Decision No. 284/2000/QĐ-NHNN on the issuance of the Loan Regulations for credit institutions to customers.

DECISION OF THE GOVERNOR OF THE STATE BANK OF VIETNAM

Regarding the issuance of the Lending Regulations for credit institutions

to customers

 

GOVERNOR OF THE STATE BANK OF VIETNAM

Pursuant to the Law on the State Bank of Vietnam and the Law on Credit Organizations dated December 12, 1997;

Pursuant to Decree No. 15/CP dated March 2, 1993 of the Government on the tasks, powers, and responsibilities of state management of ministries and ministerial-level agencies;

Pursuant to the proposal of the Director of the Monetary Policy Department,

DECISION:

Article 1. Now hereby promulgates along with this Decision the Lending Regulations forcredit institutions to customers.

Article 2.This Decision takes effect from September 15, 2000 and replaces Decision No.324/1998/QĐ-NHNN1 dated September 30, 1998 of the Governor of the State Bank onthe issuance of the Lending Regulations for credit institutions to customers.

Article 3.Credit contracts signed before the date this Decision takes effect but not yetdisbursed or not fully disbursed, and credit contracts that still have outstandingloans as of September 14, 2000, shall continue to be implemented according to theterms already agreed upon until all debts are recovered or both parties agree tomodify or supplement the credit contract in accordance with the LendingRegulations for credit institutions to customers issued together with thisDecision.

Article 4.Heads of units under the State Bank, Directors of Branches of the State Bank inprovinces and centrally-administered cities, Chairmen of Management Boards andGeneral Managers (Directors) of credit institutions, and borrowers of creditinstitutions are responsible for implementing this Decision./.

REGULATION ON LENDING BY CREDIT INSTITUTIONS

FOR CUSTOMERS

(Issued together with Decision No. 284/2000/QĐ-NHNN1

dated August 25, 2000 of the Governor of the State Bank)

PART I

General Provisions

Article 1. Scope of Regulation

These regulations govern lending in Vietnamese dong and foreign currencies bycredit institutions to customers to meet capital needs for production, business,services, development investment, and living expenses.

Article 2.Applicability

1.Credit institutions established and conducting lending operations in accordancewith the Law on Credit Institutions.

2.Borrowers at credit institutions include:

a)Legal entities such as state-owned enterprises, cooperatives, limitedliability companies, joint-stock companies, foreign-invested enterprises, andother organizations meeting the conditions stipulated in Article 94 of the CivilCode;

b)Individuals;

c)Households;

d Cooperatives;

đPrivate enterprises;

eLimited partnerships.

Article 3. Explanation of Terms

2. Relic preservation refers to activities aimed at preventing and limiting factorsdamaging relics without altering the original elements of the relics;

1.Lending is a form of credit provision whereby a credit institution provides a customerwith the use of a sum of money for a specific purpose and period as agreed upon,subject to the principle of repayment of principal and interest.

2.Loan term is a period calculated from when the customer begins to receive the loan untilthe time they repay the entire principal and interest as agreed in the creditcontract between the credit institution and the customer.

3.refers to the periods within the loan repayment period specified in the credit agreement during which the student must repay part or all of the loan amount at the end of each period. are periods within the agreed lending term between the credit institution andthe customer during which the customer must repay part or all of the loan to thecredit institution.

4.Adjustment of debt repayment terms is the agreement between the credit institution and the customer to change thepreviously agreed repayment terms in the credit contract.

5.Extension of loan period is the extension of an additional period beyond the agreed lending term in thecredit contract.

6.An investment project, production and business plan, service project, orproject serving living needs is a set of proposals regarding capital requirements,methods of using capital, and corresponding results obtained within a specifiedtime frame for a specific activity related to production, business, services,development investment, or serving living needs.

7.Credit limit is the maximum outstanding loan balance maintained over a certain period asagreed upon in the credit contract between the credit institution and thecustomer.

Article 4.Implementing foreign exchange management regulations

When lending in foreign currency, credit institutions and customers must strictlyadhere to the Government's regulations and the State Bank's guidelines on forexmanagement.

