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Circular No. 36/2018/TT-NHNN dated December 25, 2018 of the State Bank of Vietnam on lending by credit institutions and foreign branch banks for outward investment

Date: 12/25/2018

 

 
THE STATE BANK OF VIETNAM
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THE SOCIALIST REPUBLIC OF VIETNAM
Independence - Freedom - Happiness
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No. 36/2018/TT-NHNN
Hanoi, December 25, 2018
 
CIRCULAR
LENDING BY CREDIT INSTITUTIONS AND FOREIGN BRANCH BANKS FOR OUTWARD INVESTMENT
Pursuant to the Law on the State bank of Vietnam dated June 16, 2010;
Pursuant to the Law on Credit Institutions dated June 16, 2010 and Law on amendments to some Articles of the Law on Credit Institutions dated November 20, 2017;
Pursuant to the Law on Investment dated November 26, 2014 and Law on amendments to Article 6 and Appendix 4 on the list of business lines subject to conditions stipulated by the Law on Investment dated November 22, 2016;
Pursuant to the Ordinance on Foreign Currency dated December 13, 2005 and the Ordinance on amendments to some Articles of the Ordinance on Foreign Currency dated March 18, 2013;
Pursuant to the Government’s Decree No. 70/2014/ND-CP dated July 17, 2014 on guidelines for some Articles of the Ordinance on Foreign Currency and the Ordinance on amendments to some Articles of the Ordinance on Foreign Currency;
Pursuant to the Decree No. 83/2015/ND-CP dated September 25, 2015 on outward investment;
Pursuant to the Decree No. 124/2017/ND-CP dated November 15, 2017 on outward investment in petroleum industry;
Pursuant to the Government’s Decree No.16/2017/ND-CP dated February 17, 2017 defining functions, tasks, entitlements and organizational structure of the State Bank of Vietnam;
At the request of the Director of the Credit Department;
The Governor of the State Bank of Vietnam hereby promulgates a Circular on lending by credit institutions and foreign branch banks for outward investment.
Chapter I
GENERAL PROVISIONS
Article 1. Scope
This Circular provides for lending by credit institutions and foreign branch banks (hereinafter referred to as “credit institutions”) for outward investment in the forms specified in Points a, b, c and dd Clause 1 Article 52 of the Law on Investment.
Article 2. Regulated entities
1. Credit institutions, including:
a) Commercial banks;
b) Non-bank credit institutions;
c) Foreign branch banks.
2. Customers that are investors prescribed by the Law on Investment and in guiding documents (excluding credit institutions). When an investor that is a household, artel or organization without a legal status takes the loan, its member or authorized representatives shall be the borrower.
3. Other relevant organizations and individuals.
Article 3. Application of relevant legal documents
Credit institutions shall grant loans to customers for outward investment as prescribed in this Circular. This Circular only applies to the lending by credit institutions for outward investment. Other matters such as lending by credit institutions, foreign exchange management, internal control, statistical reporting, prudential ratios and limits for operations of credit institutions and foreign bank branches, establishment of provisions and risk management shall apply regulations of the State Bank and other relevant legislative documents.
Article 4. Demands for loans to be used for outward investment
A credit institution shall consider granting a loan to a customer who has a demand for:
1. contributing charter capital to establish a business entity in accordance with the law of the host country.
2. contributing capital to execute a business cooperation contract overseas.
3. purchasing part or all of charter capital of an overseas business entity to participate in the management and business investment overseas.
4. borrowing capital for making outward investment in the form specified in Point dd Clause 1 Article 52 of the Law on Investment and documents elaborating the Law.
Article 5. Eligibility requirements for a loan
A credit institution shall consider granting a decision to offer a loan to a customer for outward investment if he/she meets the following eligibility requirements:
1. If that customer is a juridical person, it must have legal personality in accordance with regulations of law. If that customer is an individual (including the one who is the member or authorized person of a household, artel or organization that does not have a legal status) aged 18 or older, he/she must have full legal capacity in accordance with regulation of law.
2. The customer has been issued with the outward investment registration certificate and has its/his/her investment permitted or approved by a competent authority of the host country. If the host country’s law does not cover investment licensing or approval, the investor shall provide documents proving his/her right to make investment in that country.
3. There is an outward investment project or plan appraised to be feasible by the credit institution and the customer is capable of repaying the credit institution.
