LEGAL UPDATE RELATING TO FINANCE AND CREDIT (MONTHLY LEGAL UPDATE – 02&03/2023)
1.
LEGAL DOCUMENTS ARE EFFECTIVE FROM 01/02/2023
1.1.
Circular No. 18/2022/TT-NHNN 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
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.””
1.2.
Circular No. 20/2022/TT-NHNN on guidelines for one-way money transfer from Vietnam to
abroad and payment, money transfer for other current transactions of residents
being organizations and individuals
v Name of
legal document: Circular No. 20/2022/TT-NHNN issued on 30/12/2022 by the State
Bank of Vietnam on guidelines for one-way money transfer from Vietnam to abroad
and payment, money transfer for other current transactions of residents being
organizations and individuals (referred to as the “Circular No. 20/2022/TT-NHNN”).
v
Effective date: 15/02/2023.
The content should be noted: Stipulating
on cases of purchase, transfer and carrying of foreign
currency abroad for one-way money transfer purposes of organizations.
Specifically, Article 4 of
Circular No. 20/2022/TT-NHNN stipulates: “Article 4. Cases of
purchase, transfer and carrying of foreign currency abroad for one-way money
transfer purposes of organizations
1. Cases of purchase,
transfer and carrying of foreign currency abroad to serve the organization's
sponsorship and aid purposes:
a) Purchase, transfer,
carrying of foreign currency abroad for sponsorship and aid according to
commitments and agreements between the State, Government, local authorities and
foreign countries. Sponsorship and aid sources are funds from the budget or the
money source of the funding body itself;
b) Purchase and transfer of
foreign currency abroad to provide finance and aids in mitigating the impacts
of natural disasters, epidemics and wars. Sources of sponsorship and aids are
voluntary contributions from domestic organizations and individuals and/or
funds from the funding body itself;
c) Purchase and transfer of
foreign currency abroad to finance programs, funds and projects established by
domestic and/or overseas organizations for the purpose of supporting and
encouraging development in the fields of: culture, education (scholarship
funding), health. Sources of sponsorship is the funding source of the funding
body itself.
2. Cases of purchase and
transfer of money abroad by an organization to serve other purposes:
a) Award prize money to
non-residents being overseas organizations and individuals participating in
programs and contests held in Vietnam in accordance with relevant laws. The
source of prize money is from non-residents being overseas organizations or
individuals or residents being organizations;
b) One-way money transfer
abroad for the following purposes from sponsorship sources received by
non-residents being overseas organizations and individuals:
(i) Allocate funding to
overseas members to participate in scientific research projects in Vietnam and
abroad;
(ii) Refund sponsorships for
projects in Vietnam according to commitments and agreements with foreign
parties.”
1.3.
Decision No. 181/QD-NHNN on the
announcement of periodical reports stipulated in Circular no. 20/2022/TT-NHNN
date 30/12/2022 of the State bank of Vietnam
v Name of
legal document: Decision No. 181/QD-NHNN issued on 10/02/2023 by the State Bank of Vietnam on
the announcement of periodical reports stipulated in Circular no.
20/2022/TT-NHNN date 30/12/2022 of the State bank of Vietnam (referred to as
the “Decision No. 181/QD-NHNN”).
v
Effective date: 15/02/2023.
The content should be noted: Stipulating on the report on the situation of buying, transferring and
bringing foreign currency abroad by residents being organizations for the
purpose of sponsoring or giving aid abroad.
Specifically, Section
1 List of Periodical reporting regimes within the scope of management functions
of the State Bank of Vietnam specified in Circular No. 20/2022/TT-NHNN
promulgated together with Decision No. 181/QD-NHNN regulates:
No. |
Name
of report |
Frequency to perform |
The subject of perform the report |
The agency receiving the report |
Data closing time |
Deadline for submission of reports |
Method of sending and receiving |
Report form |
1 |
Report on the situation of
buying, transferring and bringing foreign currency abroad by residents being
organizations for the purpose of sponsoring or giving aid abroad |
Monthly |
Banks and foreign
bank branches are allowed to do business and provide foreign exchange
services |
State Bank of
Vietnam (Foreign Exchange Management Department) |
The closing time
for reporting data is calculated from the 15th of the previous month to the
14th of the reporting month |
No later than the
20th of the reporting month |
The report is sent
by email to the email address baocaongoaite@sbv.gov.vn of the State Bank of
Vietnam. |
Attached
Appendix |
”
1.4.
Decision No. 313/QD-NHNN pertaining to
refinancing interest rate, rediscounting interest rate, and interest rate of
overnight lending for interbanking electronic payments and loans compensating
for shortage of funds used for the State Bank of Vietnam’s settlement
transactions with credit institutions and foreign bank branches
v Name of
legal document: Decision No. 313/QD-NHNN issued on 14/03/2023 by the State Bank of Vietnam pertaining
to refinancing interest rate, rediscounting interest rate, and interest rate of
overnight lending for interbanking electronic payments and loans compensating
for shortage of funds used for the State Bank of Vietnam’s settlement
transactions with credit institutions and foreign bank branches (referred to as
the “Decision No. 313/QD-NHNN”).
v
Effective date: 15/03/2023.
The content should be noted: Stipulating on the State Bank of Vietnam’s interest rates.
Specifically, Article 1 of Circular
No. 313/QD-NHNN stipulates: “Article 1. Regulations on SBV’s
interest rates, including:
1. Refinancing interest rate:
6.0%/year.
2. Rediscounting interest rate:
3.5%/year.
3. Interest rate of overnight
lending for interbanking electronic payments and loans compensating for
shortage of funds used for SBV'S settlement transactions with credit
institutions and foreign bank branches: 6.0%/year.”
1.5.
Decision No. 314/QD-NHNN pertaining to
maximum short-term lending interest rates in Vietnam Dong of credit institutions
and foreign bank branches applied to loan borrowers to meet capital demands for
certain sectors and industries as per Circular No. 39/2016/tt-nhnn dated
december 30, 2016
v Name of
legal document: Decision No. 314/QD-NHNN issued on 14/03/2023 by the State Bank of Vietnam pertaining
to maximum short-term lending interest rates in Vietnam Dong of credit
institutions and foreign bank branches applied to loan borrowers to meet
capital demands for certain sectors and industries as per Circular No. 39/2016/tt-nhnn dated december 30, 2016 (referred to as the “Decision
No. 314/QD-NHNN”).
v
Effective date: 15/03/2023.
The content should be noted:
Stipulating on the maximum interest rates applied to Vietnamese-dong short-term
loans according to clause 2 of Article 13 in the Circular
No. 39/2016/TT-NHNN.
Specifically, Article 1 of Circular
No. 314/QD-NHNN stipulates: “Article 1. Maximum interest rates
applied to Vietnamese-dong short-term loans according to clause 2 of Article 13
in the Circular No. 39/2016/TT-NHNN dated December 30, 2016 shall be
as follows:
1. Credit institutions and
foreign bank branches (except people’s credit funds and microfinance
institutions) will apply the maximum interest rate of 5.0%/year to
Vietnamese-dong short-term loans.
2. People’s credit funds and
microfinance institutions will apply the maximum interest rate of 6.o%/year to
Vietnamese-dong short-term loans.”
1.6.
Circular No. 11/2022/TT-NHNN regulating
on bank guarantee
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.”
1.7.
Circular No. 17/2022/TT-NHNN providing
guidelines on environmental risk management in credit extension by credit
institutions and foreign bank branches
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;
dd) Internal reporting on environmental risk management in extending credit.”