Chapter II

Specific provisions

Article 5. Autonomous Lending Rights of Credit Institutions

Credit institutions shall bear full responsibility for their lending decisions. Noorganization or individual may interfere with the autonomous lending rights ofcredit institutions contrary to the law.

Article 6. Principles of borrowing

Borrowers from credit institutions must ensure compliance with the following principles:

1.Use borrowed funds for the agreed purpose in the credit contract;

2.Repay the principal and interest on borrowed funds according to the agreed termsin the credit contract;

3.Loan guarantees must comply with government regulations and guidelines issuedby the Governor of the State Bank.

, Clause 1, Clause 2 Article 7a of this Regulation..Loan Conditions

Credit institutions shall consider and decide to lend when borrowers meet thefollowing conditions:

1.Have civil legal capacity, civil conduct capacity, and be liable for civilresponsibility as prescribed by law, specifically:

a)Legal entities must have civil legal capacity;

b)Individuals and private business owners must have both civil legal capacity andcivil conduct capacity;

c)Representatives of family households must have both civil legal capacity andcivil conduct capacity;

d)Representatives of cooperative organizations must have both civil legal capacityand civil conduct capacity;

đ)General partners of limited liability companies must have both civil legalcapacity and civil conduct capacity;

2.Have financial capability to repay debts within the committed period;

3.A legitimate purpose for using borrowed funds;

4.Have feasible investment projects, production plans, business plans, serviceplans, or living service plans with viable repayment plans;

5.Comply with loan guarantee regulations as prescribed by the government andguidelines issued by the Governor of the State Bank.

Article 8.Types of loans

1.Short-term lending: Credit institutions provide short-term loans to customers tomeet capital needs for production, business operations, services, and livingexpenses.

2.Medium-term and long-term lending: Credit institutions provide medium-term andlong-term loans to customers to implement investment projects aimed at developingproduction, business operations, services, and living expenses.

Article 9.Borrowing Objectives

1.Credit institutions lend to the following objects:

a)The value of materials, goods, machinery, equipment including VAT within the totalvalue of the consignment and costs to implement investment projects, productionplans, business plans, service plans, or living service plans;

b)Financial needs of customers as follows:

-Export and import tax amounts that customers must pay to complete export andimport procedures for consignments that credit institutions participate in financing;

-Interest on borrowed funds paid to credit institutions during the constructionperiod before the fixed assets are handed over and put into use for medium-termand long-term loans for fixed asset investments where the interest payment isincluded in the value of the fixed assets;

-Amounts borrowed to repay foreign financial loans (in cash) guaranteed bydomestic credit institutions if the following conditions are met: The investmentproject, production plan, business plan, service plan, or living service planusing such loans is being implemented effectively; the loan falls within therepayment period; the customer achieves more favorable borrowing conditions orcost savings compared to foreign borrowing and has the ability to repay the debt;

-Other financial needs serving production, business operations, services, andliving expenses as prescribed by the State Bank.

2.Credit institutions shall not lend to the following objects:

a)Tax amounts directly payable to the state budget; except for export and importtaxes specified in Subsection 1 Point b Clause 1 of this Article;

b)Amounts to repay principal and interest on loans from other credit institutions;

c)Interest on borrowed funds paid to the lending credit institution itself; exceptfor cases of lending interest payments as stipulated in Subsection 2 Point bClause 1 of this Article.

Article 10. Loan Term

Credit institutions and customers agree on the lending term in two categories:

1.Short-term lending: Up to 12 months, determined appropriately based on theproduction cycle, business operations, and debt repayment capacity of thecustomer.

