Circular No. 42/2018/TT-NHNN amending and supplementing certain articles of Circular No. 24/2015/TT-NHNN dated December 8, 2015, issued by the Governor of the State Bank of Vietnam on foreign currency loans by credit institutions and branches of foreign banks to resident borrowers.

CIRCULAR
Amending and supplementing certain provisions of Circular No. 24/2015/TT-NHNN dated December 8, 2015 of the Governor of the State Bank of Vietnam
on foreign currency loans granted by credit institutions and branches of foreign banks to resident borrowers
Pursuant to Decree No. 70/2014/NĐ-CP dated July 17, 2014 of the Government detailing implementation of certain provisions of the Foreign Exchange Law and the Ordinance amending and supplementing certain provisions of the Foreign Exchange Law;
The Governor of the State Bank of Vietnam promulgates this Circular amending and supplementing certain provisions of Circular No. 24/2015/TT-NHNN dated December 8, 2015 of the Governor of the State Bank of Vietnam on foreign currency loans granted by credit institutions and branches of foreign banks to resident borrowers (hereinafter referred to as Circular No. 24/2015/TT-NHNN).

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

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

Article 1. Amending and supplementing certain provisions of Circular No. 24/2015/TT-NHNN

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;

Article 1.

1. Clause 1 of Article 3 shall be amended and supplemented as follows: "1. Credit institutions and branches of foreign banks may consider granting foreign currency loans for the following capital needs:a) Short-term loans to pay abroad for imported goods and services to implement production and business plans for domestic consumption when the borrower has sufficient foreign currency from production and business revenue to repay the loan. This provision shall be implemented until March 31, 2019;

b) Short-term loans to pay abroad for imported goods and services to implement production and business plans for export through Vietnamese border gates when the borrower has sufficient foreign currency from production and business revenue to repay the loan;

c) Medium- and long-term loans to pay abroad for imported goods and services when the borrower has sufficient foreign currency from production and business revenue to repay the loan. This provision shall be implemented until September 30, 2019;

d) Short-term loans to state-owned trading enterprises designated by the Ministry of Industry and Trade to import petroleum products annually to pay abroad for imported petroleum products when such enterprises do not have or do not have sufficient foreign currency from their production and business activities to repay the loan;
e) Short-term loans to meet domestic capital needs to implement production and business plans for export through Vietnamese border gates when the borrower has sufficient foreign currency from export revenue to repay the loan. When the credit institution or branch of a foreign bank disburses the loan, the borrower must sell the borrowed foreign currency to the credit institution or branch of a foreign bank that granted the loan through spot foreign exchange transactions, except where the borrower's need for capital is to execute payment transactions that must be settled in foreign currency under the law;
f) Loans for investment abroad for projects approved by the National Assembly or the Prime Minister for overseas investment and registered with the Ministry of Planning and Investment for overseas investment."
c) Provide medium-term and long-term loans to pay for the import of goods and services abroad when the borrowing customer has sufficient foreign currency from production and business revenue to repay the loan. This provision shall be implemented until September 30, 2019;
d) Provide short-term loans to state-owned enterprises responsible for importing oil that have been assigned annual import quotas for oil by the Ministry of Industry and Trade to pay for the import of oil abroad when such state-owned enterprises do not have or do not have sufficient foreign currency revenue from their production and business activities to repay the loan;
đ) Provide short-term loans to meet domestic capital needs to implement export plans for goods through border gates of Vietnam when the borrowing customer has sufficient foreign currency from export revenues to repay the loan. When the lending credit institution or foreign bank branch disburses the loan, the borrowing customer must sell the borrowed foreign currency to the lending credit institution or foreign bank branch through spot foreign exchange transactions, except in cases where the customer's loan requirement is for settlement transactions that must be conducted in foreign currency according to the law;
e) Provide loans for investment abroad for projects approved by the National Assembly or the Prime Minister for overseas investment and which have been granted certificates of registration for overseas investment by the Ministry of Planning and Investment.

a) A customs declaration form for imported goods according to the information criteria specified in Model No. 01 - Declaration Form for Imported Goods attached as Appendix I to Circular No. 39/2018/TT-BTC dated April 20, 2018, issued by the Minister of Finance.

