; if the loan disbursement is conducted after the transaction hours of the lending credit institution on the disbursement day, the transfer shall be made on the next working day of the lending credit institution.

Clause 2. The lending credit institution must use non-cash payment services to disburse loan capital into the borrower's settlement account at the service provider in the following cases:

Point a) When the borrower pays and remits for purposes of using loan capital that the law requires to be conducted through the borrower's settlement account;

Point b) When the borrower, who is also the beneficiary, has a settlement account at the service provider and has used their own capital to pay and remit expenses belonging to the business plan, project, or living support plan approved by the lending credit institution in accordance with the law;

Point c) When the borrower directly pays and remits money to purchase agricultural products in the agriculture, forestry, salt industry, and fisheries sectors from individuals, households, farm owners, traders, and cooperatives engaged in production and business activities in rural areas to implement their business plans, consistent with the purpose of the loan recorded in the loan agreement.

c) Customers directly pay or remit money to purchase agricultural products in the fields of agriculture, forestry, salt industry, and fisheries from individuals, households, farm owners, business households, and cooperative groups engaged in production and business activities in rural areas, in order to implement their production and business plans, consistent with the purpose of borrowing as stipulated in the loan agreement.

Article 5. Method of disbursing loan funds in cash

1. Credit organizations granting loans shall consider and decide to disburse loan funds in cash in the following cases:

a) The customer makes payments or expenditures to the beneficiary (excluding legal entities) who do not have a settlement account with a service provider organization.

b) The customer is the beneficiary (excluding legal entities) who does not have a settlement account with a service provider organization, and has used their own capital to make payments or expenditures for costs included in the business plan or project or living support plan approved by the credit organization according to the provisions of the law.

2. The customer must submit to the credit organization granting the loan a commitment letter from the beneficiary stating that the beneficiary does not have a settlement account with a service provider organization.

Article 6. Method of disbursing loan funds using non-cash payment services or in cash

Credit organizations granting loans may consider and decide on the method of disbursing loan funds using non-cash payment services or in cash in the following case:

1. The customer makes payments or expenditures to the beneficiary (excluding legal entities) who have a settlement account with a service provider organization, with the amount of the loan recorded in the loan agreement not exceeding VND 100,000,000 (one hundred million dong).

2. The customer makes payments or expenditures to the beneficiary which is a state-owned entity that can be paid in cash according to the regulations of the State Bank of Vietnam.

Article 7. Application of methods of disbursing loan funds for certain specific cases

1. In the case of joint lending where the disbursing of loan funds is carried out through the lead credit organization (including the case where the lead lender is also the lead settlement organization): The participating lenders agree and decide on the method of disbursing loan funds according to Articles 4, 5, and 6 of this Circular. The lead settlement organization will immediately carry out the payment or expenditure to the beneficiary upon receiving the disbursed loan funds from the participating lenders or the lead joint lender; if the disbursed funds are received after the transaction hours of the lead settlement organization on the same day, the payment or expenditure to the beneficiary will be carried out on the next working day.

2. In the case where the customer uses centralized financial management services at a financial management organization that is not the lending credit organization: The lending credit organization decides on the method of disbursing loan funds according to Articles 4, 5, and 6 of this Circular. The financial management organization will immediately carry out the payment or expenditure to the beneficiary upon receiving the disbursed funds from the lending credit organization; if the disbursed funds are received after the transaction hours of the financial management organization on the same day, the payment or expenditure to the beneficiary will be carried out on the next working day.

3. In the case where the customer must use the borrowed Vietnamese Dong to purchase foreign currency multiple times to pay or spend for the beneficiary according to the purpose of borrowing recorded in the loan agreement:

a) The customer purchases foreign currency from the lending credit organization:

(i) In the case where the customer uses centralized financial management services at another credit organization or branch of a foreign bank that is not the lending credit organization: When selling foreign currency to the customer, the lending credit organization will disburse the loan funds; each time the foreign currency is sold, it will be immediately transferred into the dedicated capital deposit account of the customer opened at the financial management organization. The financial management organization will use non-cash payment services to carry out the payment or expenditure to the beneficiary according to the request of the lending credit organization, in compliance with the provisions of this Circular;

(ii) In the case where the customer does not use centralized financial management services or uses such services at the lending credit organization: When selling foreign currency to the customer, the lending credit organization will disburse the loan funds; each time the foreign currency is sold, it will be immediately transferred into the dedicated capital deposit account of the customer opened at the lending credit organization. The lending credit organization will use non-cash payment services to carry out the payment or expenditure to the beneficiary in compliance with the provisions of this Circular.

b) The customer purchases foreign currency from another credit organization or branch of a foreign bank (including the financial management organization) that is not the lending credit organization:

(i) In the case where the customer uses centralized financial management services at another credit organization or branch of a foreign bank that is not the lending credit organization: After receiving the disbursed funds from the lending credit organization, the credit organization or branch of a foreign bank sells foreign currency to the customer and transfers the foreign currency into the dedicated capital deposit account of the customer opened at the financial management organization. The financial management organization will use non-cash payment services to carry out the payment or expenditure to the beneficiary according to the request of the lending credit organization, in compliance with the provisions of this Circular;

(ii) In the case where the customer does not use centralized financial management services or uses such services at the lending credit organization: After receiving the disbursed funds from the lending credit organization, the credit organization or branch of a foreign bank sells foreign currency to the customer and transfers the foreign currency into the dedicated capital deposit account of the customer opened at the lending credit organization. The lending credit organization will use non-cash payment services to carry out the payment or expenditure to the beneficiary in compliance with the provisions of this Circular.

Article 8. Other Provisions

1. For credit institutions providing loans:

a) Consider and decide on the application of disbursement methods for loan capital as prescribed in this Circular based on information, documents, and payment vouchers provided by customers and bear full responsibility for their decisions;

b) Specify disbursement methods for loan capital in internal regulations on lending and loan management in accordance with this Circular and relevant laws;

c) Strictly control the disbursement of loan capital into customer settlement accounts to ensure that customers use the loan capital for the purposes specified in the lending agreement;

d) Inform customers about legal provisions and internal regulations regarding disbursement methods for loan capital. Notify customers and foreign bank branches involved in loan capital disbursement about the operating hours for payment transactions during the day as stipulated in this Circular;

2. Credit institutions managing finance shall notify customers and foreign bank branches involved in loan capital disbursement about the operating hours for payment transactions during the day as stipulated in this Circular;

3. For customers: Provide information, documents, and payment vouchers as required by the lending credit institution to facilitate the consideration and decision-making on disbursement methods for loan capital as prescribed in this Circular. Customers are legally responsible for the accuracy and truthfulness of the information, documents, and vouchers provided to the lending credit institution;

Article 9. Transitional Provisions

For credit agreements or lending agreements signed before the effective date of this Circular, customers and lending credit institutions continue to use non-cash or cash payment services to disburse loan capital according to the terms already agreed upon, in compliance with applicable laws or amended and supplemented credit agreements or lending agreements in accordance with this Circular;

Article 10. Implementation Organization

1. This Circular takes effect from April 2, 2018. This Circular replaces Circular No. 09/2012/TT-NHNN dated April 10, 2012, which regulates the use of payment instruments for the disbursement of loan capital by credit institutions and foreign bank branches to customers;

2. The Director of the Office, Heads of the Monetary Policy Department, and Heads of units under the State Bank of Vietnam, Governors of the State Bank of Vietnam branches in provinces and centrally-administered cities; Chairmen of Management Boards, Chairmen of Board Members, and General Directors (Directors) of credit institutions and foreign bank branches are responsible for implementing this Circular./.