2.Medium-term and long-term lending: The lending term is determined appropriatelybased on the capital recovery period of the investment project, the debtrepayment capacity of the customer, and the nature of the lending source of thecredit institution:

a)Medium-term lending term: From electronic media in Vietnam 12 months to 60 months;

b)Long-term lending term: Over 60 months but not exceeding the remainingoperating period as stipulated in the establishment decision or business licensefor legal entities and not exceeding 15 years for lending to living serviceprojects. a) For PPP projects, the tenderer shall post the selection results of investors and attach the approval decision on the System no later than ten days from the date the document is issued in accordance with point b of Clause 2, Article 4 of Decree No. 35/2021/NĐ-CP. 1.Interest rates for lending are agreed upon between credit institutions andcustomers in accordance with the State Bank's regulations on lending interestrates at the time of signing the credit contract. Credit institutions areresponsible for publicly announcing lending interest rates for customers toknow.

Article 11. Interest Rate on Loans

2.Favorable interest rates are applied to customers who are entitled to interestrate benefits as prescribed by the government and guidelines issued by theState Bank.

3.In case a loan is transferred to overdue status, the overdue interest rate asprescribed by the Governor of the State Bank at the time of signing the creditcontract must be applied.

1.Credit institutions base their lending decisions on the borrowing needs ofcustomers, government regulations under Decree No. 178/1999/ND-CP regarding thelending amount relative to collateral value, the debt repayment capacity ofborrowers, and their own funding capacity.

Article 12. Loan Amount

2.The total outstanding balance of loans to a single customer shall not exceed 15%of the credit institution's own capital, except for loans from governmententrusted sources, organizations, individuals, or cases where the borrower is acredit institution.

3.The total outstanding balance of loans to the objects specified in Article 21 ofthis Regulation shall not exceed 5% of the credit institution's own capital.

1.Based on the characteristics of production, business operations, services,financial capacity, income, and repayment sources of customers, creditinstitutions and customers agree on the repayment of principal and interest onloans as follows:

Article 13.Principal and Interest Repayment

a)Repayment periods for principal;

b)Interest repayment periods together with principal repayment periods orseparately;

c)Currency for repayment and measures to maintain the value of the principaldebt through appropriate methods in accordance with the law

preservation entire of the principal debt value through appropriate methods in accordance with thelaw.           

2. When the debt repayment period expires or the loan term ends, if the customer does not have the ability to repay the debt on time and has not had the debt term adjusted or the debt extended, the overdue debt that cannot be repaid will be transferred to overdue debt, and the customer must bear the interest rate for overdue debt on the amount of delayed payment.

3. In case the customer repays the debt ahead of schedule, the financial institution and the customer shall agree on the amount of interest on the borrowed money to be paid but it shall not exceed the interest rate agreed upon in the credit contract.

Article 14.Loan application documents

1. When there is a need for borrowing capital, the customer shall submit to the financial institution the following documents:

- A loan application form. The loan application form must include basic contents such as the name and address of the borrower; the amount needed to borrow; the purpose of borrowing, commitments regarding the use of borrowed funds, repayment, payment of interest, and other commitments;

- Necessary documents proving eligibility for borrowing as stipulated in Article 7 of this Regulation;

The customer shall bear legal responsibility for the accuracy and legality of the documents submitted to the financial institution.

2. The financial institution specifies in detail the types of documents the customer needs to submit in accordance with the specific characteristics of each type of customer and type of loan as provided for in Clause 1 of this Article.

Article 15.Appraisal and decision to grant loans

1. Financial institutions establish a loan approval process based on the principle of ensuring independence and clearly defining individual responsibilities and joint liability between the appraisal and loan granting stages.

2. Financial institutions check the documents submitted by customers and simultaneously conduct an assessment of the feasibility and effectiveness of investment projects, production and business plans, services, or investment projects, plans serving daily life and the customer's ability to repay the loan..

In cases where necessary or as prescribed by law, financial institutions may establish a credit council or hire related consulting agencies to conduct an assessment of investment projects, production and business plans, services, or investment projects, plans serving daily life of the customer.

3. Within a maximum of 10 working days for short-term loans and 45 working days for medium and long-term loans from the date when the financial institution receives complete and valid loan application documents and necessary information from the customer as required by the financial institution, the financial institution must make a decision and notify the customer of whether the loan will be granted or not. In case of a decision not to grant the loan, the financial institution must notify the customer in writing, specifying the grounds for refusing the loan.

