Circular No. 18/2019/TT-NHNN dated November 04, 2019 of the State Bank of Vietnam on amending, supplementing some Articles of the Circular No. 43/2016/TT-NHNN dated December 30, 2016 of the Governor of the State Bank of Vietnam, stipulating the financial companies’ consumer loans

CIRCULAR

On amending, supplementing some Articles of the Circular No. 43/2016/TT-NHNN dated December 30, 2016 of the Governor of the State Bank of Vietnam, stipulating the financial companies’ consumer loans

Pursuant to the Law on the State Bank of VietnamdatedJune 16, 2010;

Pursuant to the Law on Credit InstitutionsdatedJune 16, 2010;

Pursuant to the Law amending and supplementing a number ofArticles of the Law onCreditInstitutions dated November 20, 2017;

Pursuant to the Government’s Decree No.16/2017/ND-CP dated February 17, 2017 defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;

Pursuant to the Government’s Decree No.39/2014/ND-CP dated May07, 2014 on the operation of financial company and financial leasing company;

Pursuant to the Government’s Decree No.16/2019/ND-CP of February01, 2019 on amending and supplementing Decrees on business conditions under the state management of the State Bank of Vietnam;

At the request of the Chiefofthe Banking Supervision Agency;

The Governor of the State Bank of Vietnam hereby promulgates a Circular amending and supplementing a number ofArticles of the Circular No.43/2016/TT-NHNN dated December 30, 2016 of the Governor of the State Bank of Vietnam on consumer loans of financial companies.

Article 1. Amending and supplementing a number of articles of Circular No.43/2016/TT-NHNN dated December 30, 2016 of the Governor of the State Bank of Vietnam providing for consumer loans by financial companies (hereinafter referred to asCircular No.43/2016/TT-NHNN)

1. Point b, Clause 2, Article 3 is amended and supplemented as follows:

“b) Expenses for study, medical examination and treatment, tourism, culture, physical training and sports;”.

2. ToaddClause 5 into Article 3 as follows:

“5. Direct disbursement to customersmeans that financial companies disburse consumer loans directly to customers in cash or through the use of non-cash payment services as mutually agreed upon in consumer loan contract, ensuring inspection and supervision of the purposes of loan use in accordance with law”.

3. Article 4 is amended and supplemented as follows:

“Article 4. Application of legal documents

1. Other provisions on lending related to consumer lending activities of financial companies are not provided for in this Circular, financial companies shall comply with the provisions on lending activities serving life demands in accordance with provisions of the State Bank on lending activities of credit institutions, foreign bank branches to customers.

2. The direct disbursement to customers shall comply with the provisions of this Circular.”.

4. Clause 2, Article 5 is amended and supplemented as follows:

“2. Financial companies shall manage, supervise and make statistics on consumer lending activities separate from other lending activities of financial companies, separating consumer loans directly disbursed to customers from other disbursement methods for consumer loans”.

5. Clause 4, Article 6 is amended and supplemented as follows:

“4. Financial companies shall report to the State Bank according to the following provisions:

a) When there is a change in the manager or supervisor of the service introduction points, the financial companies shall report to the State Bank branch in the province or city where the service introduction point is located, according to the following provisions:

- Methods of sending and receiving reports: Reports are made in writing and sent to the State Bank branches in provinces and cities in one of the following forms: directly, via post service or via the email system of the State Bank branch in provinces, cities;

- Deadline of sending report: within 05 (five) working days from the date of arising changes on the managers, persons in charge of service introduction points;

- The report outlines are subject to Appendix No.01 attached to this Circular.

b) In case of opening, terminating or expecting to open or close service introduction points, the financial companies shall report to theBanking Supervision Agency and the State Bank branches in provinces, cities financial companies open, close, expect to open and close service introduction points according to the following provisions:

- Methods of sending and receiving reports: Reports are made in writing and sent to theBanking Supervision Agency and the State Bank branches in provinces and cities in one of the following forms: directly, via the postal service or via the State Bank’s email system;

- Data closing time: starting from the first day of the first month of the reporting quarter to the last day of the last month of the reporting quarter;

- Deadline of sending report: within the first 05 (five) working days of the first month of the quarter preceding the reporting quarter;

- The report outlines to theBanking Supervision Agency are subject to Appendix No.02 attached to with this Circular; The report outlines to the State Bank branches in provinces, cities are subject to Appendix 03 attached to this Circular.”.

6. Point a, Clause 2, Article 7 is amended and supplemented as follows:

“a) Lending conditions; ineligible funding demands; methods of lending; methods of disbursement (including method of direct disbursement to customers); loan interest rates and methods of calculating loan interest; loan documents and documents submitted by the customers to the financial companies in accordance with the characteristics of the loan, the types of loans and the types of customers; debt collection; conditions, processes and procedures for debt rescheduling; transfer of overdue debts; “.

