LEGAL UPDATE RELATING TO FINANCE AND CREDIT (MONTHLY LEGAL UPDATE – 04/2023)
1. LEGAL DOCUMENTS ARE EFFECTIVE FROM 01/04/2023
1.1. 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.”
v Name of
legal document: Decision No. 574/QĐ-NHNN issued on 31/03/2023 by the State Bank of Vietnam
refinancing interest rate, re-discount interest rate, interest rate on
overnight loans in interbank electronic payment and loans for making up fund
deficits in clearing payment given by the State bank of Vietnam to credit
institutions and foreign bank branches (referred to as the “Decision No. 574/QĐ-NHNN”).
v
Effective date: 04/03/2023.
The content should be noted: The
interest rates are adopted by the State Bank of Vietnam.
Specifically, Article 1 of
Decision No. 574/QĐ-NHNN stipulates: “Article 1. The following
interest rates are adopted by the State Bank of Vietnam, including:
1. Refinancing interest rate:
5,5%/year.
2. Re-discount interest rate:
3,5%/year.
3. Interest rate on overnight
loans in interbank electronic payment and loans for making up fund deficits in
clearing payment given by the State Bank of Vietnam to credit Institutions and
foreign bank branches: 6,0%/year.”
v Name of
legal document: Decision No. 575/QĐ-NHNN issued on 31/03/2023 by the State Bank of Vietnam maximum interest rates of deposits in Vietnamese
dong of organizations and individuals at credit institutions and foreign bank
branches according to Circular No. 07/2014/TT-NHNN dated March 17, 2014 (referred to as the
“Decision No. 575/QĐ-NHNN”).
v
Effective date: 04/03/2023.
The content should be noted: Maximum
interest rates of deposits in Vietnamese Dong (VND) of organizations (except
credit institutions and foreign bank branches) and individuals at credit
institutions and foreign bank branches according to Circular No. 07/2014/TT-NHNN.
Specifically, Article 1 of
Decision No. 575/QĐ-NHNN stipulates: “Article 1. Maximum
interest rates of deposits in Vietnamese Dong (VND) of organizations (except
credit institutions and foreign bank branches) and individuals at credit
institutions and foreign bank branches according to Circular No. 07/2014/TT-NHNN dated
March 17, 2014 are as follows:
1. The maximum interest rate
of demand deposits and deposits with a term less than 1 month is 0,5%/year.
2. The maximum interest rate
of deposits with a term from 1 month to less than 6 months is 5,5%/year.
Particularly, people’s credit funds and microfinance institutions shall apply
the maximum interest rate of 6,0%/year with respect to deposits with a term
from 1 month to less than 6 months.”
v Name of
legal document: Decision No. 576/QĐ-NHNN issued on 31/03/2023 by the State Bank of Vietnam prescribing maximum interest rates of short-term
loans in Vietnamese dong granted by credit institutions and foreign bank
branches to meet borrowers' funding demand in certain business sectors
according to Circular No. 39/2016/TT-NHNN dated December 30, 2016 (referred to as the
“Decision No. 576/QĐ-NHNN”).
v
Effective date: 04/03/2023.
The content should be noted: Maximum
interest rates of short-term loans in Vietnamese Dong (VND) according to Clause
2 Article 13 of the Circular No. 39/2016/TT-NHNN.
Specifically, Article 1 of
Decision No. 576/QĐ-NHNN stipulates: “Article 1. Maximum interest rates
of short-term loans in Vietnamese Dong (VND) according to Clause 2 Article 13
of the Circular No. 39/2016/TT-NHNN dated December 30, 2016 are as
follows:
1. Credit institutions and
foreign bank branches (except people’s credit funds and microfinance
institutions) shall grant short-term loans in VND with the maximum interest
rate of 4,5%/year.
2. People’s credit funds and
microfinance institutions shall grant short-term loans in VND with the maximum
interest rate of 5,5%/year.”
v Name of
legal document: Circular No. 02/2023/TT-NHNN issued
on 23/04/2023 by the State Bank of Vietnam providing instructions for credit
institutions and foreign branch banks on debt rescheduling and retention of
debt category to assist borrowers in difficulties (referred to as the “Circular
No. 02/2023/TT-NHNN”).
v
Effective date: 24/04/2023.
The content should be noted:
·
Firstly, stipulating
on debt rescheduling.
Specifically, Article 4 of
Circular No. 02/2023/TT-NHNN stipulates: “Article 4. Debt rescheduling
A credit institution or foreign
branch banks may consider rescheduling outstanding debt, including the
principal and/or interest (including the debts regulated by the Government’s
Decree No. 55/2015/ND-CP dated June 09, 2015 on credit policies
serving development of agriculture and rural areas (with amendments)) on the
basis of borrowers’ requests, its financial capacity and compliance with the
following regulations:
1. The outstanding debt is
principal of a loan or finance lease granted before the effective date of this
Circular, and from lending and finance lease.