Article 16.Methods of lending

Based on the specific needs for using each loan amount of the customer and the ability of the financial institution to monitor the customer's use of the loan, the financial institution agrees with the borrowing customer on the selection of a loan method according to one of the following loan methods:

1. Loan in installments: Each time borrowing funds, the customer and the financial institution carry out necessary loan procedures and sign a credit contract.

2. Credit limit loan: The financial institution and the customer determine and agree on a credit limit maintained within a certain period or according to the production and business cycle.

3. Project-based loan: The financial institution provides the customer with funds to implement investment projects for developing production, business, services, and investment projects serving daily life.

4. Syndicated loan: A group of financial institutions jointly provide a loan for a borrowing project or borrowing plan of the customer; among which, one financial institution acts as the lead arranger coordinating with other financial institutions. Syndicated lending is carried out in accordance with this regulation and the co-financing regulations issued by the Governor of the State Bank.

5. Installment loan: When borrowing funds, the financial institution and the customer determine and agree on the amount of interest on the borrowed money to be paid together with the principal debt divided into multiple periods for repayment during the loan term.

6. Standby credit limit loan: The financial institution commits to being ready to provide the customer with a loan within a certain credit limit. The financial institution and the customer agree on the validity period of the standby credit limit, and the fee for the standby credit limit.

7. Loan through credit card issuance and usage operations: The financial institution approves the customer to use the borrowed funds within the credit limit to pay for goods and services and withdraw cash from ATMs or cash advance points that are agents of the financial institution. When issuing and using a credit card, the financial institution and the customer must comply with the Government and State Bank regulations on credit card issuance and usage.

8. Other loan methods in compliance with this Regulation and other regulations of the State Bank.

Article 17.Foreign Currency Loans

1. Financial institutions permitted to operate foreign exchange can lend foreign currency to resident customers in accordance with the Government's regulations and the State Bank's guidelines on foreign exchange management.

The concept of resident is defined in Article 4 of Decree No. 63/1998/NĐ-CP dated August 17, 1998 of the Government on foreign exchange management.

2. Loan application documents: In addition to the documents stipulated in Article 14 of this Regulation, the customer must submit to the financial institution: Import permit or import quota (if applicable); import contract or entrusted import contract and other relevant documents concerning the use of borrowed funds.

3. Principal and interest repayment: Any foreign currency loan must be repaid in the same foreign currency. In case of repayment in another foreign currency or in Vietnamese dong, it shall be implemented according to the agreement between the financial institution and the customer and converted at the exchange rate or based on the principle of determining the exchange rate agreed upon in the credit contract. Foreign-invested enterprises under self-balancing foreign exchange shall not repay foreign currency loans in Vietnamese dong.

Article 18.Credit Contract

After making the lending decision, the credit organization and the customer shallenter into a loan agreement. The loan agreement must include provisions on thelending conditions, purpose of using the borrowed funds, disbursement methodand use of the borrowed capital, amount of borrowing, interest rate, term ofborrowing, repayment method and term, form of collateral for the loan, value ofthe collateral, measures to handle the collateral, transfer or non-transfer of theloan agreement, and other commitments agreed upon by the parties.

Article 19. Limitations on Lending

1. The total outstanding debt for lending to a single customer shall not exceed 15%of the credit organization's own capital, except for cases involving loans fromsources of entrusted capital from the Government, organizations, and individuals.In cases where a customer's capital requirement exceeds 15% of the creditorganization's own capital or the customer requires capital mobilization frommultiple sources, credit organizations shall lend combined capital in accordancewith the regulations of the Governor of the State Bank.

2. In special cases, credit organizations may only exceed the lending limit specifiedin Clause 1 of this Article when permitted by the Prime Minister for each specificcase.

3. The determination of the credit organization's own capital as the basis forcalculating the lending limits specified in Clauses 1 and 2 of this Article shall becarried out in accordance with the regulations of the State Bank.

