LEGAL UPDATE RELATING TO FINANCE AND CREDIT (MONTHLY LEGAL UPDATE – 12/2022&01/2023)
1. LEGAL DOCUMENTS ARE EFFECTIVE FROM 01/12/2022
1.1. Decision No. 2081/QD-NHNN prescribing interest rates imposed by commercial banks in 2023 on outstanding debts of concessional housing loans granted under Circular No. 11/2013/TT-NHNN dated May 15, 2013, Circular No. 32/2014/TT-NHNN dated November 18, 2014 and Circular No. 25/2016/TT-NHNN dated July 29, 2016
The content should be noted: Stipulating on the interest rate
imposed by commercial banks in 2023 on outstanding debts of concessional
housing loans.
Specifically, Article 1 of Circular No. 2081/QD-NHNN
stipulates: “Article 1. The interest rate imposed
by commercial banks in 2023 on outstanding debts of concessional housing loans
granted under the Circular No. 11/2013/TT-NHNN dated
May 15, 2013, the Circular No. 32/2014/TT-NHNN dated November 18, 2014 and the
Circular No. 25/2016/TT-NHNN dated July 29, 2016 is 5,0%/year.”
v Name of legal document: Circular No. 18/2022/TT-NHNN issued on 26/12/2022 by the State Bank of Vietnam amending and supplementing a number of articles of the Circular No. 09/2015/TT-NHNN dated July 17, 2015 of the Governor of the State Bank of Vietnam prescribing debt purchase and sale by credit institutions and foreign bank branches (referred to as the “Circular No. 18/2022/TT-NHNN”).
v Effective date: 09/02/2023.
The content should be noted: Amending
and supplementing regulations on principles of debt purchase and sale
Specifically, Clause 3 of Article
1 of Circular No. 18/2022/TT-NHNN stipulates: “Article 1. amending
and supplementing a number of articles of the Circular No. 09/2015/TT-NHNN
dated July 17, 2015 of the Governor of the State Bank of Vietnam prescribing debt purchase and sale by
credit institutions and foreign bank branches
...
3. Amending Clauses 3, 4, 6,
and 7 and suplementing Clauses 11, 12, Article 5 as follows:
“3. Credit institutions and
foreign bank branches that are considered and approved by the State Bank for
debt purchase activity must have a bad debt ratio of less than 3% according to
the latest classification period according to the State Bank’s regulations on
classification of assets, level of deduction, method of setting up risk
provisions and use of provisions to deal with risks in the operation of credit
institutions, foreign bank branches before the time of requesting for
requesting for approval of debt purchase activity, except for credit
institutions under special control. Credit institutions and foreign bank
branches that sell debts are not required to obtain permission from the State
Bank.
Credit institutions, foreign
bank branches may purchase debt only when they are approved by the State Bank
for debt purchase activities in the establishment and operation license of the
credit institution, the establishment license of the bank branch (hereinafter
referred to as the License) and has a bad debt ratio of less than 3% according
to the latest classification period according to the State Bank’s regulations
on classification of assets, level of deduction, method of setting up risk
provisions and the use of provisions to deal with risks in the operation of
credit institutions, foreign bank branches before the time of signing debt purchase
contracts, except for the cases specified in Clause 12 of this Article.
4. Before performing debt
purchase and sale as prescribed in Clause 3 of this Article, credit
institutions and foreign bank branches must issue internal regulations on debt
purchase and sale activities (in which, clearly define the decentralization of
authority according to the principle of division of responsibilities between
the appraisal stage and the decision to purchase and sell debt; method of
purchase and sell debt, method of payment; debt purchase and sale process; debt
valuation process and methods; risk management process for debt purchase and
sell activities).”
“6. Repurchase of sold debt
of a credit institution:
a) The debt seller does not
repurchase the sold debt, except in the following cases:
(i) The credit institution
repurchases the sold debt to the specially controlled credit institution as
prescribed at Point a, Clause 12 of this Article;
(ii) The credit institution
shall assist in the redemption of debts sold to the specially controlled credit
institution according to the approved plan for the rehabilitation of the
specially controlled credit institution as prescribed in Clause 6 of this
Article148dd of Law on Credit Institutions;
(iii) The credit institution
receiving the compulsory transfer repurchases the debt that has been sold to
the commercial bank subject to the compulsory transfer under the provisions of
Point c, Clause 12 of this Article.
b) The credit institution
shall repurchase the sold debt specified at Points a(ii), a(iii) of this Clause
according to the contents of its commitment to repurchase the debt in the
restructuring plan approved by the competent authority in the following cases:
(i) The repurchased debt is
being used by a specially controlled credit institution as security for a
special loan at the State Bank but is no longer classified as a qualified debt
under the provisions of the State Bank and sell replacement with other
qualified debt.
