Consolidated Document number 50/VBHN-NHNN on foreign currency loans by credit institutions and branches of foreign banks for resident borrowers

CIRCULAR

REGULATIONS ON LOANS IN FOREIGN CURRENCY FOR DOMESTIC RESIDENT CUSTOMERS BY CREDIT ORGANIZATIONS AND BRANCHES OF FOREIGN BANKS

Circular No. 24/2015/TT-NHNN dated December 8, 2015 of the Governor of the State Bank of Vietnam on loans in foreign currency for domestic resident customers by credit organizations and branches of foreign banks took effect from January 1, 2016, and was amended and supplemented by:

Circular No. 31/2016/TT-NHNN dated November 15, 2016 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 loans in foreign currency for domestic resident customers by credit organizations and branches of foreign banks, which took effect from January 1, 2017.

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

No. 06/2013/UBTVQH13 dated March 18, 2013;

Pursuant to Decree No. 28/2005/PL-UBTVQH11 dated December 13, 2005 on Foreign Exchange and Decree No. 6/2013/PL-UBTVQH13 dated March 18, 2013 amending and supplementing certain provisions of the Foreign Exchange Decree;

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

Pursuant to Decree No. 156/2013/NĐ-CP dated November 11, 2013, 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 on loans in foreign currency for domestic resident customers by credit organizations and branches of foreign banks.

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 borrowers have sufficient foreign currency from production and business revenue to repay the loan;

b) Short-term loans for enterprises designated by the Ministry of Industry and Trade to import petroleum annually when borrowers do not have or do not have sufficient foreign currency revenue from production and business operations to repay the loan;

c) Short-term loans to meet short-term capital needs within the country to implement plans for producing and trading goods for export through border gates of Vietnam, provided that borrowers have sufficient foreign currency from export revenue to repay the loan; when credit organizations and branches of foreign banks disburse the loan, borrowers must sell the borrowed foreign currency to the credit organization or branch of the foreign bank that granted the loan through spot foreign exchange transactions, except in cases where the customer's need for capital is to execute payment transactions that must be conducted in foreign currency according to the law. This provision will be implemented until December 31, 2017;

d) Loans for investment abroad in important national projects decided by the National Assembly, the Government, or the Prime Minister and already approved by the Ministry of Planning and Investment for overseas investment.

2. Credit organizations and branches of foreign banks may consider and decide to grant loans in foreign currency for capital requirements outside those specified in Clause 1 of this Article in priority areas for encouraging production and business development as stipulated in Resolutions, Decrees, Decisions, Directives, and other documents of the Government and the Prime Minister, after obtaining written approval from the State Bank of Vietnam in accordance with the procedures and formalities prescribed in Article 4 of this Circular for each specific case.

Article 4. Procedures and formalities for approving foreign currency loans

1. When there is a need for foreign currency loans as prescribed in Clause 2, Article 3 of this Circular, credit institutions and overseas bank branches shall submit a written request to the State Bank of Vietnam for approval to provide foreign currency loans, including the main contents:

a) Credit institutions and overseas bank branches commit to having assessed and ensured that the project and capital usage plan are feasible, the borrower meets all loan conditions stipulated by laws on lending activities, and has the ability to repay the principal and interest on time.

b) Credit institutions and overseas bank branches report in detail the contents they have assessed and approved for lending to the borrower: The foreign currency loan needs of the borrower to implement projects and production and business plans in priority and encouraged sectors according to Government Resolutions, Decrees, Decisions, Directives, and other documents of the Government and Prime Minister; the amount of capital approved for lending; the borrower's production and business operations, financial situation, sources of repayment, and other contents to ensure the feasibility of the project and capital usage plan, and that the borrower meets all loan conditions stipulated by laws.

c) Credit institutions and overseas bank branches report specifically on the source of foreign currency capital for lending, while committing and ensuring a balance of foreign currency capital appropriate to the term and amount of the loan; the lending activity complies with current laws on lending activities, foreign exchange management, credit limit regulations, safety ratios in banking operations of credit institutions, and other relevant laws.

d) Credit institutions and overseas bank branches commit to being responsible for the results of the assessment and decision to provide foreign currency loans to customers and the contents and information provided in the request letter.

2. Procedures and formalities for approving foreign currency loans:

a) Credit institutions and overseas bank branches directly send or mail the request for approval of foreign currency loans to the State Bank of Vietnam (Department of Monetary Policy).

b) Based on provisions in Government Resolutions, Decrees, Decisions, Directives, and other documents of the Government and Prime Minister regarding priority and encouraged sectors for production and business development, foreign exchange market trends, monetary policy objectives, provisions in this Circular, and the content of the request letter from credit institutions and overseas bank branches, the State Bank of Vietnam will consider and approve foreign currency loans provided by credit institutions and overseas bank branches.

c) Within a maximum period of 30 working days from the date of receipt of the complete request letter for approval of foreign currency loans from credit institutions and overseas bank branches as stipulated in Clause 1 of this Article, the State Bank of Vietnam will send a notification letter approving or rejecting the approval for credit institutions and overseas bank branches to provide foreign currency loans, specifying the reasons for rejection.