7. Point dd, Clause 2 of Article 7 is amended and supplemented as follows:

“dd) Measures to urge and recover debts in accordance with customers’ characteristics and the provisions of law and excluding measures to threaten customers, in which the maximum number of debt reminding times is 05 (five) times/1 (one) day, ways of debt reminding, time of debt reminding shall be mutually agreed upon by the parties in consumer loan contracts but shall be between07 (seven) hours and 21 (twenty one) hours; not to remind debts, collect debts, send information on customer debt recovery to organizations and individuals that are not obliged to pay debts to financial companies, except at the request of competent state agencies as prescribed by law; keep customer information confidential in accordance with the law.”.

8. Point h, Clause 2, Article 7 is amended and supplemented as follows:

“h) Specialized divisions, ways of receiving, handling, time limit for handling and answering complaints, the time limit for archives of comments, feedbacks and complaints of customers, organizations and individuals related to consumer lending activities of financial companies;”.

9. ToaddPoint mafterPoint l, Clause 2, Article 7 as follows:

“m) To specify measures to control direct disbursement to customers, ensuring that customers use loans strictly for the loan purposes stated in consumer loan contracts.”.

10. Clause 4, Article 7 is amended and supplemented as follows:

“4. Financial companies shall send directly or via post service to the State Bank the internal regulations on consumer lending in accordance with the following provisions:

a) To theBanking Supervision Agency within 10 (ten) working days from the date of new issuance, amendment, supplementation;

b) To send to the State Bank branches in provinces, cities where the financial companies are headquartered, branches, representative offices, points of service introduction upon request.”.

11. ToaddClause 8a after Article 8 as follows:

“Clause 8a. Direct disbursement to customers

1. The direct disbursement to customers in cash shall comply with the State Bank’s regulations on methods of disbursing borrowed funds of foreign credit institutions and bank branches to customers, as prescribed Clauses 3, 4, 5 and 6 of this Article and Article 7 of this Circular.

2. The direct disbursement to customers through the use of non-cash payment services shall be decided by the financial companies themselves on the ground of payment information, documents and vouchers provided by customers and ensure the compliance with the provisions of Clauses 3, 4, 5, 6, 7, 8 of this Article, Article 7 of this Circular and the provisions of the law on non-cash payment.

3. Financial companies may only disburse directly to customers for customers who do not have bad debts according to the reference credit search report at Vietnam National Credit Information Center at the latest time compared to time of signing consumer loan contract.

4. The total debit balance of consumer loan directly disbursed to customers at a financial company compared to the total debit balance of consumer loan of that financial company at the end of the working day immediately preceding the signing date of the consumer loan contract directly disbursed to the customers shall comply with the maximum rate according to the following schedule:

a) From January01, 2021 to the end of December 31, 2021: 70%;

b) From January01, 2022 to the end of December 31, 2022: 60%;

c) From January01, 2023 to the end of December 31, 2023: 50%;

d) From January01, 2024: 30%.

5. The total debit balance of consumer loan directly disbursed to customers and the total debit balance of consumer credit a financial company specified in Clause 4 of this Article, including also the amount of consumer loan directly disbursed to customers in contracts already signed up to the date of signing contract prescribed in Clause 4 of this Article, but not yet disbursed.

6. Total debit balance of consumer loan directly disbursed to customers at a financial company specified in Clauses 4 and 5 of this Article only includes customers with total debit balance of consumer loan directly disbursed (including consumer loan  directly disbursed to customers in contracts already signed up to the date of signing contracts specified in Clause 4 of this Article, but not yet disbursed), at such financial company, of more than VND 20,000,000 (twenty million).

7. Financial companies shall notify customers of legal provisions and internal regulations on methods of direct disbursement to customers through the use of non-cash payment services; notify customers and foreign credit institutions, bank branches related to the direct disbursement to customers through the use of non-cash payment services prescribed on daily payment transaction hours.

8. Customers provide payment information, documents and vouchers as prescribed by the financial companies for the consideration and decision on the method of direct disbursement to customers through the use non-cash payment services. Customers are responsible before the law for the accuracy and truthfulness of the information, documents and vouchers provided to the financial companies.”.

12. Clause 3, Article 9 is amended and supplemented as follows:

“3. Within 10 (ten) working days from the date of issuance or amendment or supplement of the consumer loan interest rate frame, financial companies shall send, directly or via postal service, to the baning Inspection and Supervision Agencies and State Bank branches in provinces, cities where the financial companies locate their head offices, branches, representative offices, service introduction points, reports on consumer loan interest rate frame according to Appendix 04 attached to with this Circular.”.

13. Pointl, Clause1, Article 10 is amended and supplemented as follows:

“l) Measures to urge and recover debts in accordance with the provisions of Point dd, Clause 2, Article 7 of this Circular and the provisions of relevant laws; handling measures in cases customers fail to fulfill their obligations specified in consumer loan contracts;”.

14. Clause 4, Article 10 is amended and supplemented as follows:

“4. Financial companies shall provide customers with draft consumer loan contracts, accurately, fully and truthfully explaining the preliminary contents of the consumer loan contracts, inclusive of rights and obligations of consumer borrowers, measures to urge and recover debts, measures to handle in cases customers fail to fulfill their obligations specified consumer loan contracts and have their customers’ certification that they have been provided with information by financial companies under this Clause, so that customers can consider and decide before signing consumer loan contracts.”.

