Decision No. 324/1998/QD-NHNN promulgates the Loan Regulations for credit institutions with customers.

Pursuant to …; DECISION OF THE GOVERNOR OF THE STATE BANK OF VIETNAM

On Issuing 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 CreditInstitutions dated December 12, 1997;

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

At the proposal of the Director of the Economic Research Department,

 

DECISION:

Article 1. The attached Decision issues the Lending Regulations for credit institutions tocustomers.

Article 2. This Decision takes effect from October 15, 1998 and replaces the provisions inthe following documents issued by the Governor of the State Bank of Vietnam:

1.Decision No. 198/QĐ-NH1 dated September 16, 1994 promulgating the Short-TermCredit Rules for economic organizations; Decision No. 199/QĐ-NH1 dated June 28,1997 amending and supplementing certain articles of the Short-Term Credit Rulespromulgated together with Decision No. 198/QĐ-NH1 dated September 16, 1994;Decision No. 367/QĐ-NH1 dated December 21, 1995 promulgating the Medium- andLong-Term Credit Rules; Decision No. 200/QĐ-NH1 dated June 28, 1997 amending andsupplementing certain articles of the Medium- and Long-Term Credit Rulespromulgated together with Decision No. 367/QĐ-NH1 dated December 21, 1995;Decision No. 18/QĐ-NH5 dated February 16, 1994 promulgating the Rules on Loansfor Family Economic Development and Consumer Loans; Decision No. 77-NH/QĐ datedJune 13, 1991 promulgating the Investment Credit Rules for Basic ConstructionProjects within the State Plan; Decision No. 270-QĐ/NH1 dated September 25, 1995promulgating the Rules on Loans for Applying Science and Technology inProduction; Decision No. 185/QĐ-NH5 dated September 6, 1994 promulgating thePawn Regulation.

2.Other documents issued by the Governor of the State Bank of Vietnam before theeffective date of this Decision that conflict with the provisions of this Decisionshall cease to be effective.

Article 3. Loan contracts signed before the effective date of this Decision but not yetdisbursed or partially disbursed and loan contracts with outstanding balances atthe end of the day before the effective date of this Decision shall continue tobe implemented according to the terms agreed upon until all debts are recovered.In the course of implementation, if any difficulties arise, credit institutionsmust report to the State Bank of Vietnam for supplementary guidance.

Article 4. Heads of units under the Central State Bank; Branch Directors of the State Bankof Vietnam in Provinces and Cities; Chairmen of Management Boards and GeneralDirectors (Directors) of credit institutions and borrowers of credit institutionsare responsible for implementing this Decision.

 

REGULATIONS

LENDING BY CREDIT INSTITUTIONS TO CUSTOMERS

(Issued together with Decision No. 324/1998/QĐ-NHNN1 dated September 30, 1998 ofthe Governor of the State Bank of Vietnam)
These regulations govern lending in Vietnamese dong and foreign currency bycredit institutions to customers to meet capital needs for production, business,investment services, and living expenses.

 

PART I

GENERAL PROVISIONS

Article 1. Scope of application

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

Article 2Applicability

a)Legal entities include state-owned enterprises, cooperatives, limited liabilitycompanies, joint-stock companies, foreign-invested enterprises, and otherorganizations meeting the conditions stipulated in Article 94 of the Civil Code.

2.Borrowers at credit institutions include:

In these regulations, the following terms are understood as follows:

b)Individuals;

c)Households;

d Cooperatives;

đPrivate enterprises;

Article 3. Definitions

1.Loan is a form of credit provision whereby a credit institution provides acustomer with a sum of money for use for a specified purpose and period inaccordance with an agreement, subject to the principle of repayment of bothprincipal and interest.

2.Loan term is a period calculated from when the customer begins to receive theloan amount until the time when the principal and interest of the loan have beenfully repaid as agreed in the credit contract between the credit institution andthe customer.

3.Repayment periods are intervals within the loan term agreed upon between thecredit institution and the customer during which the customer must repay part orall of the loan amount to the credit institution at the end of each interval.

4.Revision of repayment periods refers to the agreement between the creditinstitution and the customer to change the previously agreed repayment periods inthe credit contract.

5.Loan extension refers to the credit institution's approval to extend the loanterm beyond the originally agreed period in the credit contract.

6.An investment project or business plan is a set of proposals for fundingproduction, business, services, investment development, and serving daily lifeover a defined period.

7.Credit limit is the maximum outstanding loan balance maintained over a specificperiod as agreed upon in the credit contract between the credit institution andthe customer.

When lending in foreign currency, the credit institution and the customer mustcomply with the Government's regulations and the State Bank of Vietnam'sguidelines on foreign exchange management.