"Article 5. Currency for Repayment of Debt
1. For foreign currency loans, at the time before signing the credit contract or loan agreement, if the credit institution or foreign bank branch assesses that the borrower has sufficient foreign currency income to repay the loan:
a) The borrower must repay the principal and interest of the loan in the same foreign currency used for borrowing; repayment in another foreign currency may be agreed upon between the credit institution or foreign bank branch and the borrower in accordance with relevant laws;
b) In case the borrower proves that due to objective reasons, the foreign currency from their production and business activities is delayed in payment, and the borrower does not have or does not yet have sufficient foreign currency to repay the loan, the borrower may purchase foreign currency from the credit institution or foreign bank branch that granted the loan or from another credit institution or foreign bank branch to repay the loan.

If the borrower requests to purchase foreign currency from the credit institution or foreign bank branch that granted the loan, the credit institution or foreign bank branch must sell foreign currency to the borrower. If the borrower purchases foreign currency from another credit institution or foreign bank branch, the credit institution or foreign bank branch selling the foreign currency must transfer the amount of foreign currency to the credit institution or foreign bank branch that granted the loan.

The borrower must sell foreign currency to the credit institution or foreign bank branch that sold the foreign currency when receiving foreign currency from their production and business activities.

2. For foreign currency loans, at the time before signing the credit contract or loan agreement, if the credit institution or foreign bank branch assesses that the borrower does not have or does not have sufficient foreign currency income to repay the loan: The borrower may purchase foreign currency from the credit institution or foreign bank branch that granted the loan or from another credit institution or foreign bank branch to repay the loan.

If the borrower requests to purchase foreign currency from the credit institution or foreign bank branch that granted the loan, the credit institution or foreign bank branch must sell foreign currency to the borrower. If the borrower purchases foreign currency from another credit institution or foreign bank branch, the credit institution or foreign bank branch selling the foreign currency must transfer the amount of foreign currency to the credit institution or foreign bank branch that granted the loan."

Article 2.

Replace Table No. 01 and Table No. 02 issued together with Circular No. 24/2015/TT-NHNN with Table No. 01 and Table No. 02 issued together with this Circular.

Article 3. Transitional Provisions

1. For credit contracts applying the credit limit lending method or loan agreements applying the credit limit lending method signed before the effective date of this Circular, where subsequent loan agreements are signed from the effective date of this Circular, the credit institution or foreign bank branch and the borrower shall implement according to this Circular.

2. Except for the cases provided for in Clause 1 of this Article, for credit contracts or loan agreements signed before the effective date of this Circular, the credit institution or foreign bank branch and the borrower shall continue to implement according to the contents already agreed upon in compliance with the laws at the time of signing. In case of amending or supplementing the credit contract or loan agreement, the amended or supplemented content must comply with this Circular.

The Head of the Ministry’s Office, Heads of Departments, Director of the Vietnam Registration Agency, Heads of agencies, units, and individuals related to this Circular shall be responsible for its enforcement.

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-administered cities; the Chairmen of the Board of Directors, the Chairmen of the Board of Members, and the General Directors (Directors) of credit institutions and foreign bank branches are responsible for organizing the implementation of this Circular.

Article 5. Effective Date

1. This Circular takes effect from January 1, 2019.

2. This Circular abolishes Circular No. 18/2017/TT-NHNN dated December 27, 2017 of the Governor of the State Bank of Vietnam amending and supplementing certain provisions of Circular No. 24/2015/TT-NHNN dated December 8, 2015 of the Governor of the State Bank of Vietnam on foreign currency lending by credit institutions and foreign bank branches to resident borrowers./.