15. ToaddClause 10a and Clause 10b after Article 10 as follows:

“Clause 10a. Responsibilities of financial companies

1. To comply with the provisions of this Circular and relevant provisions of law.

2. To publicly post at the head offices, branches, service introduction points and posting on the financial companies’s website the following contents:

a) Consumer loan interest rate frame, types of charges and interest calculation methods;

b) Ways of receiving comments, feedbacks and complaints from customers, organizations and individuals related to consumer lending activities of financial companies.

3. To post contact information of financial companies, list (names, addresses) of service introduction points, things to know about consumer loans (including, at least content of basic rights and obligations of consumer loan customer in accordance with the law), frequently asked questions in consumer loans on the financial companies’ website.

4. To specify the responsibilities of managers and persons in charge of service introduction points in reporting and providing information and documents at the request of the State Bank branches in provinces, cities where the service introduction points are located.

5. To apply ways of receiving comments, feedbacks and complaints of customers, organizations and individuals related to consumer lending activities of financial companies in accordance with law provisions, ensuring the authentication of complaint information provided by customers, organizations and individuals to financial companies, including, at least, the following two ways:

a) Directly, through individuals, specialized divisions at the head offices, branches, service introduction points of financial companies;

b) Indirectly, through documents, electronic means, telephone exchange (with audio recording, operating, at least, from07 (seven) hours to 21 (twenty one) hours) and other indirect ways in accordance with the provisions of law.

6. To settle and respond to complaints of relevant customers, organizations and individuals within 48 (forty-eight) hours (exclusive of Saturdays, Sundays and public holidays) from the date of receiving the complaints, on loan amount, interest rates, measures to urge and recover debts specified in consumer loan contracts; on recoving payments from individuals, organizations not obliged to make repayment, false information on debt obligations at the Vietnam National Credit Information Center and within 07 (seven) working days after receiving complaints  on other contents.

7. To regularly review and improve the quality of recruitment process, staff assessment, moral risk limitation; organize training, professional training, improve skills, customer service quality, a sense of compliance with laws, internal regulations, professional ethics for employees.

8. To regularly supervise, inspect and control the compliance with the provisions of laws, processes, internal regulations on consumer lending activities to related individuals, departments and units at the head offices, branches, representative offices, service introduction points of financial companies, to ensure compliance with the provisions of law, internal processes and regulations. Timely detect acts of signs of law violations in consumer lending activities, notify and give warnings in the system of financial companies to take measures to prevent and limit risks and acts of law violatoin.

9. To handle and coordinate with competent agencies to handle violations of laws, processes, internal regulations in consumer lending activities, protecting the lawful interests of customers; To internally publicize of the handling of these violations.

10. In cases a financial company sells debt to a third party permitted to buy debts in accordance with law, a debt purchase contract shall contain a commitment of the third party on implementing the provisions agreed upon with customers in a consumer loan contract (inclusive of the measures to urge and recover debts) in accordance with the provisions of this Circular and relevant law provisions.

Clause 10b. Responsibilities of units of the State Bank

1. Banking Supervision Agency shall:

a) Inspect and supervise financial companies in the implementation of the provisions of this Circular;

b) Consider and handle according to its competence or propose competent authorities to handle law-breaking acts, ensuring financial companies’ compliance with this Circular and relevant law provisions;

c) To receive reports as prescribed in Point b Clause 4 Article 6, Clause 4 Article 7 and Clause 3 Article 9 of this Circular.

2. The State Bank branches in provinces, cities are responsible for:

a) Inspecting, supervising or coordinating with other State Bank branches in provinces and cities to inspect and supervise the operations of branches, representative offices, and service introduction points of financial companies in the area in accordance with the law;

b) Considering and handling according to their competence or propose competent authorities to handle law-breaking acts, ensuring that financial companies, branches, representative offices and service introduction points of financial companies comply the provisions of this Circular and relevant law provisions;

c) Receiving reports as prescribed in Clause 4 Article 6, Clause 4 Article 7 and Clause 3 Article 9 of this Circular;

d) Cooperating with competent authorities in obtaining information, notifying and warning financial companies, branches, representative offices, and service introduction points of financial companies in their localities to have measures to prevent and limit risks, law-breaking acts, and ensuring the interests of customers and financial companies.”.

16.To addAppendices 01, 02, 03 and 04 attached to this Circular.

Article 2. Organization of implementation

Chief of Office, Chief Inspector and Supervisor of the Bank, Heads of units of the State Bank of Vietnam, Directors of State Bank branches in provinces, cities under the central Government’s management, Chairperson of the Board of Directors,  Chairperson of the Members’ Council and General Directors (Directors) of financial companies shall be responsible for organizing the implementation of this Circular.

Article 3. Implementation validity

This Circular takes effect from January 01, 2020./.

For the Governor

The Deputy Governor

Doan Thai Son