Article 4. Implementing foreign exchange management regulations

Credit institutions' autonomy in lending

 

Chapter II

SPECIFIC PROVISIONS

Article 5. Principles of borrowing

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. Borrowers of credit institutions must ensure the following principles:

3.The guarantee of loans must comply with the Government's regulations and theGovernor of the State Bank of Vietnam's directives.

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;

4.Having feasible and effective investment projects or business plans.

Article 7. 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;

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

3.A legitimate purpose for using borrowed funds;

5.Complying with the regulations on loan guarantees as prescribed by theGovernment and the guidelines of the State Bank of Vietnam.

1.Short-term loans: Credit institutions provide short-term loans to customers tomeet the need for working capital for production, business, and living services.

Article 8. Types of loans

a)The value of raw materials, goods, machinery, equipment, and other expenses forcustomers to implement projects or business plans, services, and livingexpenses, and investment development;

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:

b)The tax payable for export that the customer must pay to process exportprocedures for the value of the exported consignment, in which the creditinstitution participates in financing;

c)The interest on the loan paid to the credit institution during the constructionperiod, before the transfer and commissioning of fixed assets for medium- andlong-term loans for investment in fixed assets, where the interest payment isincluded in the value of the fixed asset.

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

a)Tax payable; except for the export tax payable as provided in sub-clause b,paragraph 1 of this Article;

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

c)Interest on the loan paid to the lending credit institution itself; except forthe case of lending interest on the loan as provided in sub-clause c, paragraph 1of this Article.

c) The amount of interest on the loan paid to the credit institution providing the loan; except in cases where interest on the loan is paid according to the provisions of point c, Clause 1 of this Article.

Article 10. Loan term

Financial institutions and customers agree on the loan term in two types:

1.Short-term loans: up to 12 months, determined appropriately in accordance with theproduction cycle, business activities, and the customer's ability to repay debts.

2.Medium-term and long-term loans: the loan term is determined appropriately inaccordance with the capital recovery period of investment projects, thecustomer's ability to repay debts, and the nature of the lending institution'sfunding sources:

a)Medium-term loan term: from 12 months to 60 months (5 years);

b)Long-term loan term: over 60 months but not exceeding the remaining operationalperiod as stipulated in the establishment decision or business license forlegal entities, and not more than 15 years for loans for projects serving lifeneeds.

Article 11. Interest Rate for Loans

1.The interest rate for loans is agreed upon by financial institutions and customersin accordance with the State Bank of Vietnam's regulations on loan interest ratesat the time of signing the credit contract. Financial institutions have theresponsibility to publicly announce loan interest rates for customers to beaware.

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.

3.In cases where a loan is transferred to overdue debt, the overdue interest rate mustbe applied according to the level prescribed by the Governor of the State Bankof Vietnam at the time of signing the credit contract.

Article 12. Loan amount

Financial institutions base their decisions on the borrowing needs of customers, themaximum loan-to-value ratio relative to the value of collateral assets asprescribed by the Government and guidelines of the State Bank of Vietnam, thecustomer's ability to repay debts, and their own funding capacity, but shall notexceed the limit prescribed in Article 79 of the Law on Credit Institutions.

Article 13. Principal and Interest Repayment

1.Based on the characteristics of production, business, services, financialcapabilities, income, and debt repayment sources of customers, financialinstitutions and customers agree on the principal and interest repayment of theloan as follows:

a)Repayment periods for the principal:

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

c)The currency for repayment and the method to ensure the value of the principaldebt through appropriate forms in accordance with the provisions of the Law.

2.When the repayment period ends or the loan term expires, if the customer does nothave the ability to repay on time and has not been granted an extension oradjustment of the repayment period, the due debt must be transferred to overduestatus, and the customer must bear the overdue interest rate on the amountoverdue.

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:

Loan application form. The loan application form must include basic contents suchas: name, address of the borrowing customer; the amount needed to borrow; purposeof borrowing, commitments regarding the use of borrowed funds, repayment ofprincipal and interest, and other commitments;

Necessary documents proving that the customer meets the borrowing conditions asprescribed 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.Financial institutions specify in detail the types of documents that customers needto submit in accordance with the specific characteristics of each type of customerand type of loan as prescribed 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, whileconducting an assessment of the feasibility and effectiveness of investmentprojects or business plans and the ability to repay borrowed funds.

In necessary cases or as prescribed by law, financial institutions may establish acredit committee or hire related consulting agencies to assess the customer'sinvestment projects or business plans.

3.Within no more than 10 working days for short-term loans and no more than 45working days for medium-term and long-term loans from the date when thefinancial institution receives complete and valid loan application documents andnecessary information from the customer as required by the financialinstitution, the financial institution must decide and notify whether to grant theloan to the customer. In case of refusal to grant the loan, the financialinstitution must notify the customer in writing, specifying the grounds forrefusal.