Article 5. Currency for Repayment of Debt

1. For foreign currency loans as prescribed in Points a, c, d of Clause 1 and Clause 2, Article 3 of this Circular where the borrower has sufficient foreign currency income to repay the loan: The borrower must repay the principal and interest of the foreign currency loan in the same foreign currency; in case of repayment in another foreign currency, it shall be carried out according to the agreement between the credit institution, overseas bank branch, and the borrower in accordance with relevant laws.

In cases where the borrower cannot repay the foreign currency loan due to objective reasons leading to delayed payment of foreign currency from production and business activities, and the borrower does not have sufficient foreign currency from production and business activities or legitimate foreign currency income to repay the loan, and this is confirmed in writing by the credit institution, overseas bank branch, then the credit institution, overseas bank branch may lend foreign currency to the borrower to repay the loan, and the borrower commits to selling the received foreign currency from production and business activities back to the credit institution, overseas bank branch.

2. For foreign currency loans as prescribed in Point b of Clause 1 and Clause 2, Article 3 of this Circular where the borrower does not have or does not have sufficient legitimate foreign currency income to repay the loan: The credit institution, overseas bank branch may lend foreign currency to the borrower to repay the principal and interest of the loan.

Article 6. Responsibilities of credit institutions and foreign bank branches

1. Credit institutions and overseas bank branches providing foreign currency loans in accordance with this Circular shall comply with provisions on lending, foreign exchange management, safety ratios in their operations, and related laws. In case of conflicting provisions between this Circular and other documents of the State Bank of Vietnam on foreign currency lending, the provisions of this Circular shall apply.

2. When implementing foreign currency lending, credit institutions and overseas bank branches must ensure a balance of foreign currency capital appropriate to the term and amount of the loan.

3. Credit institutions and overseas bank branches providing foreign currency loans must ensure a balance of legitimate foreign currency capital to sell to the borrower to repay the principal and interest of the loan when the borrower does not have or does not have sufficient legitimate foreign currency income to repay the loan as stipulated in Article 5 of this Circular.

4. Monthly, no later than the 12th day of the following month, credit institutions and overseas bank branches shall report to the State Bank of Vietnam on foreign currency lending using Form 01 and Form 02 issued together with this Circular.

Article 7. Implementation Organization

1. This Circular takes effect from January 1, 2016.

2. Repeal Circular No. 43/2014/TT-NHNN dated December 25, 2014, 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.

3. For loans that apply single-loan disbursement methods, project investment loans, syndicated loans under credit agreements signed before this Circular takes effect, credit institutions, branches of foreign banks, and borrowers shall implement the contents of the signed credit agreement in accordance with the then-effective laws at the time of signing the credit agreement or amend and supplement the credit agreement in compliance with this Circular. For loans that apply credit limit disbursement methods under credit agreements signed before this Circular takes effect, which are disbursed from the date this Circular becomes effective, credit institutions, branches of foreign banks, and borrowers shall comply with the provisions of this Circular.

4. 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 Boards of Directors, the Chairmen of the Boards of Members, and the General Managers (Directors) of credit institutions and branches of foreign banks are responsible for implementing this Circular.

TABLE 01

Name of credit institution, branch of foreign bank:...

FOREIGN CURRENCY LOAN DEBT REPORT

Month...Year...

(Annexed to 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)

Note:

1. Loan debt in Part I: (1) = (2) = (3) = (4).

2. Loan debt in Item 2e of Part I does not include loan debt for capital needs regulated in documents issued before Circular No.../2015/TT-NHNN took effect but still regulated in Clause 1, Article 3 of Circular No.../2015/TT-NHNN; these capital needs are included in Items 2a, 2b, 2c, and 2d of Part I respectively.

3. Reporting unit: Monetary Policy Department - State Bank of Vietnam, 49 Ly Thai To Street - Hoan Kiem District - Hanoi (email: [email protected], fax: 04.38240132).

4. Please clearly state the name and phone number of the person responsible for answering details of the report when requested by the State Bank of Vietnam.

TABLE 024

Name of credit institution, branch of foreign bank:...

AMOUNT OF CUSTOMER LOAN REPAYMENTS AND PROJECTED LOAN REPAYMENTS FOR THE YEAR

Month...Year...

(Annexed to Circular No. 31/2016/TT-NHNN dated November 15, 2016, 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)

Unit: billion VND

Note:

1. At the reporting month: Credit institutions report actual figures occurring before and during the reporting month and projected figures for each subsequent month.

2. Reporting unit: Monetary Policy Department - State Bank of Vietnam, 49 Ly Thai To Street - Hoan Kiem District - Hanoi (email: [email protected], fax: 04.38240132).

3. Please clearly state the name and phone number of the person responsible for answering details of the report when requested by the State Bank of Vietnam.