Vietnam: Credit institution shall take self-responsibility for any risk in entering into and performance of the loan agreement

According to Article 3 of Circular No. 45/2011/TT-NHNN of the State Bank of Vietnam, responsibilities of the credit institution performing the foreign loan are as follows:

1. To verify the legal capacity, financial capacity of the foreign borrower; ability to perform the loan agreement in order to ensure that both principal and interest debts shall be collected in accordance with the loan agreement.

2. To take self-responsibility for any legal and financial risk in entering into and performance of the loan agreement.

3. To comply with current provisions of laws on foreign exchange control, foreign loans and debt collection, regulation on lending of the credit institution applicable to its customers, security for the foreign loan, other provisions of applicable laws of Vietnam and relevant foreign laws in entering into and performance of the loan agreement.

4. To draw up a procedure for credit appraisement, credit risk management and prevention for foreign loans, debt collection in conformity with current provisions of applicable laws.

Concurrently, when taking part in foreign loan syndications, the credit institution shall be obliged to comply with provisions of Circular No. 45/2011/TT-NHNN and other provisions of applicable laws.

- In case where there is 01 (one) credit institution joins with other non-resident-lenders to provide the foreign loan syndication, the credit institution shall implement the provisions on registration of the loan, change of loan with the State Bank, opening and use of an account of foreign loan, debt collection, reporting in accordance with provisions in Circular No. 45/2011/TT-NHNN for its participation in the foreign loan syndication.

- In case where there are 02 (two) credit institutions and more joining in the foreign loan syndication, such credit institutions shall authorize one credit institution to act as the head. The head credit institution shall take responsibility for representing the lending credit institutions to implement regulations on registration of loan, change of loan with the State Bank, opening and use of an account of foreign loan, debt collection and reporting in accordance with Circular No. 45/2011/TT-NHNN.

View more details at Circular No. 45/2011/TT-NHNN of the State Bank of Vietnam, effective from June 30, 2012.

Thuy Tram

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