Article 16. Loan methods.

Financial institutions agree with customers on loan methods suitable for the needfor using borrowed funds and the ability to monitor the customer's use of borrowedfunds in one of the following loan methods:

1.Loan in installments: Each time borrowing funds, the customer and the financialinstitution must go through the necessary procedures and sign a creditcontract.

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.Loan for investment projects: financial institutions provide customers with fundsto implement investment projects for developing production, business, services,and projects serving life needs.

4.Group loan: A group of financial institutions jointly provides a loan for a singleproject or financing plan of the customer; among which, one financial institutionacts as the lead coordinator and collaborates with other financial institutions.The group loan is implemented in accordance with this regulation and the jointfinancing rules issued by the Governor of the State Bank of Vietnam.

5.Installment loan: When borrowing funds, the financial institution and the customeragree and determine the amount of interest on the loan to be paid together withthe principal divided into multiple periods within the loan term, the assetpurchased with borrowed funds only belongs to the borrower when the principaland interest are fully repaid.

6.Loan under a credit line: financial institutions commit to ensuring the availabilityof funds for customers within a certain credit limit. Financial institutions andcustomers agree on the validity period of the credit line, and the fee for thecredit line.

7.Loan through credit card issuance and usage operations: Financial institutionsapprove customers to use borrowed funds within the credit limit to pay for goodsand services and withdraw cash from ATMs or cash withdrawal points that areagents of the financial institution. When issuing and using credit cards,financial institutions and customers must comply with the government and StateBank of Vietnam's regulations on credit card issuance and usage.

8.Other loan methods in accordance with this regulation and other regulations of theState Bank of Vietnam.

Article 17. Foreign Currency Loans

1.Loan recipients: Foreign exchange operating credit institutions may lend foreigncurrency to customers to pay for imported materials, goods, machinery, equipment,and services from abroad for the customer's business activities. Cases of lendingforeign currency outside these recipients must be approved in writing by theGovernor of the State Bank of Vietnam.

2.Loan documentation: In addition to the documents stipulated in Article 14 of thisregulation, customers must submit to credit institutions: import licenses orimport quotas (if applicable); import contracts or entrusted import contracts andother relevant documents concerning the use of borrowed funds.

3.Repayment of principal and interest: Any loan denominated in foreign currency must berepaid in that same foreign currency. In cases where repayment is made in adifferent foreign currency or in Vietnamese dong, it shall be carried out accordingto the agreement between the credit institution and the customer and convertedbased on the exchange rate or determined according to the principle agreed uponin the credit contract. Foreign-invested enterprises within the scope of self-balancing foreign exchange shall not repay foreign currency loans in Vietnamese dong.

Article 18. Credit Contract

After making the loan decision, the credit institution and the customer shall sign thecredit contract. The credit contract must include provisions on loan conditions, thepurpose of using borrowed funds, methods of disbursing and utilizing borrowedfunds, the amount of the loan, interest rates, loan term, repayment method andterm, form of collateral for the loan, value of collateral assets, measures forhandling collateral assets, assignment or transfer of the credit contract, and othercommitments agreed upon by both parties.

Article 19. Limitations on lending

1.The total outstanding loan balance for a single customer may not exceed 15% of thecredit institution's own capital, except for loans from entrusted sources of theGovernment, organizations, and individuals. In cases where a customer's capitalneeds exceed 15% of the credit institution's own capital or the customer hascapital needs from multiple sources, credit institutions shall provide joint loansin accordance with the regulations of the Governor of the State Bank of Vietnam.

2.In special circumstances, credit institutions may only exceed the lending limit setout in Clause 1 of this Article when permitted by the Prime Minister for eachspecific case.

3.The determination of credit institutions' own capital as the basis for calculating thelending limits specified in Clauses 1 and 2 of this Article shall be implemented inaccordance with the regulations of the State Bank of Vietnam.

Article 20. Cases Prohibited from Lending

1.Credit institutions shall not lend to customers in the following situations:

a.Members of the board of directors, Supervisory Board, General Director (Director),Deputy General Director (Deputy Director) of the credit institution;

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 creditinstitutions.

Article 21. Restrictions on Lending

1.Credit institutions shall not lend without collateral or lend with preferentialinterest rates to the following entities:

a.Auditing organizations, Auditors currently auditing at the credit institution; ChiefAccountants, Inspectors;

b.Large shareholders of the credit institution;

c.Enterprises where any of the entities specified in Clause 1 of Article 77 of the Lawon Credit Institutions hold more than 10% of the enterprise's charter capital.

2.The total outstanding loan balance for the entities specified in Clause 1 of thisArticle may not exceed 5% of the credit institution's own capital.

