Circular 12/2024/TT-NHNN amend Circular 39/2016/TT-NHNN provision of loans by credit institutions, foreign bank branches

CIRCULAR

Amending and supplementing a number of articles of Circular 39/2016/TT-NHNN dated December 30, 2016, of the Governor of the State Bank of Vietnam, prescribing the provision of loans by credit institutions and foreign bank branches to clients

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

Pursuant to the Law on Credit Institutions dated January 18, 2024;

Pursuant to the Government’s Decree No. 102/2022/ND-CP dated December 12, 2022, defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;

At the proposal of the Director of the Monetary Policy Department;

The Governor of the State Bank of Vietnam hereby promulgates the Circular amending and supplementing a number of articles of Circular 39/2016/TT-NHNN dated December 30, 2016, of the Governor of the State Bank of Vietnam, prescribing the provision of loans by credit institutions and foreign bank branches to clients.

Article 1. Amending and supplementing a number of articles of Circular No. 39/2016/TT-NHNN

1. To amend and supplement Clause 1 and add Clause 13, Clause 14 to Article 2 as follows:

a) To amend and supplement Clause 1 as follows:

“1. Provision of loans means a form of credit extension by which a credit institution gives or commits to give a client a sum of money for use for a specific purpose in a certain period of time as agreed upon on the principle of repayment of both principal and interest to the credit institution.”.

b) To add Clause 13 as follows:

“13. A small-value loan means a loan prescribed in Clause 2 Article 102 of the Law on Credit Institutions, which does not exceed VND 100,000,000 (one hundred million).”.

c) To add Clause 14 as follows:

“14. Affiliated person of a client means an organization or individual having relations with such client as defined in Clause 24 Article 4 of the Law on Credit Institutions.”.

2. To amend and supplement Clause 2 Article 4 as follows:

“2. Clients borrowing loans from a credit institution shall ensure proper use of loans as committed, and repayment of the loan principal and interest in full on schedule as agreed with the credit institution.”.

3. To amend and supplement Clause 3 Article 7 as follows:

“3. Having a feasible loan use plan. For a small-value loan, this condition is not required.”.

4. To amend and supplement Article 9 as follows:

“Article 9. Dossiers of application for loans

1. A client, who has a demand for a loan, shall provide the credit institution:

a) Information, documents or data proving the eligibility for the loan as prescribed in Article 7 of this Circular and other information, documents or data required by the credit institution;

b) Information about the client's affiliated persons, for the cases specified in Clause 2 of this Article.

Information about the affiliated person who is an individual, includes full name; individual identification number; citizenship, passport number, date of issuance and place of issuance, for foreigners; relationship with the client.

Information about the affiliated person who is an organization, includes Name, enterprise identification number, head office address of the enterprise, enterprise registration certificate number or equivalent legal documents, at-law representative, and relationship with the client.

2. Provisions of Point b Clause 1 Article 2 of this Circular shall be applied for the following cases:

a) At the time of loan request at a commercial bank, cooperative bank or foreign bank branch, the client has the total outstanding credit extended (including the loan balance that the customer is requesting) greater than or equal to 0.1% of the credit institution’s, cooperative bank’s or foreign bank branch’s own capital at the end of the latest working day;

b) At the time of loan request at a non-bank credit institution or micro financial institution, the client has the total outstanding credit extended (including the loan balance that the customer is requesting) greater than or equal to 0.5% of the non-bank credit institution’s or micro financial institution’s own capital at the end of the latest working day;

c) At the time of loan request at a people’s credit fund, the client has the total outstanding credit extended (including the loan balance that the customer is requesting) greater than or equal to 1% of the people’s credit fund’s own capital at the end of the latest working day;

d) In case a credit institution has a negative own capital, the aforesaid ratios shall be applied on charter capital or allocated capital for foreign bank branches.”.

5. To amend and supplement Clause 2 Article 16 as follows:

“2. Clients shall provide information, documents and data to the credit institution in a truthful, accurate, adequate and timely manner, and take responsibility for their provision of information, documents and data:

a) Information, data and documents as prescribed in Clause 1 Article 9 of this Circular;

b) Reports on loan use and provision of information, documents and data proving loans to be used for proper purposes as stated in the loan agreements;

c) Information, data and documents on loan security measures in case the credit institution and client reach an agreement on taking loan security measures.”.

