Circular No. 24/2015/TT-NHNN on lending in foreign currency by credit institutions and branches of foreign banks to resident borrowers

CIRCULAR

Regulations on foreign currency loans by credit institutions and branches of foreign banks for resident borrowers

Pursuant to the Law on the State Bank of Vietnam No. 46/2010/QH12 dated June 16, 2010;

Pursuant to the Law on Credit Institutions No. 47/2010/QH12 dated June 16, 2010;

Pursuant to Decree No. 28/2005/PL-UBTVQH11 dated December 13, 2005 on foreign exchange and Decree No. 6/2013/PL-UBTVQH13 dated March 18, 2013 amending and supplementing certain articles of the Foreign Exchange Decree;

Pursuant to Decree No. 70/2014/NĐ-CP dated July 17, 2014 of the Government detailing the implementation of certain provisions of the Foreign Exchange Decree and the Decree Amending and Supplementing Certain Articles of the Foreign Exchange Decree;

Pursuant to Decree No. 156/2013/NĐ-CP dated November 11, 2013 of the Government stipulating 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 foreign currency loans by credit institutions and branches of foreign banks for resident borrowers.

Article 1. Scope of Regulation

This Circular regulates loans in foreign currency for domestic resident customers by credit organizations and branches of foreign banks.

Article 2. Applicability

1. Credit organizations and branches of foreign banks permitted to operate in foreign exchange may implement loans in foreign currency for customers.

2. Domestic resident customers borrowing capital at credit organizations and branches of foreign banks shall comply with the laws governing lending activities.

Article 3. Requirements for loans in foreign currency

a) Short-term, medium-term, and long-term loans to pay for imports of goods and services abroad when borrowers have sufficient foreign currency from production and business revenue to repay the loan;

b) Short-term loans for state-owned enterprises assigned import quotas for gasoline by the Ministry of Industry and Trade to pay for gasoline imports abroad when the borrower does not have or does not have sufficient foreign currency revenue from business operations to repay the loan;

c) Short-term loans to meet domestic short-term capital needs to implement plans for exporting goods through border gates of Vietnam where the borrower has sufficient foreign currency from export revenues to repay the loan; when the credit institution or branch of a foreign bank disburses the loan, the borrower must sell the borrowed foreign currency to the credit institution or branch of a foreign bank in the form of spot foreign exchange transactions, except in cases where the loan is required for settlement transactions that must be conducted in foreign currency according to the law. This provision shall be effective until March 31, 2016;

d) Loans for investment abroad for national key projects approved by the National Assembly, the Government, or the Prime Minister and already granted investment certificates for overseas investment by the Ministry of Planning and Investment.

2. Credit institutions and branches of foreign banks may consider granting foreign currency loans for capital needs outside the provisions of Clause 1 of Article 3 of this Circular in priority areas for encouraging production and business development as stipulated in resolutions, decrees, decisions, directives, and other documents of the Government and the Prime Minister, provided they obtain written approval from the State Bank of Vietnam in accordance with the procedures and formalities specified in Article 4 of this Circular for each specific case.

Article 4. Procedures and formalities for approving foreign currency loans

1. When there is a need for foreign currency loans as stipulated in Clause 2 of Article 3 of this Circular, credit institutions and branches of foreign banks shall submit a written request to the State Bank of Vietnam for approval to grant foreign currency loans, including the main contents:

a) Credit institutions and branches of foreign banks commit to having assessed and ensured that the project and the plan for using capital are feasible, the borrower meets all conditions for borrowing as prescribed by law on lending activities, and has the ability to repay the principal and interest on time;

b) Credit institutions and branches of foreign banks report in detail the contents that they have assessed and approved for lending to the borrower: The borrower's need for foreign currency loans to implement projects and plans for production and business operations in priority and encouraged sectors as stipulated in government resolutions, decrees, decisions, directives, and other documents; the amount of capital approved for lending; the borrower's business operation and financial situation and sources of repayment; and other contents to ensure that the project and the plan for using capital are feasible and the borrower meets all conditions for borrowing as prescribed by law;

c) Credit institutions and branches of foreign banks report in detail about the source of foreign currency capital for lending, while committing to ensuring a balance of foreign currency capital appropriate to the term and amount of the loan; the lending activity complies with current laws on lending activities, foreign exchange management, credit limits, safety ratios in banking operations of credit institutions, and other relevant laws;

d) Credit institutions and branches of foreign banks commit to being responsible for the results of their assessment and decision to grant foreign currency loans to customers and the contents and information provided in the request;

