Decision 09/2024/QD-TTg requirements for approval of the maximum credit overextension granted by credit institutions

DECISION

Prescribing requirements, documents, and procedures for applying for approval of the maximum credit overextension granted by credit institutions and foreign bank branches

^{_______________}

Pursuant to the Law on Government Organization dated June 19, 2015; Law Amending and Supplementing a Number of Articles of the Law on Organization of the Government and the Law on Organization of Local Administration dated November 22, 2019;

Pursuant to the Law on the State Bank of Vietnam dated June 16, 2010;

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

At the proposal of the Governor of the State Bank of Vietnam;

The Prime Minister hereby promulgates a Decision prescribes requirements, documents and procedures for applying for approval of the maximum credit overextension granted by credit institutions and foreign bank branches.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

This Decision prescribes requirements, documents and procedures for applying for approval of the maximum credit overextension granted by credit institutions and foreign bank branches to a single client or a client and its/his/her related persons in accordance with Clauses 1, 2 and 7 Article 136 of the 2024 Law on Credit Institutions.

Article 2. Subjects of application

1. Credit institutions, foreign bank branches (hereinafter referred to as credit institutions) include:

a) Banks: Commercial banks, cooperative banks, joint-venture and wholly foreign-owned banks;

b) Non-bank credit institutions: General finance companies, specialized finance companies;

c) People’s credit funds;

d) Microfinance institutions;

dd) Foreign bank branches.

2. Borrowers, organizations and individuals concerned.

Chapter II

SPECIFIC PROVISIONS

Article 3. Requirements for consideration for approval of the credit overextension

1. Borrowers, business projects, plans shall be offered credit overextensions provided they meet the following requirements:

          a) Borrowers completely meet lawful credit extension requirements, have not non-performing loans at credit institutions for 3 consecutive years before the time of requesting for credit overextension, have a debt-to-equity ratio not exceeding three times in their annual financial statements at the nearest time to the time of requesting for credit overextension;

b) Borrowers wish have funds to implement business projects or plans with the aim of performing socio-economic development tasks under one of the following circumstances:

Implementing business projects or plans of socio-economic significance and urgent ones in order to perform socio-economic development duties, meet the basic human needs in electricity, coal, oil and gas, petroleum, traffic, public transportation and other industries or sectors under the direction of the Government or the Prime Minister over periods of time;

Implementing investment programs and projects for which investment policies are decided by the National Assembly and the Prime Minister;

Investing in sectors prioritized and encouraged under the Resolutions of the National Assembly and the Government on socio-economic development over periods of time.

c) Business projects or plans in need of credit overextensions have been appraised and evaluated by credit institutions as feasible, and borrowers are able to repay debts and decide on credit extension; meet applicable regulations on investment and construction, accord with the planning and business plans, and have been approved or received the Investment Registration Certificate granted by competent authorities.

2. Credit institutions must meet the following requirements:

a) Regarding syndicated credit:

Having already proposed and followed legal procedures on the extension of syndicated credit for business projects and plans in need of credit overextensions but the syndicated capacity of credit institutions has not yet met borrowers’ requirements; or

Having already sent syndication invitation letters to at least 5 other credit institutions, posted them on the official websites of credit institutions and websites of the State Bank of Vietnam, Banking Review or Banking Times for at least 45 days but no other credit institutions have participated in syndication.

b) At the time of application of credit overextension, credit institutions meet the requirements on limits and prudential ratio prescribed by the Law on Credit Institutions and the guiding document of the State Bank of Vietnam;

c) Fully implementing the requirements related to the responsibilities and obligations stated in the application document for credit overextensions and documents approving credit overextension;

d) Complying with the limits of credit extension provided in Clause 8, Article 136 of the 2024 Law on Credit Institutions, including the amount of credit overextension in demand.

Article 4. Application documents for credit overextension

1. Required documents submitted by credit institutions to the State Bank of Vietnam:

Application documents for credit overextension to a single client, a client and its/his/her related persons, which are submitted to the State Bank of Vietnam, must be duplicates derived from original registers, or authenticated duplicates, or duplicates certified by credit institutions, including:

a) The credit institution’s written request submitted to the State Bank of Vietnam reporting to the Prime Minister to obtain the permission for credit overextension to a single client, a client and its/his/her related persons, using form given in the Appendix to this Decision;

b) Documents and materials proving that the credit institution has met the conditions at Point a, Clause 2, Article 3 of this Decision;

c) Appraisal document of credit institutions for clients, business projects, loan plans of clients;

d) The approval document of credit extension granted for client by the competent authorities of the requesting credit institution;

dd) The written request for credit extension at the client’s credit institution;

e) Documents related to clients applying for credit extension, including: Certificate of Business Registration or Establishment Certificate or Establishment Decision; audited financial statements for 03 consecutive years prior to the time of credit overextension; other relevant documents (if any);

g) Legal documents related to business projects or plans in need of credit extension, including:

The Investment Registration Certificate or a document issued by competent authorities on approval or acceptance of business projects or plans.

Other relevant documents.

h) Report on credit relationship and demands for credit overextension of a single client or a client and its/his/her related persons, using the Form No.01 given in the Appendix attached to this Decision.

2. Documents of the State Bank of Vietnam submitted to the Prime Minister shall include the statement of the State Bank of Vietnam, enclosing with the following materials:

a) The credit institution’s written request submitted to the State Bank of Vietnam reporting to the Prime Minister to obtain the permission for credit overextension to a single client, a client and its/his/her related persons;

b) Written document recording contributed opinions from Ministries, sectoral administrations and local authorities involved;

c) Written explanation of credit institutions and clients (if any);

d) Other relevant documents.

