LEGAL UPDATE RELATING TO FINANCE AND CREDIT (MONTHLY LEGAL UPDATE – 09/2023)

 

1. LEGAL DOCUMENTS ARE EFFECTIVE FROM 01/09/2023

1.1. Circular No. 10/2023/TT-NHNN suspending the enforceable effect of a number of contents of Circular No. 39/2016/TT-NHNN dated December 30, 2016 of the Governor of the State Bank of Vietnam prescribing lending transactions of credit institutions and/or foreign bank branches with customers (supplemented in Circular No. 06/2023/TT-NHNN dated June 28, 2023 of the Governor of the State Bank of Vietnam)

v  Name of legal document: Circular No. 10/2023/TT-NHNN issued on 23/08/2023 by the State Bank of Vietnam suspending the enforceable effect of a number of contents of Circular No. 39/2016/TT-NHNN dated December 30, 2016 of the Governor of the State Bank of Vietnam prescribing lending transactions of credit institutions and/or foreign bank branches with customers (supplemented in Circular No. 06/2023/TT-NHNN dated June 28, 2023 of the Governor of the State Bank of Vietnam) (referred to as the “Circular No. 10/2023/TT-NHNN”).

v  Effective date: 01/09/2023.

The content should be noted: Suspending the enforceable effect of Clause 8, Clause 9 and Clause 10, Article 8 of Circular No. 39/2016/TT-NHNN.

Specifically, Article 1 of Circular No. 10/2023/TT-NHNN stipulates: “Article 1. Suspension of enforceable effect of Clause 8, Clause 9 and Clause 10, Article 8 of Circular No. 39/2016/TT-NHNN dated December 30, 2016 of the Governor of the State Bank of Vietnam prescribing lending transactions of credit institutions and/or foreign bank branches with customers (supplemented in Circular No. 06/2023/TT-NHNN dated June 28, 2023 of the Governor of the State Bank of Vietnam on amending and supplementing a number of articles of Circular No. 39/2016/TT-NHNN)[1] from September 1, 2023 until the effective date of the new legal document regulating about these issues.”

2. LEGAL DOCUMENTS ARE ISSUED IN 08/2023

 

2.1. Decision No. 22/2023/QĐ-TTg on credit for people who have completed their prison sentences

v  Name of legal document: Decision No. 22/2023/QĐ-TTg issued on 17/08/2023 by the Prime Minister on credit for people who have completed their prison sentences (referred to as the “Decision No. 22/2023/QĐ-TTg”).

v  Effective date: 10/10/2023.

The content should be noted:

·          Firstly, stipulating on loan objects and conditions.

Specifically, Article 3 of Decision No. 22/2023/QĐ-TTg stipulates: “Article 3. Subjects and conditions for borrowing capital

Subjects and conditions for borrowing capital include:

1. Subjects for borrowing capital

a) People who have completely served their prison sentence include people who have completely served their prison sentence and have been granted a certificate of completion of their prison sentence as prescribed in the Law on Execution of Criminal Sentences and people who have been granted special amnesty certificates as prescribed in the Law on Special Amnesty;

b) Production and business establishments include small and medium-sized enterprises, cooperatives, artels, and business households that use employees who have completed prison sentences.

2. Conditions for borrowing capital

a) People who have completely served their prison sentence: Having a need for a loan; be on the list of people who have completed their prison sentence and returned to reside in the locality, well obeyed the provisions of law, and did not participate in social evils, drawn up by the Commune Police and certified by the People’s Committe according to the Form No. 01 attached to this Decision. The maximum time from serving the prison sentence to the time of borrowing capital is 05 years;

b) Production and business establishments: Legally established and operating according to the provisions of law; Employ at least 10% of the total number of employees who have completed their prison sentences and meet the conditions stated in Point a of this Clause and sign labor contracts according to the provisions of labor law; have a loan plan and have it certified by the Commune People’s Committee where the plan is implemented according to Form No. 02 attached to this Decision.

3. People who have completed their prison sentences and production and business establishments specified in Clauses 1 and 2 of this Article must have no outstanding debt at the Bank for Social Policies for other credit programs with for the same purpose of using loan capital for vocational training, production, business, and job creation in accordance with the law.”

·          Secondly, stipulating on loan capital amount.

Specifically, Article 6 of Decision No. 22/2023/QĐ-TTg stipulates: “Article 6. Loan capital amount

1. For loans for vocational training

The maximum loan capital is 04 million VND/month/person who has completed their prison sentence.

2. For loans for production, business, and job creation

a) People who have completed their prison sentence: The maximum loan capital is 100 million VND/person who has completed their prison sentence;

b) Production and business establishments: Maximum loan capital is 02 billion VND/project and not more than 100 million VND/employee at the production and business establishment.”

---

[1] Article 8 of Circular No. 39/2016/TT-NHNN supplemented in Circular No. 06/2023/TT-NHNN: “Article 1. Amending and supplementing a number of articles of Circular No. 39/2016/TT-NHNN

...

2. To amend and supplement Article 8 as follows:

“Article 8: Rejected loan demands

Credit institutions shall not be allowed to approve the following loan demands:

1. Loans used for doing business or investing in sectors or activities prohibited by the Investment Law.

2. Loans used for paying expenses or meeting financial demands of business or investment in sectors or activities prohibited by the Investment Law and other transactions or activities prohibited by laws.

3. Loans used for purchasing or using goods or services in the list of prohibited sectors and activities under the Investment Law.

4. Loans used for buying gold bullion.

5. Loans used for repaying loan debts owed to lending credit institutions, except those used for paying loan interests arising during the construction process which are accounted for in the total construction cost estimate approved by a competent authority in accordance with regulations of law.

6. Loans used for repaying foreign loan debts (excluding foreign loans granted in the form of deferred payment for purchased goods) or repaying loan debts owed to other credit institutions, except for a loan used for making early repayment of an existing loan that meets the following conditions: a) The term of the new loan does not exceed the remaining term of the old one; b) The old loan has not yet undergone any debt rescheduling.

7. Loans used for sending money to deposit accounts.

8. Loans used for making capital contribution to, buying or receiving transfer of stakes of a limited liability company or a partnership, or shares of a joint-stock company that is not yet listed on the securities market or registered for trading on the Upcom system.

9. Loans used for making capital contributions under capital contribution contracts, investment cooperation contracts or business cooperation contracts for executing investment projects that are unfit for sale or for business operation as prescribed by laws when the credit institution issues its lending decision.

10. Loans used for financial offsetting purposes, except for those meeting the following conditions: a) The customer has used their own funds for paying costs incurred from their business project for a period of less than 12 months by the time of grant of lending decision by the credit institution; b) Costs paid using the customer’s funds for executing a business project are costs to be covered using the fund borrowed from the credit institution under the plan to use borrowed fund submitted to the credit institution when applying for a medium-term or long-term loan for executing that business project.”."