Circular No. 13/2016/TT-NHNN dated June 30, 2016 of the State Bank of Vietnam amending certain articles of Circular No. 45/2011/TT-NHNN dated 30 December 2011 by the Governor of the State Bank on the management of foreign exchange with regard to credit institutions’ foreign loans and collection of debts thereof

THE STATE BANK OF VIETNAM

CircularNo. 13/2016/TT-NHNN dated June 30, 2016 of the State Bank of Vietnam amending certain articles of Circular No. 45/2011/TT-NHNN dated 30 December 2011 by the Governor of the State Bank on the management of foreign exchange with regard to credit institutions’ foreign loans and collection of debts thereof

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

Pursuant to the Law of Credit Institutions No. 47/2010/QH12 dated June 16, 2010;

Pursuant to the Foreign Exchange Ordinance No. 28/2005/PL-UBTVQH11 dated December 13, 2015 by the Standing Committee of the National Assembly and the Ordinance No. 06/2013/PL-UBTVQH13 dated March 18, 2013 on amendments to the Foreign Exchange Ordinance;

Pursuant to the Government’s Decree No. 156/2013/ND-CP dated November 11, 2013 defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;

At the request of the Head of the Foreign Exchange Management Department;

Governor of The State Bank of Vietnam promulgates the Circular on amendments to certain articles of the Circular No. 45/2011/TT-NHNN dated December 30, 2011 by the Governor of the State Bank on the management of foreign exchange with regard to credit institutions’ foreign loans and collection of debts thereof (hereinafter referred to as the Circular No. 45/2011/TT-NHNN).

Article 1. Amendments to certain articles of the Circular No. 45/2011/TT-NHNN

1.Section 1 of Article 2 is amended as follows:

“1. Foreign loan refers to the granting of credit by a credit institution that gives or undertakes to give a sum of money to a non-resident customer (referred to as the foreign borrower) for a certain purpose in a certain period of time under an agreement that regulates the repayment of the principal and interest."

2.Section 7 of Article 2 is amended as follows:

“7. The account for transaction of foreign loans and collection of debts thereof is a checking account that a credit institution making foreign loans utilizes to transact foreign loans.”

3.Section 8 is added to Article 2 as follows:

“8. The banks providing account services are commercial banks and foreign banks’ branches operating in Vietnam. In such bank(s), the credit institution making the foreign loan opens a checking account to disburse money, to collect debts thereof and to transact other money transfers in relation to granting of foreign loans and collection of debts thereof."

4.Section 5 is added to Article 3:

"5. To formulate plans for mobilizing deposits and making loans in foreign currencies pertinent to the structure of currency, structure of durations of deposits and loans, avoidance of duration-originated risks and liquidity risk that may derive from foreign loans."

5. Article 5 and Section 1 of Article 5 are amended as follows:

“Article 5. Currency of foreign loans and debts collected

1.Credit institutions shall make foreign loans and collect debts thereof in foreign currencies. The currency of debts collected shall be that of the loan disbursed. The collection of debts in a foreign currency other than that of the amounts disbursed shall be subject to any negotiation between the credit institution making the loan and the foreign borrower.”

6.Section 1 and Section 2 of Article 9 are amended as follows:

“1. Credit institutions shall register their loans with the State Bank in 30 (thirty) days upon the former’s signing of a loan agreement (if the loan is not guaranteed) or in 30 (thirty) days upon the guarantor’s signing of the guarantee document.

2.If a revision is made to any details of a foreign loan in the State Bank’s certificate of registration or certificate of amendment of that foreign loan, the credit institution making the foreign loan shall be responsible for registering such revision:

a) In 30 (thirty) days from the date that the agreement on such revision is signed; or,

b) In 30 (thirty) days upon the guarantor’s signing of a written consent to the revision to the loan agreement (if the loan is guaranteed); or,

c) Prior to the adoption of the revision if a written agreement on such revision is not required."

7.Article 10 is amended as follows:

“Article 10. Documents for registration of foreign loans

The credit institution shall send 01 (one) application of registration of foreign loan to the State Bank by hand or by post. The application includes:

1.The filled-out form of application for registration of foreign loan (as per Annex 01 of the Circular).

2.The report on the effects of the foreign loan on the compliance with regulations on capital adequacy ratio, limit of credit granted to a customer (i.e. foreign borrower) and related individuals, maximum ratio of short-term funds used to make medium-term and long-term loans, ratio of outstanding debts to total deposits, solvency ratio and foreign currency positions of the credit institution making the foreign loan.