2. Procedures and formalities for approving foreign currency loans:

a) Credit institutions and overseas bank branches directly send or mail the request for approval of foreign currency loans to the State Bank of Vietnam (Department of Monetary Policy).

b) Based on the provisions in government resolutions, decrees, decisions, directives, and other documents regarding priority and encouraged sectors for production and business development, foreign exchange market trends, monetary policy objectives, provisions of this Circular, and the contents of the request submitted by credit institutions and branches of foreign banks, the State Bank of Vietnam will consider approving foreign currency loans by credit institutions and branches of foreign banks;

c) Within a maximum period of thirty working days from the date of receipt of the complete request for approval to grant foreign currency loans from credit institutions and branches of foreign banks, the State Bank of Vietnam shall send a written notification approving or rejecting the granting of foreign currency loans by credit institutions and branches of foreign banks, specifying the reasons for rejection;

1. For foreign currency loans as stipulated in Points a, c, and d of Clause 1 and Clause 2 of Article 3 of this Circular where the borrower has sufficient foreign currency income to repay the loan: The borrower must repay the principal and interest of the loan in the same foreign currency borrowed; in case of repayment in another foreign currency, it shall be carried out in accordance with the agreement between the credit institution or branch of a foreign bank and the borrower in compliance with relevant laws.

In the case where, upon the maturity date for repayment of foreign currency loans, due to objective reasons leading to delays in the foreign currency from the borrower's production and business activities being paid, and the borrower does not have sufficient foreign currency from their production and business activities or other lawful foreign currency sources to repay the loan, and such situation is appraised and confirmed in writing by the credit institution or foreign bank branch, then the credit institution or foreign bank branch shall lend foreign currency to the borrower to repay the loan, and the borrower commits to selling the foreign currency received from their production and business activities to the credit institution or foreign bank branch that provided the loan when they receive it.

2. For foreign currency loans specified in point b, Clause 1 and Clause 2, Article 3 of this Circular, if the borrower does not have or does not have sufficient lawful foreign currency income to repay the loan, the credit institution or foreign bank branch shall lend foreign currency to the borrower to repay the principal and interest of the loan.

Article 6. Responsibilities of credit institutions and foreign bank branches

1. Credit institutions and foreign bank branches lending foreign currency in accordance with this Circular shall comply with provisions on lending, foreign exchange management, safety ratio in the operation of credit institutions and foreign bank branches, and relevant laws. In cases where there are differing provisions between this Circular and other documents of the State Bank of Vietnam regarding foreign currency lending, the provisions of this Circular shall apply.

2. When implementing foreign currency lending, credit institutions and overseas bank branches must ensure a balance of foreign currency capital appropriate to the term and amount of the loan.

3. Credit institutions and foreign bank branches lending must ensure a balance of lawful foreign currency sources to sell to borrowers to repay the principal and interest of the loan in cases where the borrower does not have or does not have sufficient lawful foreign currency income to repay the loan as stipulated in Article 5 of this Circular.

4. Monthly, no later than the 12th day of the month following the reporting month, credit institutions and foreign bank branches shall report to the State Bank of Vietnam on foreign currency lending according to Form 01 and Form 02 issued together with this Circular.

Article 7. Implementation Organization

1. This Circular takes effect from January 1, 2016.

2. Repeal Circular No. 43/2014/TT-NHNN dated December 25, 2014 of the Governor of the State Bank of Vietnam on foreign currency lending by credit institutions and foreign bank branches to resident borrowers.

3. For loans applying single disbursement methods, project investment loans, syndicated loans under credit agreements signed before the effective date of this Circular, credit institutions and foreign bank branches and borrowers shall implement the contents of the credit agreement signed in compliance with the laws in effect at the time of signing the credit agreement or amend and supplement the credit agreement in compliance with this Circular. For loans applying credit limit disbursement methods under credit agreements signed before the effective date of this Circular, which are disbursed from the effective date of this Circular, credit institutions and foreign bank branches and borrowers shall implement in accordance with this Circular.

4. 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 the Board of Directors, Chairmen of the Board of Members and General Directors (Directors) of credit institutions and foreign bank branches are responsible for organizing the implementation of this Circular./.