Article 22. Monitoring of loan funds

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

2.Credit institutions shall conduct pre-loan, during-loan, and post-loan inspectionsand supervision in accordance with the characteristics of the credit institution'soperations and the customer's business and borrowing activities.

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

1.When the due date for debt repayment arrives and the customer is unable to fullyrepay the debt due to objective reasons and submits a written request for debtextension, the credit institution shall consider extending the debt repaymentperiod in accordance with the following provisions:

a.The maximum extension period for short-term loans shall be equal to the agreedloan term or one production cycle but not exceeding 12 months.

b.The maximum extension period for medium- and long-term loans shall be half ofthe agreed loan term in the credit contract.

c.Any overdue debts that have not been repaid and are not extended shall beconverted to overdue debts and subject to late payment interest.

2.In cases where the customer fails to repay the loan according to the agreed term inthe credit contract due to objective reasons and submits a written request, thecredit institution shall consider adjusting the repayment term. If the repaymentterm is not adjusted, the credit institution shall convert the overdue debt of thatterm to overdue debt.

3.The customer's request for debt extension or adjustment of the repayment term andthe credit institution's resolution on such requests must be completed before thedue date for repayment. Both parties may agree to supplement the credit contractaccording to the new repayment term.

4.Loans that have been extended or had their terms adjusted shall continue to applythe agreed interest rate in the credit contract for on-time loans until the end of theextended period or adjusted term.

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;

2.The extent of interest reduction on loans shall be commensurate with the financialcapacity of the credit institution;

3.Credit institutions shall not reduce interest on loans for customers belonging to theentities specified in Clause 1 of Article 78 of the Law on Credit Institutions.

4.Credit institutions must issue a regulation on interest reduction for customersapproved by the Board of Directors. Interest reduction on loans for customers canonly be implemented if there is a regulation on interest reduction issued by thecredit institution.

Article 25. Rights and Obligations of the Customer

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

a.Refuse requests from credit institutions that do not comply with the agreements inthe credit contract;

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.

d.be liable under the law for failing to fulfill the repayment obligations and performthe guarantee obligations committed in the credit contract.

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.Require customers to provide documents proving the feasibility of investmentprojects or business plans, as well as their financial capacity and that of theguarantor before deciding to lend;

b.Refuse loan requests from customers if they do not meet the loan conditions, if theinvestment project or loan plan is not effective, does not comply with legalrequirements, or if the credit institution does not have sufficient funds to lend;

c.Supervise the loan process, use of borrowed funds, and repayment by customers;

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.At the due date for repayment, if there are no other agreements, the creditinstitution has the right to sell the collateral asset according to the agreement inthe contract to recover the debt in accordance with the law or request the guarantor to fulfill their guarantee obligation in the case of guaranteed loans.

g) Waiving, reducing interest on loans, extending debt terms, adjusting debt maturities, purchasing debts in accordance with the regulations of the State Bank, and implementing debt rollover, debt write-off, and debt cancellation in accordance with the provisions 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. Providing preferential loans and investment construction loans according 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 credit organizations provide investment construction loans according to the State plan in accordance with the laws on investment construction and the Government's regulations on investment construction credit according to the annual State plan.

3. State credit organizations designated by the Government to provide loans to preferential customers and investment construction loans according to the State plan shall handle any interest rate differences and losses from such loans due to objective reasons in accordance with the Government's regulations and guidelines from the State Bank and relevant ministries and sectors.

4. Before providing preferential loans and investment construction loans according to the State plan, credit organizations must assess the effectiveness of the project or loan proposal; if it is deemed ineffective and unable to repay both principal and interest, they must report to the competent state authority, and if necessary, report to the Prime Minister for consideration and decision.

Article 28. Entrusted lending

1. Credit organizations provide entrusted loans for the Government, domestic and foreign organizations, and individuals in accordance with the entrusted loan contracts signed with the Government's representative agencies or domestic and foreign organizations and individuals. Entrusted lending must comply with banking credit laws and entrusted contracts.

2. Credit organizations providing entrusted loans are entitled to receive entrusted fees and other agreed benefits in the entrusted loan contract in compliance with the law and international practices, ensuring sufficient coverage of costs, risks, and profit.

 

Chapter III

IMPLEMENTING PROVISIONS

Article 29. Credit organizations and borrowers are responsible for implementing this regulation. Based on this regulation and related legal documents, credit organizations issue specific operational guidelines consistent with their conditions, characteristics, and bylaws.

Article 30. Organizations and individuals violating the provisions of this regulation may be subject to disciplinary action, administrative penalties, or criminal liability追究根据法律规定。

Article 31. Amendments and supplements to this regulation shall be decided by the Governor of the State Bank./.