Article 20. Cases Prohibited from Lending

1. Credit organizations shall not lend to customers in the following cases:

a) Members of the Board of Directors, Supervisory Board, General Director(Director), Deputy General Director (Deputy Director) of the credit organization;

b) Appraisers and loan reviewers;

c) Father, mother, wife, husband, child of members of the Board of Directors,Supervisory Board, General Director (Director), Deputy General Director (DeputyDirector).

2. The provisions of Clause 1 of this Article shall not apply to cooperative creditorganizations.

Article 21. Restrictions on Lending

Credit organizations shall not lend without collateral or lend with preferentialinterest rates to the following entities:

1. Auditing organizations, auditors currently auditing at credit organizations; ChiefAccountants, Inspectors;

2. Large shareholders of credit organizations;

3. Enterprises that have one of the entities specified in Clause 1 of Article 77 of theLaw on Credit Organizations owning more than 10% of the enterprise's chartercapital.

Article 22. Monitoring and Supervising Borrowed Capital

1. Credit organizations are responsible for monitoring and supervising the borrowingprocess, use of borrowed capital, and repayment by customers.

2. Credit organizations conduct monitoring and supervision before, during, andafter lending in accordance with the characteristics of the credit organization'soperations and the business and use of borrowed capital by customers.

Article 23.Extension of loan term, adjustment of repayment period

1. When the repayment deadline arrives and the customer is unable to repay due toobjective reasons and has submitted a written request for extension, the creditorganization shall consider granting an extension according to the followingprovisions: 1. Inspection regime a) The maximum extension period for short-term loans is equal to one productionor business cycle but does not exceed 12 months; except in special cases approvedby the Governor of the State Bank or delegated to the credit organization forconsideration and decision;

b) The maximum extension period for medium-term and long-term loans is half theagreed term in the loan agreement; except in special cases approved by theGovernor of the State Bank or delegated to the credit organization forconsideration and decision;

c) Overdue debts that remain unpaid and are not extended shall be transferred tooverdue status and subject to overdue interest rates.

2. If a customer fails to repay the loan according to the agreed term in the loanagreement due to objective reasons and has submitted a written request, thecredit organization shall consider adjusting the repayment term. If the repaymentterm is not adjusted, the credit organization shall transfer the overdue debt ofthat term to overdue status.

3. Requests for extensions and adjustments to the repayment terms by customersand the processing of such requests by credit organizations must be completedbefore the repayment deadline, and the parties may supplement the loanagreement according to the new repayment term.

4. Debts that have been extended or had their terms adjusted will continue toapply the interest rate agreed in the loan agreement for on-time debts until theextended or adjusted term expires.

Exemption and Reduction of Loan Interest

Article 24.Credit organizations may decide to exempt or reduce the interest payable bycustomers based on the following principles:

1. Customers suffer asset losses related to borrowed capital due to objective reasons,leading to financial difficulties;

2. The level of exemption or reduction of loan interest must be commensurate withthe financial capacity of the credit organization;

3. Credit organizations shall not exempt or reduce interest for loans to customersbelonging to the categories specified in Clause 1 of Article 78 of the Law onCredit Organizations;

4. Credit organizations must issue a regulation on the exemption and reduction ofloan interest for customers, which must be approved by the Board of Directors. Theexemption and reduction of loan interest for customers can only be implementedwhen there is a regulation on the exemption and reduction of loan interest issuedby the credit organization.

Rights and Obligations of Customers

Article 25.1. Borrowing customers have the right:

a) To refuse demands from credit organizations that are inconsistent with theagreements in the loan agreement;

b) To lodge complaints or initiate legal proceedings against breaches of the loanagreement in accordance with the law;

2. Borrowing customers have the obligation:

a) To provide complete and truthful information and documents related to theborrowing of capital and to bear responsibility for the accuracy of the informationand documents provided;

b) To use borrowed funds for the agreed purpose and to comply with otheragreements in the loan agreement;

c) To repay the principal and interest on borrowed funds as agreed in the loanagreement;

d) To bear legal responsibility for failing to fulfill agreements regarding repaymentof borrowed funds and fulfillment of obligations to secure the borrowed fundsas committed in the loan agreement.