Article 5. Determination of the maximum credit overextension

The maximum credit overextension to a single client, a client and its/his/her related persons shall be calculated according to the following formula:

In which:

MCTDTD is the maximum credit overextension level;

TMDN is the total credit extension outstanding balance at the time of reporting;

DN is the requested amount of newly approved credit extension.

In the above formula, TMDN and DN are determined as follows:

1. The total credit extension outstanding balance at the time of reporting (TMDN), which is included in the credit overextension level, is the total credit extension outstanding balance of a single client, a client and its/his/her related persons at a credit institution at the reporting time, including:

a) The total credit extension outstanding balance granted within the permissible limits under the jurisdiction of the credit institution;

b) The total credit extension outstanding balance of credit extensions approved by the Prime Minister for the credit overextension that remains valid as of the reporting time.

2. Newly approved credit extension request (DN):

The newly requested amount included in the credit overextension is the total amount of new credits approved by the Prime Minister for credit overextension.

Article 6. Procedures for consideration for approval of credit overextension

1. The credit institution shall send 01 set of documents to the State Bank of Vietnam as prescribed in Clause 1, Article 4 of this Decision directly at the Single-window section or via public postal services.

2. Within 15 days from the date of receiving the full documents of the credit institution:

In case the documents of a credit institution do not meet the requirements specified in Article 3 of this Decision, the State Bank of Vietnam shall issue a written notice to the credit institution clearly stating the requirements that the credit institution has not met;

In case the documents of the credit institution are valid, the State Bank of Vietnam shall issue a written request for opinions from relevant ministries, sectoral administrations and local authorities regarding the economic, technical, and legal aspects of the project, plan, and clients applying for credit overextension.

3. Within 15 days from the date of receiving the written request for opinions from the State Bank of Vietnam, ministries, sectoral administrations and local authorities shall give their written opinions on the contents in their management areas to the State Bank of Vietnam. Based on these opinions, the State Bank of Vietnam shall request credit institutions and clients to explain related issues (if any).

4. Within 40 days of receiving oppinions from Ministries, sectoral administrations and local authorities or explanations from credit institutions, clients, the State Bank of Vietnam shall check the reasonableness and validity of the credit application documents for credit overextension provided by the credit institution:

In case the documents of a credit institution do not meet the requirements specified in Article 3 of this Decision, the State Bank of Vietnam shall issue a written notice to the credit institution clearly stating the requirements that the credit institution has not met;

In case the documents of the credit institution are reasonable and valid, the State Bank of Vietnam shall submit them to the Prime Minister for consideration and decision on the request for credit overextension of the credit institution.

5. Based on the credit overextension request of the credit institution, the opinions of the State Bank of Vietnam and ministries, sectoral administrations and local authorities, the Prime Minister shall decide on approving the request for credit overextension of the credit institution.

Chapter III

IMPLEMENTATION ORGANIZATION AND PROVISIONS

Article 7. Implementation organization

1. The State Bank of Vietnam shall

a) Take responsibility for appraising the documents provided by credit institutions and submitting them to the Prime Minister for consideration and decision on the request for credit overextension of credit institutions, the maximum credit overextension level, ensuring compliance with the requirements and procedures prescribed in this Decision;

b) Inspect and supervise the implementation of credit overextension by credit institutions;

c) Annually, the State Bank of Vietnam shall summarize and report to the Prime Minister on the implementation of credit overextensions approved by the Prime Minister which remain valid.

2. Ministries, sectoral administrations and local authorities shall

a) Coordinate with the State Bank of Vietnam to give opinions on the request for credit overextension of credit institutions for a single client, a client and its/his/her related persons as prescribed in Clause 3, Article 6 of this Decision;

b) Take responsibility for their opinions on business projects, plans and clients requesting credit overextension and for business projects, plans, clients granted credit overextension within the scope of their state management in accordance with the law.

3. Credit institutions shall

a) Strictly comply with the direction of the Prime Minister and the contents of the written notices of the State Bank of Vietnam on the credit overextension of the credit institutions; only use the approved credit extension; the maximum approved for each specific business project or plan proposed and approved;

b) Take responsibility before the law for the accuracy and completeness of the information and documents provided to the State Bank of Vietnam to synthesize and advise the Prime Minister to consider and decide on credit overextension of credit institutions;

c) Take responsibility for appraising, granting credit, inspecting and supervising the use of loans and repayment of clients, recovering loans (principal and interest) and handling risks (if any) as prescribed for the overextended amount.

d) Check and supervise closely, ensuring that clients use loans for the right purposes and report monthly to the State Bank of Vietnam on the implementation of credit overextension amount approved by the Prime Minister according to Forms No. 02, 03 in the Appendix to this Decision.

‎‎Article 8. Transition clause

Any credit overextension cases approved by the Prime Minister before the effective date of this Decision shall continue to comply with the previously approved documents.

Article 9. Effect

1. This Decision takes effect on July 1, 2024.

2. This Decision replaces the Prime Minister's Decision No. 13/2018/QD-TTg dated March 6, 2018, prescribing eligibility and documentation requirements and procedures for application for approval of credit overextensions granted by credit institutions and foreign bank branches.

Article 10. Responsibility for implementation

Ministers, Heads of Ministerial-level agencies, Heads of Government-attached agencies, Chairpersons of Members Boards, Management Boards, General Directors (Directors) of credit institutions and related institutions and individuals shall implement this Decision.

For the Prime Minister

The Deputy Prime Minister

LE MINH KHAI