Circular No. 29/2013/TT-NHNN on lending in foreign currency by credit institutions and branches of foreign banks to resident borrowers

CIRCULAR

Article 24regulating foreign currency loans by credit institutions and branches of foreign banksfor resident borrowers

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

Based on the Law on Credit InstitutionsNo. 47/2010/QH12 dated June 16, 2010 2010;

Pursuant to the Foreign Exchange LawNo. No. 28/2005/PL-UBTVQH11 dated December 13, 2005;

Pursuant to Decree No. 160/2006/NĐ-CP dated December 28, 2006 of the Government detailing the implementation of the Foreign Exchange Law;"b) In addition to the lists of public services issued according to the provisions of Clause 2, Article 4 of this Decree, specialized agencies under provincial People's Committees shall report to the provincial People's Committee for decision-making on amending, supplementing, or issuing the list of public services funded by the state budget within their jurisdiction and consistent with the local budget capacity within the approved budget by the Provincial People's Assembly, and send it to the Ministry of Finance and relevant ministries and sectors for supervision during implementation."Pursuant to Decree No. 96/2008/NĐ-CP dated August 26, 2008 of the Government on the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;No.The Governor of the State Bank of Vietnam issues a Circular amending and supplementing certain legal normative documents concerning administrative procedures and formalities in the field of foreign exchange management.”

The Governor of the State Bank of Vietnam promulgates this Circular regulating foreign currency loans by credit institutions and branches of foreign banks

Article 1.

for resident borrowerslogoa) Short-term, medium-term, and long-term loans to pay for imports of goods and services abroad when the borrower has sufficient foreign currency from production and business revenue to repay the loan.i b) Short-term loans for enterprises designated by the Ministry of Industry and Trade to import gasoline in 2014 if they have a need for foreign currency loans to pay for gasoline imports abroad when the borrower does not have or does not have sufficient foreign currency revenue from production and business activities to repay the loan. This provision shall be implemented until December 31, 2014.,

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

1. Credit organizations and branches of foreign banks may consider and decide to grant loans in foreign currency for the following capital requirements:

c) Short-term loans to meet domestic capital needs to implement export plans through border gates of Vietnam when the borrower has sufficient foreign currency from export revenue to repay the loan; upon disbursing the loan, the borrower must sell the borrowed foreign currency to the credit institution or branch of a foreign bank in an immediate spot exchange transaction, except where the loan is required to settle transactions that must be conducted in foreign currency under the law. This provision shall be implemented until December 31, 2014.

d) Loans for direct investment abroad in national key projects approved by the National Assembly, the Government, or the Prime Minister and already certified by the Ministry of Planning and Investment for overseas 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 this Article in priority areas encouraged by the Government for production and business development after obtaining written approval from the State Bank of Vietnam according to the procedures and formalities stipulated in Article 4 of this Circular for each specific case.

1. When there is a need to grant foreign currency loans, 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 following main contents:

a) The credit institution or branch of a foreign bank has assessed and ensured that the borrower's project or business plan is feasible and effective, 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; specifically reporting on the financial situation, production and business activities, sources of loan repayment, and the borrower's need for foreign currency loans to implement projects or business plans in priority areas encouraged by the Government.

Article 4. Procedures and formalities for approving foreign currency loans

b) The credit institution or branch of a foreign bank reports specifically on the source of foreign currency funds for lending, while committing to ensure a balance of foreign currency funds 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, and other relevant legal provisions.

c) The credit institution or branch of a foreign bank commits to bear responsibility for the results of the assessment and decision to grant foreign currency loans to customers and the information provided in the request.

a) The credit institution or branch of a foreign bank directly sends or sends by post the request for approval to grant foreign currency loans to the State Bank of Vietnam (Department of Monetary Policy).

b) Based on the Government's policy on priority areas for production and business development, foreign exchange market trends, the provisions of this Circular, and the content of the request from the credit institution or branch of a foreign bank, the State Bank of Vietnam will consider approving the foreign currency loans by credit institutions and branches of foreign banks.

2. Procedures and formalities for approving foreign currency loans:

c) Within a maximum period of thirty working days from the date of receipt of the request for approval to grant foreign currency loans from credit institutions and branches of foreign banks containing complete information as stipulated in Clause 1 of Article 4 of this Circular, the State Bank of Vietnam will send a written notification approving or rejecting the credit institution or branch of a foreign bank's foreign currency loan.

1. Credit institutions and branches of foreign banks granting foreign currency loans in accordance with this Circular, regulations on lending, foreign exchange management, safety ratios in the operation of credit institutions and branches of foreign banks, and other related regulations.

2. Monthly, no later than the twelfth day of the month following the reporting month, credit institutions and branches of foreign banks shall report to the State Bank of Vietnam on foreign currency loans in the format attached to this Circular.

Article 5. Responsibilities of credit institutions and foreign bank branches

1. This Circular takes effect from January 1, 2014, and replaces Circular No. 37/2012/TT-NHNN dated December 28, 2012 of the Governor of the State Bank of Vietnam on foreign currency loans by credit institutions and branches of foreign banks for resident borrowers.

2. By the end of the twelfth day of each month following the reporting month, credit institutions and foreign bank branches shall report to the State Bank of Vietnam on foreign currency lending in accordance with the report form attached to this Circular.

Article 6. Implementation Organization

1. This Circular takes effect from January 1, 2014, and replaces Circular No. 37/2012/TT-NHNN dated December 28, 2012, issued by the Governor of the State Bank of Vietnam, concerning foreign currency lending by credit institutions and foreign bank branches to resident borrowers.

2. For loans that apply single disbursement methods, project investment loans, and syndicated loans under credit contracts signed before this Circular takes effect, credit institutions, foreign bank branches, and borrowing customers shall implement the contents of the signed credit contracts in accordance with the laws in force at the time of signing such contracts or amend and supplement the credit contracts in compliance with this Circular. For loans that apply credit limit disbursement methods and revolving credit (cyclical) under credit contracts signed before this Circular takes effect and disbursed from January 1, 2014 onwards, credit institutions, foreign bank branches, and borrowing customers shall comply with the provisions of this Circular.

3. 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 Managers (Directors) of credit institutions and foreign bank branches are responsible for organizing the implementation of this Circular./.