6. To amend and supplement Point b(iii) Clause 2, Point c(iii) Clause 2 and add Point c(iv) Clause 2 Article 22 of Circular No. 39/2016/TT-NHNN, which was amended and supplemented under Points c and d Clause 6 Article 1 of Circular No. 06/2023/TT-NHNN dated June 28, 2023, the Governor of the State Bank of Vietnam, amending and supplementing a number of articles of Circular No. 39/2016/TT-NHNN dated December 30, 2016, of the Governor of the State Bank of Vietnam, prescribing the provision of loans by credit institutions and foreign bank branches to clients, as follows:

a) To amend and supplement Point b(iii) Clause 2 as follows:

“(iii) In case of provision of loans for payment to secure obligation performance of the client toward the third party, the lending credit institution shall reach an agreement with the client to freeze the amounts of loans at the lending credit institution in accordance with the law until the security obligation is terminated;”.

b) To amend and supplement Point c(iii) Clause 2 as follows:

“(iii) In case of provision of loans for making payment to secure obligation performance of the client toward the third party, ensuring the recovery of loans in case the parties fail to properly fulfill the secured obligations as agreed upon;”.

c) To add Point c(iv) Clause 2 as follows:

“(iv) For small-value loans, taking measures of examination and supervision of the proper use of loans as committed, and loan repayment by clients, ensuring the ability to fully recover loan principal and interest on schedule as agreed upon.”.

7. To amend and supplement Article 24 of Circular No. 39/2016/TT-NHNN (amended and supplemented under Clause 8 Article 1 of Circular No. 06/2023/TT-NHNN) as follows:

 “Article 24. Examination of loan use

1. Clients are obligated to use loans and repay debts according to the committed purpose, fully repay loan principal, interest and charges on schedule as agreed upon; report the use of loans, and provide information, data and documents proving their proper use of loans.

2. A credit institution may examine and supervise clients in using loans and repaying debts as prescribed in Clause 1 Article 102 of the Law on Credit Institutions; may request clients to report their loan use and provide information, data and documents proving their proper use of loans.

3. For small-value loans, credit institutions shall take measures of examination and supervision of the proper use of loans as committed, and loan repayment by clients, ensuring the ability to fully recover loan principal and interest on schedule as agreed upon.”.

8. To amend and supplement Clauses 1 and 3 and add Clauses 5, 6 and 7 to Article 26 as follows:

a) To amend and supplement Clause 1 as follows:

“1. Comply with provisions on cases ineligible for loans, loan restrictions and loan limits prescribed in the Law on Credit Institutions and with regulations of the State Bank of Vietnam on limits and prudential ratios in operations of credit institutions.”.

b) To amend and supplement Clause 3 as follows:

“3. Classify assets and make deduction to set up and use risk provisions in lending activities as prescribed by law.”.

c) To add Clause 5 as follows:

“5. In case of provision of loans for payment to secure obligation performance of the client toward the third party, the lending credit institution shall reach an agreement with the client to freeze the amounts of loans at the lending credit institution in accordance with the law until the security obligation is terminated.”.

d) To add Clause 6 as follows:

“6. The credit institution must archive dossiers of loan provision under the Law on Credit Institutions; the archival period shall comply with the law on archive.”.

b) To add Clause 7 as follows:

“7. The credit institution must request the client to provide data and documents proving its/his/her feasible loan use plan and financial capability to repay debt, legal loan use purposes before deciding on provision of loans, except for small-value loans.

For small-value loans, the credit institution must have at least information about the client's legal loan use purposes and financial capability before deciding on provision of loans.”.

Article 2. To repeal Article 29, Article 32 of Circular No. 39/2016/TT-NHNN and Article 32g of Circular No. 39/2016/TT-NHNN, which was amended and supplemented under Clause 11 Article 1 of Circular No. 06/2023/TT-NHNN.

Article 3. Responsibility for implementation organization

The Chief of Office, the Director of the Monetary Policy Department, Heads of units affiliated to the State Bank of Vietnam, Directors of State Bank branches of provinces and centrally-run cities, credit institutions and foreign bank branches shall implement this Circular.

Article 4. Implementation provisions

1. This Circular takes effect from July 1, 2024.

2. To repeal Clause 8 and Point b Clause 9 Article 1 of Circular No. 06/2023/TT-NHNN.

3. For loan agreements and credit contracts signed before the effective date of this Circular, credit institutions and clients may continue performing such loan agreements and credit contracts in accordance with regulations effective at the time of their signing. The modification and supplementation, if any, of loan agreements or credit contracts must comply with this Circular./.