(ii) When the special loan is
due, the specially controlled credit institution has not yet had enough money
to repay the special loan to the State Bank according to the special loan
repayment plan.
7. A credit institution is
not allowed to sell debt to its own subsidiary, except in the following cases:
a) Selling debt to a debt
management and asset exploitation company according to the restructuring plan
approved by a competent authority;
b) The credit institution
that is the compulsory transferee sells the qualified debt to the commercial
bank subject to the compulsory transfer according to the approved compulsory
transfer plan.”
“11. Credit institutions,
foreign bank branches are not allowed to grant credit to customers to purchase
debt owned by that credit institution or foreign bank branch.
12. Credit institutions are
not required to have a bad debt ratio of less than 3% when purchasing debt in
the following cases:
a) A specially controlled
credit institution shall purchase qualified debt as prescribed in Clause 2,
Article 146a of the Law on Credit Institutions;
b) The specially controlled
credit institution shall purchase qualified debt from the supporting credit
institution according to the approved plan for rehabilitation of the specially
controlled credit institution as prescribed in Clause 1 of this Article 148b of
Law on Credit Institutions;
c) The transferred commercial
bank purchases qualified debt from the credit institution receiving the
compulsory transfer according to the compulsory transfer plan already approved
by the competent authority;
d) Cases of debt purchase
specified at Points a(ii), a(iii) Clause 6 of this Article.””
v Name of
legal document: Circular No. 11/2022/TT-NHNN issued
on 30/09/2022 by the State Bank of Vietnam regulating on bank guarantee (referred
to as the “Circular No. 11/2022/TT-NHNN”).
v
Effective date: 01/04/2023.
The content should be noted:
·
Firstly, stipulating
on cases of non-guarantee, guarantee restriction and implementation of credit
limit
Specifically, Article 5 of
Circular No. 11/2022/TT-NHNN stipulates: “Article 5. Cases of
non-guarantee, guarantee restriction and implementation of credit limit
When making guarantees,
credit institutions and foreign bank branches must comply with the provisions
of the Law on Credit Institutions and the guidance of the State Bank of Vietnam
(hereinafter referred to as the State Bank) about the cases of not being
granted credit, restrict credit granting, limiting credit granting.”
·
Secondly, stipulating
on requirements for customers.
Specifically, Article 11 of
Circular No. 11/2022/TT-NHNN stipulates: “Article 11. Requirements for
customers
1. Credit institutions,
foreign bank branches shall consider and decide to grant guarantees, reciprocal
guarantees, and confirm guarantees for customers when customers satisfy the
following requirements:
a) Having full civil legal
capacity and civil act capacity as prescribed by law;
b) The guaranteed obligation
is a lawful financial obligation;
c) Being assessed by the
credit institution, foreign bank's branch with guarantee to be able to repay
the amount that the credit institution or foreign bank branch has to pay on
behalf of when performing the guarantee obligation.
2. Credit institutions,
foreign bank branches are not allowed to guarantee for the bond payment
obligations of the issuing enterprises for the purposes of: restructuring the
debts of the issuing enterprises themselves; contribute capital, buy shares in
other enterprises and increase the scale of operating capital.”
v Name of
legal document: Circular No. 17/2022/TT-NHNN issued
on 23/12/2022 by the State Bank of Vietnam providing guidelines on
environmental risk management in credit extension by credit institutions and
foreign bank branches (referred to as the “Circular No. 17/2022/TT-NHNN”).
v
Effective date: 01/06/2023.
The content should be noted: Internal
regulations on environmental risk management in extending credit.
Specifically, Article 6 of
Circular No. 17/2022/TT-NHNN stipulates: “Article 6. Internal regulations
on environmental risk management in extending credit
1. Each credit institution
shall formulate its own internal regulations on environmental risk management
in extending credit which may be separated from or included in its internal
regulations on credit extension and internal control, and must be conformable
with regulations of law on credit extension and credit risk management.
2. Internal regulations on
environmental risk management in extending credit of a credit institution
shall, inter alia, have the following contents:
a) Identification and
classification of applications for credit extension which require environmental
risk assessment in extending credit;
b) Information to be
collected to serve the environmental risk management in extending credit;
c) Environmental risk assessment
in extending credit that is carried out in conformity with the provisions of
this Circular;
d) Environmental risk
management in extending credit during the consideration, appraisal, approval
and management of credit amounts extended;