Rights and Obligations of Credit Organizations

Article 26.1. Credit organizations have the right:

a) To require customers to provide documentation proving the feasibility andfinancial capability of their investment projects, production plans, business plans,service projects, or living support projects before deciding to lend.

a) Requesting customers to provide documentation proving the feasibility of their investment project, production, business, service plan, or living support project and plan, as well as their own and guarantor's financial capacity before making a loan decision;

b) Refuse the customer's loan request if it is found that the customer does not meetthe borrowing conditions, the loan project or the borrowing plan is not effective,does not comply with the provisions of the law, or the credit organization does nothave sufficient funds to lend;

c) Monitor the loan process, the use of borrowed funds, and the repayment by thecustomer;

d) Terminate the lending, recover the debt ahead of schedule when discoveringthat the customer provides false information or violates the credit contract;

đ) Initiate legal proceedings against customers who violate the credit contract orguarantors as prescribed by law;

e) When the debt repayment deadline arrives and the customer fails to repay thedebt, if the parties do not have another agreement, the credit organization has theright to dispose of the collateral for the loanas agreed in the contract FOR recover the debt in accordance with the provisions of the law or request the guarantorsto fulfill their guarantee obligations in cases where the guaranteed customers borrowfunds;

g) Waive, reduce interest on loans, extend debts, adjust the term of debt accordingto the regulations stipulated in this Charter; buy and sell debts in accordance withthe regulations of the State Bank and implement debt swaps, write-offs, and debtforbearance according to the regulations of the Government;

2. Credit organizations are obligated to:

a) Fulfill the agreements in the credit contracts;

b) Retain credit files in compliance with the provisions of the law;

Article 27.Provide preferential loans and investment loans for basic construction projectsaccording to the state plan

1. Credit organizations provide loans to customers eligible for preferential creditpolicies as prescribed by the Government and guided by the State Bank during eachperiod;

2. State-owned credit organizations provide investment loans for constructionaccording to the state plan in accordance with the laws on construction investmentand the Government's regulations on state-planned construction investment creditannually;

3. State-owned credit organizations, designated by the Government, provide loans tocustomers eligible for preferential treatment and investment loans for constructionaccording to the state plan. If there is a difference in interest rates and losses fromloans due to objective reasons, the handling shall be carried out according to theGovernment's regulations and guidance from the State Bank and relevant ministriesand sectors;

4. Before providing preferential loans and investment loans for constructionaccording to the state plan, credit organizations must assess the effectiveness of theproject or borrowing plan. If it is determined that the project is not effective andcannot repay the principal and interest, they must report to the competent stateauthority. If necessary, they should report to the Prime Minister for considerationand decision;

Article 28. Lending under Entrustment

1.Debt proposed for handling lend under the entrustment of the Government, domestic and foreign organizationsand individuals according to the loan entrustment contract signed with theGovernment's representative agency or domestic and foreign organizations andindividuals. The entrusted lending must comply with current legal provisions onbanking credit and entrustment contracts;

2.Credit organizations receiving entrusted loans are entitled to collect entrustmentfees and other benefits agreed upon in the loan entrustment contract in accordancewith the law and international practices, ensuring full compensation for costs, risks,and profit;

Chapter III

Implementation Provisions

Article 29.Credit organizations and borrowing customers are responsible for implementingthis Charter. Based on this Charter and related legal provisions, credit organizationsshall issue specific operational guidelines consistent with their conditions,characteristics, and bylaws;

Article 30.Organizations and individuals violating the provisions of this Charter may be subjectto disciplinary action, administrative penalties, or criminal liability pursuit accordingto the law, depending on the nature and severity of the violation.

Article 31. The amendment and supplementation of this Regulation shall be decided by the Governor of the State Bank of Vietnam./.