Circular No. 36/2018/TT-NHNN on the activities of lending for foreign investment of credit institutions and branches of foreign banks for customers.

CIRCULAR
Regulations on lending activities for foreign investment of credit institutions and branches of foreign banks for customers
sử dụng, chi nhánh ngân hàng nước ngoài đối với khách hàng

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 Provisions of the Law on Credit Institutions dated November 20, 2017;

Pursuant to the Investment Law dated November 26, 2014 and the Law amending and supplementing Article 6 and Appendix 4 regarding the list of conditional business sectors of the Investment Law dated November 22, 2016;

Pursuant to the Foreign Exchange Regulations dated December 13, 2005 and the Decree Amending and Supplementing Certain Provisions of the Foreign Exchange Regulations dated March 18, 2013;

On the basis of Decree No. 70/2014/NĐ-CP dated July 17, 2014 of the Government detailing the implementation of certain provisions of the Foreign Exchange Law and the Law amending and supplementing certain provisions of the Foreign Exchange Law;

Decree No. Decree No. 83/2015/NĐ-CP dated September 25, 2015 on foreign investment;

On the basis of Decree number Decree No. 124/2017/NĐ-CP dated November 15, 2017 on foreign investment activities in oil and gas;

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

At the proposal of the Director of the Department of Credit for Economic Sectors;

The Governor of the State Bank of Vietnam issues this Circular regulating lending activities for foreign investment of credit institutions and branches of foreign banks for customers.

Chapter I
GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular regulates lending activities for foreign investment of credit institutions and branches of foreign banks (hereinafter referred to as credit institutions) for customers according to the forms of investment prescribed in Points a, b, c, and d Clause 1 Article 52 of the Investment Law.

Article 2. Applicability

a) Commercial banks, cooperative banks;

a) Commercial banks;

c) Microfinance organizations.

c) Branches of foreign banks.

2. Customers are investors as defined by the Investment Law and guiding documents (excluding credit institutions). For individual investors such as households, cooperatives, and organizations without legal personality, when participating in loan relationships, members of households, cooperatives, and organizations without legal personality are subjects participating in establishing and performing loan transactions or authorizing representatives to participate in establishing and performing loan transactions.

3. Other related organizations and individuals.

Article 3. Application of related legal documents

Credit institutions shall implement lending to customers for foreign investment in accordance with the provisions of this Circular. Matters not specified in this Circular shall be implemented in accordance with the regulations of the State Bank of Vietnam on lending activities of credit institutions to customers, limits on safety ratios in credit institution operations, foreign exchange management, internal control, statistical reporting, classification, provision setting, risk handling, and other relevant regulatory documents.

Article 4. Demand for foreign investment loans

Credit institutions shall consider granting loans to customers for the following needs:

1. Contributing registered capital to establish economic organizations in accordance with the laws of the host country.

2. Contributing capital to implement joint venture contracts (BCC contracts) abroad.

3. Purchasing part or all of the registered capital of economic organizations abroad to participate in management and conduct business investment activities abroad.

4. Capital requirements for foreign investment activities in accordance with the form prescribed in Point d Clause 1 Article 52 of the Investment Law and implementing guidance documents.

Article 5. Loan Conditions

Credit institutions shall consider and decide to grant loans for foreign investment when customers meet the following conditions:

1. Customers are legal entities with civil legal capacity as provided by law. Individual customers (including individuals who are members or authorized representatives of households, cooperatives, and organizations without legal personality) must be at least 18 years old and have full civil capacity under the law.

2. Have been issued a Certificate of Registration for Foreign Investment and their investment activities have been approved or licensed by the competent authority of the host country. In cases where the host country's laws do not require investment approval or consent, investors must provide documentation proving their right to operate investments in the host country.

3. Have a foreign investment project or plan that has been assessed as feasible by the credit institution and the customer has the ability to repay the credit institution.