4. The customer has not incurred any bad debts for 02 consecutive years by the time of applying for loans.
Article 6. Loan application
When there is a demand for a loan, a customer must send a credit institution documents evidencing its eligibility for such loan in accordance with Article 5 hereof and others as referred to in the credit institution's instructions.
Article 7. Loan limit
1. A credit institution shall consult the demand for loan, outward investment plan, financial capability of a borrowing customer, credit lines extended to the borrowing customer and available capital source of the credit institution in order to enter into an agreement with the customer on the loan limit.
2. The loan limit must not exceed 70% of the customer’s outward investment.
Article 8. Loan term
The credit institution and the customer shall agree on the loan term as appropriate to the customer’s solvency, the credit institution’s capability to provide long and medium term capital, investment term, remaining effective period of the investment license, outward investment registration certificate or other equivalent documents.
Article 9. Currency units used for extending loans or repaying debts
1. Credit institutions and their customers shall agree on currency units used for extending loans in accordance with regulations on lending by credit institutions and relevant regulations of law.
2. Currency unit used for debt repayment is the one used in a loan. In case other currency units are used to repay debts, it is required to adhere to the agreement between credit institutions and their customer in accordance with relevant regulations of law.
Article 10. Loan security
1. The loan security shall comply with regulations on regulations on lending by credit institutions and relevant regulations of law.
2. The use of overseas assets as collateral shall be agreed upon by parties according to the rules for applying law to civil relations involving foreign elements under regulations in Part 5 of the Civil Code.
Article 11. Inspection and supervision of use of loans
1. Credit institutions have the right and obligations to inspect and supervise the use of loans and debt repayment by their customers as prescribed by law.
2. Credit institutions are entitled to request their customers to submit reports on operations and use of loans or provide documents evidencing the use of loans.
3. Customers shall use loans and repay debts as agreed; submit reports and provide documents evidencing use of such loans at the request of the credit institution.
Article 12. Responsibilities of affiliates of the State Bank
1. The Credit Department shall:
a) be in charge of supervising and reviewing the lending by credit institutions for outward investment;
b) take charge and cooperate in addressing issues relating to lending by credit institutions for outward investment within the scope of this Circular.
2. The Central Banking Inspection and Supervision Authority shall:
a) take charge and cooperate with relevant units in inspecting and supervising credit institutions granting loans to customers for outward investment in accordance with regulations of the law on lending for outward investment purpose; take actions against violations within its power and in accordance with regulations of law;
b) control credit institutions upon their compliance with regulations on money laundering prevention related to lending for outward investment purpose.
3. The Department of Foreign Exchange Management shall take charge and cooperate with relevant units of the State Bank in addressing issues about the transfer of loans and other amounts related to the lending for outward investment purpose.
4. The Department of Monetary Policy shall take charge and cooperate with relevant units of the State Bank in addressing issues about foreign currency loans granted for outward investment purpose.
5. Other affiliates of the State Bank shall, within their jurisdiction, cooperate in addressing issues arising from lending by credit institutions for outward investment.
Article 13. Effect
1. This Circular comes into force from February 15, 2019 and replaces the Circular No. 10/2006/TT-NHNN dated December 21, 2006 of the State Bank.
2. Credit institutions and their customers are entitled to keep complying with terms and conditions of the credit contract/agreement which is signed in accordance with laws and regulations in force at the date of signing of that credit contract, or agree on any revision to that credit contract as appropriate to regulations laid down herein.
Article 14. Implementation
The Chief of the Office, Director of Credit Department, heads of affiliates of the State Bank, Directors of the State Bank branches of provinces and central-affiliated cities, Presidents of the Board of Directors, Presidents of the Board of Members and General Director (Director) of credit institutions are responsible for the implementation of this Circular./.
 
 
PP. THE GOVERNOR
THE DEPUTY GOVERNOR
(Signed and sealed)



Dao Minh Tu
(This translation is for reference only)



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