2. The principal and/or
interest have to be paid within the period from the effective date of this
Circular to June 30, 2024 inclusive.
3. The outstanding debt to be
rescheduled is undue or up to 10 (ten) days overdue according to the
loan/finance lease agreement.
4. The credit institution or foreign
branch banks determines that the borrower is unable to repay the principal
and/or interest on schedule under the signed agreement due to decrease in
revenue or income compared to that specified in the principal and/or interest
repayment plan under the signed agreement.
5. The credit institution or foreign
branch banks determines that the borrower is able to fully repay the principal
and/or interest after the debt is rescheduled.
6. Debts that violate
regulations of law shall not be rescheduled.
7. Rescheduling time
(including repayment deadline extension) shall vary according to the degree of
difficulty facing the borrower and shall not exceed 12 months from the due date
of the outstanding debt to be rescheduled.
8. Debt rescheduling under
regulations of this Circular shall be carried out from the effective date of
this Circular to June 30, 2024 inclusive.”
·
Secondly, stipulating
on retention of debt category and debt classification.
Specifically, Article 5 of
Circular No. 02/2023/TT-NHNN stipulates: “Article 5. Retention of debt
category and debt classification
1. Credit institutions and Foreign
branch banks may retain the debt categories with respect to the debt whose
principal and/or interest has been rescheduled (hereinafter referred to as
“rescheduled debt”) under regulations of this Circular in the same manner as
the debt categories that have been assigned in accordance with SBV Governor’s
regulations on classification of assets, rates and methods of making loan loss
provision and use of loan loss provision for handling of risks arising from
operations of credit institutions and Foreign branch banks at the nearest time
before prior to the debt rescheduling according to regulation of this Circular.
2. After debt rescheduling and
retention of debt categories are carried out as prescribed in clause 1 of this
Article within the time limit for rescheduling, credit institutions and Foreign
branch banks are not required to put these debts into a higher-risk category
according to SBV Governor’s regulations on classification of assets, rates and
methods of making loan loss provision and use of loan loss provision for
handling of risks arising from operations of credit institutions and Foreign
branch banks.
3. If the outstanding debts
after rescheduling and retention of debt categories prescribed in clause 1 of
this Article are not granted another debt rescheduling by the credit
institution or foreign branch banks according to regulations of this circular,
the credit institution or foreign branch banks shall carry out debt
classification in accordance with SBV Governor’s regulations on classification
of assets, rates and methods of making loan loss provision and use of loan loss
provision for handling of risks arising from operations of credit institutions
and Foreign branch banks.
4. From the rescheduling date,
credit institutions and foreign branch banks shall not record the interests on
the outstanding debts that are rescheduled and debts that remain current
non-performing loans (Category 1) as prescribed in this Circular as revenue
(estimated). Instead, they shall be monitored off-balance sheet and recorded as
revenue when they are collected in accordance with regulations of law on
financial regimes applicable to credit institutions and foreign branch banks.”
v Name of
legal document: Circular No. 03/2023/TT-NHNN issued
on 23/04/2023 by the State Bank of Vietnam providing on ceasing the
implementation effective of Clause 11 Article 4 Circular No. 16/2021/TT-NHNN
date November 10, 2021 of the Governer of the State bank of Vietnam on
corporate bond trading of credit institutions and branches of foreign banks (referred
to as the “Circular No. 02/2023/TT-NHNN”).
v
Effective date: 24/04/2023.
The content should be noted: Stipualting
on cessation of effect from April 24, 2023 to the end of December 31, 2023 for
the provisions of Clause 11 Article 4 of Circular No. 16/2021/TT-NHNN.
Specifically, Article 1 of
Circular No. 03/2023/TT-NHNN
stipulates: “Article 1. Cessation of effect from April 24, 2023 to
the end of December 31, 2023 for the provisions of Clause 11 Article 4 of
Circular No. 16/2021/TT-NHNN.
During the cessation period
of Clause 11 Article 4 of Circular No. 16/2021/TT-NHNN as prescribed in this
Article, credit institutions, foreign bank branches (hereinafter referred to as
credit institutions) may redeem corporate bonds that have not been listed on
the stock market or have not been registered for trading on the Upcom trading
system (hereinafter referred to as unlisted corporate bonds) that have been
sold by a credit institution and/or Unlisted corporate bonds may be issued in
the same lot/phrase as unlisted corporate bonds sold by a credit institution
when:
a) Satisfy the provisions of
Article 4 of Circular No. 16/2021/TT-NHNN;
b) The buyer of this
corporate bond from a credit institution shall pay the entire amount of the
purchase of corporate bonds at the time the credit institution signs a contract
to sell corporate bonds to the bond buyer;
c) The bond issuer is rated
at the highest level according to the credit institution’s internal credit
rating regulations at the latest time before the credit institution purchases
corporate bonds.”
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;
2.1. 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.”
2.2. 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.”