4. Have not generated non-performing debts for two consecutive years up to the time of requesting the loan.

Article 6. Loan Application Documents

When there is a need for a loan, the customer must submit to the credit institution the documents proving that they meet the borrowing conditions as stipulated in Article 5 of this Circular and other documents as guided by the credit institution.

Article 7. Loan Amount

1. The loan amount shall be agreed upon between the credit institution and the customer based on the borrowing needs, the overseas investment plan, the financial capacity of the customer, the credit limits for the customer, and the capital supply capability of the credit institution.

2. The maximum loan amount of the credit institution shall not exceed 70% of the customer's overseas investment capital.

The loan term shall be agreed upon between the Social Policy Bank and the customer but shall not exceed five years (60 months).

The loan term shall be agreed upon between the credit institution and the customer in accordance with the customer’s debt repayment ability, the medium and long-term capital supply capability of the credit institution, the project investment period, the remaining time of the Investment License, the Certificate of Registration for Overseas Investment, or other equivalent documents.

Article 9. Currency for Loan and Repayment

1. The credit institution and the customer shall agree on the currency for the loan in compliance with the legal provisions governing the lending activities of credit institutions towards customers and relevant laws.

2. The repayment currency shall be the loan currency of the loan. In case of repayment in another currency, it shall be carried out according to the agreement between the credit institution and the customer in compliance with relevant legal provisions.

Customers borrowing funds pursuant to this Decision are not required to provide loan guarantees.

1. The application of security measures for loans shall be implemented in accordance with the legal provisions governing the lending activities of credit institutions towards customers and relevant laws.

2. The application of security measures for loans using assets abroad shall be agreed upon by the parties in compliance with the principle of choosing applicable law in civil relations involving foreign elements as stipulated in Part Five of the Civil Code.

Article 11. Monitoring and Supervision of Loan Usage

1. The credit institution has the right and obligation to monitor the usage of the loan and the repayment of the customer in accordance with the law.

2. The credit institution has the right to request the customer to report on business results and the situation of loan usage or provide documents proving the usage of the loan.

3. The customer is responsible for using the loan and repaying it in accordance with the content of the loan agreement; reporting and providing documents proving the usage of the loan as required by the credit institution.

Article 12. Responsibilities of Units under the State Bank

1. Department of Credit for Economic Sectors:

a) To be the focal point for monitoring and summarizing the situation of loans granted for overseas investment by credit institutions to customers;

b) To take the lead and coordinate in handling issues arising related to granting loans for overseas investment within the scope of this Circular.

2. Banking Inspection and Supervision Authority:

a) To take the lead and coordinate with relevant units to conduct inspections, audits, and supervision of credit institutions in granting loans to customers for overseas investment activities in accordance with the law on lending for overseas investment; Handling violations within their authority and in accordance with the law;

b) To control credit institutions in complying with regulations on anti-money laundering related to lending for overseas investment activities.

3. Department of Foreign Exchange Management: To take the lead and coordinate with relevant units of the State Bank to handle issues related to transferring funds for loans and other related items concerning lending for overseas investment.

4. Monetary Policy Department: To take the lead and coordinate with relevant units of the State Bank to handle issues arising from lending for overseas investment in foreign currencies.

5. Other units under the State Bank, within their functions and management scope, have the responsibility to coordinate in handling issues arising from granting loans for overseas investment by credit institutions to customers.

Article 13. Effective Date

1. This Circular takes effect from February 15, 2019, and replaces Circular No. 10/2006/TT-NHNN dated December 21, 2006, of the State Bank guiding credit institutions in granting loans to customers for direct overseas investment.

2. Credit institutions and customers shall continue to implement the contents of the signed credit contracts/agreements in compliance with the laws in force at the time of signing the contract or amend and supplement the credit contract in compliance with this Circular.

Article 14. Implementation Organization

The Director of the Office, Heads of the Department of Economic Credit, Heads of units under the State Bank, Governors of the State Bank 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 are responsible for implementing this Circular./.