3.The assessment report on the foreign loan, primarily including: the feasibility and outcomes of investment projects and business plans of the foreign borrowers; relevant risks, probability of punctual recovery of full principle and interest; suitability of the value of the loan for the scale of the project funded by the loan; loan guarantee and other relevant details.

4.The report on foreign currency funds for lending, which manifests the capacity and structure of currency, the structure of durations of funds mobilized and loans made in foreign currency upon the signing of the loan agreement.

5.The copy and Vietnamese translation of the incorporation paper or investment certificate of the foreign borrower according to regulations of its home country.

6.The copy of the certificate of outward investment registration of the Vietnamese investor that holds investment(s) in and engages directly in managing investments activities in the foreign borrower.

7.The copy and Vietnamese translation (endorsed by a competent representative of the credit institution) of the signed loan agreement.

8.The copy and Vietnamese translation (endorsed by a competent representative of the credit institution) of any documents and written agreement(s) on the security or guarantee of the foreign loan.”

8.Section 3 of Article 11 is amended as follows:

“3. The report on the effects of the foreign loan on the compliance with regulations on capital adequacy ratio, limit of credit granted to a customer (i.e. foreign borrower) and related individuals, maximum ratio of short-term funds used to make medium-term and long-term loans, ratio of outstanding debts to total deposits, solvency ratio and foreign currency positions of the credit institution making the foreign loan (if the quota or duration of the foreign loan is increased).”

9.Section 5 is added to Article 12:

"5. The credit institution s abidance by limits and ratios that secure its activities when making a foreign loan, as follows: capital adequacy ratio, limit of credit granted to a customer (i.e. foreign borrower) and related individuals, maximum ratio of short-term funds used to make medium-term and long-term loans, ratio of outstanding debts to total deposits, solvency ratio, and maximum foreign currency position in comparison with self-financed capital.”

10.Article 14 is amended as follows:

“Article 14. Accounts for transaction of foreign loans and collection of debts thereof

1.Commercial banks making foreign loans shall be responsible for monitoring transactions related to their foreign loans as per current regulations on recording and accounting activities of a commercial bank. Moreover, they shall be held responsible for executing and undertaking to execute foreign loan transactions as per the State Bank’s certificate of registration or of amendment of such credit institutions’ foreign loans.

2. Credit institutions, that are not commercial banks, shall be responsible for opening account(s) for transaction of foreign loans they make and collection of debts thereof in 01 (one) bank that provides account services in order to disburse the loan and collect the debt thereof (i.e. principal, interest, fees, etc.).

Banks providing account services shall be responsible for examining and collating documents given by the credit institution making foreign loans in order to transact the foreign loans according to the State Bank’s certificate of registration or of amendment and as per the laws.

3.A credit institution s using its overseas foreign currency account to make a foreign loan shall abide by current regulations on credit institutions’ opening and use of foreign currency account in a foreign country."

11.Article 15 is amended as follows:

“Article 15. Reporting

The credit institution making a foreign loan and the bank providing account services shall comply with the reporting scheme as defined by the State Bank with regard to summarizing and reporting regulations for credit institutions and foreign banks’ branches.”

12.Point a, Section 2 of Article 16 is amended as follows:

a) In 7 (seven) working days upon a request by the Foreign Exchange Management Department for counsels on a foreign loan, the agency for inspection and supervision of banks shall give a written response to Foreign Exchange Management Department with regard to the foreign loan of the credit institution. Such written respond shall verify scale of the credit institution’s business activities and foreign exchange services, its conformity to current regulations of the State Bank on safety limits and ratios as defined in Section 4, Article 12 of this Circular at the end of the month prior to its signing of the loan agreement or an agreement on revision to the quota or duration of the foreign loan."

Article 2.Article 7 of the Circular No. 45/2011/TT-NHNN is abrogated.

Article 3. Implementation provisions

1.This Circular takes effect on June 30, 2016.

2.Upon the effect of this Circular, Article 8 of the Circular No. 29/2015/TT-NHNN dated December 22, 2015 by the Governor of the State Bank of Vietnam amending certain legislative documents that the State Bank of Vietnam has promulgated on documents requiring certified copies shall lose effect.

3.Office Manager and Head of the Foreign Exchange Management Department, Heads of units under the State Bank of Vietnam, Directors of the State Bank’s provincial branches, Chairpersons of Boards of Directors, Chairpersons of Member Councils, General Directors (Directors) of credit institutions and foreign banks’ branches are responsible for implementing this Circular.

For the Governor

The Deputy Governor

Nguyen Thi Hong