Circular No. 37/2012/TT-NHNN on foreign currency loans by credit institutions and branches of foreign banks for resident borrowers

CIRCULAR

Regulations on foreign currency loans by credit institutions and overseas bank branches

for resident borrowers

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

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

Pursuant to the Foreign Exchange Ordinance 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;

Pursuant to Decree No. 96/2008/NĐ-CP dated August 26, 2008 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 overseas bank branches 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

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

a) 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.

b) Short-term loans for key enterprises importing oil and gas products assigned import quotas for oil and gas in 2013 by the Ministry of Industry and Trade, when the borrower does not have or does not have sufficient foreign currency revenue from production and business activities to repay the loan. The provisions of this paragraph shall be implemented until December 31, 2013.

Short-term loans to meet domestic capital needs to implement export plans through border gates of Vietnam where the borrower has sufficient foreign currency from export revenues to repay the loan; when the credit institution or overseas bank branch disburses the loan, the borrower must sell the borrowed foreign currency to the credit institution or overseas bank branch in a spot foreign exchange transaction (spot), except in cases where the loan is required for transactions that must be conducted in foreign currency according to the law. The provisions of this paragraph shall be implemented until December 31, 2013.

d) Loans for direct investment abroad for national key projects approved by the National Assembly, the Government or

2. Credit institutions and overseas bank branches may consider granting foreign currency loans for capital needs outside the scope specified in 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 in accordance with the procedures and formalities stipulated in Article 4 of this Circular.

Article 4. Procedures and formalities for approving foreign currency loans

1. When there is a need for foreign currency loans, credit institutions and overseas bank branches shall submit a written request to the State Bank of Vietnam for approval to grant foreign currency loans. The request for approval to grant foreign currency loans shall include the following main contents: The credit institution or overseas bank branch has appraised and ensured that the borrower's project and business plan is feasible and effective; the borrower meets all conditions for borrowing funds as prescribed by laws on lending activities, has the ability to repay the principal and interest on time; the credit institution or overseas bank branch ensures a balance of foreign currency capital for lending, granting foreign currency loans does not affect the credit limit and safety ratio in the operation of the credit institution or overseas bank branch as prescribed by the State Bank of Vietnam; the borrower's demand for foreign currency loans to implement projects and business plans in priority areas encouraged by the Government for production and business development; the credit institution or overseas bank branch commits to bear responsibility for the results of the appraisal and the contents and information provided in the request.

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.

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

Within thirty working days from the date of receipt of the request for approval to grant foreign currency loans from credit institutions or overseas bank branches, the State Bank of Vietnam shall send a written notification approving or rejecting the credit institution or overseas bank branch's foreign currency loan.

Article 5. Responsibilities of credit institutions and foreign bank branches

1. Credit institutions and overseas bank branches shall comply with the provisions of this Circular, regulations on lending, foreign exchange management, safety ratios in the operation of credit institutions and overseas bank branches, and other relevant regulations when granting foreign currency loans.

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

Article 6. Implementation Organization

1. This Circular takes effect from January 1, 2013 and replaces Circular No. 03/2012/TT-NHNN dated March 8, 2012 of the Governor of the State Bank of Vietnam on foreign currency loans by credit institutions and overseas bank branches for resident borrowers.

2. For loans granted under single-installment lending methods, project investment loans, syndicated loans under credit contracts signed before the effective date of this Circular, credit institutions and overseas bank branches and borrowers shall implement the contents of the signed credit contracts in accordance with the applicable laws at the time of signing the credit contract or amend and supplement the credit contract in accordance with the provisions of this Circular. For loans granted under credit limit and revolving credit methods under credit contracts signed before the effective date of this Circular, which are disbursed from January 1, 2013, credit institutions and overseas bank branches and borrowers shall implement in accordance with the provisions of this Circular.

3. The Director of the Office, the Head of the Monetary Policy Department, and the Heads of units under the State Bank of Vietnam, the Governors of the State Bank of Vietnam branches in provinces and centrally governed cities; the Chairmen of the Management Boards, the Chairmen of the Members' Councils, and the General Directors (Directors) of credit organizations, foreign bank branches, other organizations, and related individuals are responsible for implementing this Circular.

Name of credit organization, foreign bank branch: …

FOREIGN CURRENCY LOAN DEBT REPORT

Month … year …

(Issued together with Circular No. 37/2012/TT-NHNN dated December 28, 2012)

Note:

1. Loan balance in Part I: (1) = (2) = (3).

2. Loan balance at point e, Section 2, Part I does not include loan balances at points a, b, c, d, Section 2, Part I.

3. Deadline for submitting reports: Monthly, no later than the 12th day of the month following the reporting month.

4. Unit receiving reports: Monetary Policy Department - State Bank of Vietnam, 49 Ly Thai To Street - Hoan Kiem District - Hanoi (email: [email protected], fax: 04.38246953 - 04.38240132)

5. Please clearly state the name and phone number of the person responsible for responding to details in the report when requested by the State Bank of Vietnam.