Vietnam: Details of internal rules on consumer lending applicable from January 01, 2020

Currently, subject to provisions of the Law on Credit Institutions, Circular No. 18/2019/TT-NHNN of the State Bank of Vietnam and other relevant laws, finance companies shall issue internal rules on consumer lending and borrowed fund management as appropriate to operational characteristics of finance companies (hereinafter referred to as internal rules on consumer lending).

Specifically, internal rules on consumer lending shall be implemented in a consistent manner within the entire network of finance companies and address the following specific contents:

- Lending conditions; unqualified lending demands; lending approaches; disbursement methods (including the method of direct disbursement of borrowed funds to customers); interest rates and lending interest calculation method; lending documents and other documents submitted by customers to finance companies relevant to loan characteristics, types of borrowed funds and customers; debt collection; eligibility and documentation requirements and procedures for rescheduling of debt repayment; loan delinquency status;

- Procedures for processing, assessing, approving a loan application and deciding to extend a loan under which the maximum duration to process, assess a loan application and decide to extend a loan should be specified; delegation or assignment of rights and responsibilities for each individual or department in loan application processing, assessment, approval and grant of a loan decision and other workloads as part of the lending procedures;

- Procedures for inspection and supervision of loan application, use and debt repayment of customers; delegation and assignment of rights and responsibilities of each individual and department for inspection and supervision of loan application, use and debt repayment of customers;

- Requirement concerning security for loans, assessment of assets pledged as collateral for loans; management, supervision and monitoring of collateral appropriate to loan security, collateral features and customers;

- Actions to be taken to push customers into repaying and collecting debts which are relevant to specific customers, conform to laws and exclude any threat to customers. The maximum rate of sending debt repayment reminders shall be 05 (five) a day; the method and time frame of reminding debt repayment which are agreed upon in consumer lending contracts, especially such time frame that must be between 7 (seven) and 21 (twenty one) o’clock; a ban on sending debt repayment reminders, debt repayment requests and information about debt collection to organizations or individuals that are not liable to pay debts to finance companies, unless otherwise required by competent regulatory authorities regulated by law; customer information confidentiality prescribed by law;

- Loan termination and treatment; loan interest rate and fee exemption and reduction;

- Rules and standards of conduct in consumer lending operations and measures to be applied to ensure strict compliance with these rules and standards;

- In-charge department; forms of receiving, processing, and time limit for giving decisions on or responses to, complaints; duration of retention of feedbacks and complaints received from customers, organizations and individuals involved in a finance company’s consumer lending services;

- Information technology system or database necessary for consumer lending operations; collection, update and verification of figures, management of customer's information, identification of false information and prevention of fraudulent acts for the purpose of granting a lending decision, controlling loans and recovering debts;

- Identification of risks that may arise during the lending process; procedures for monitoring, assessing and controlling risks; risk treatment methods;

- With respect to finance companies owning consumer credit counseling points, internal rules must contain requirements concerning procedures, authority and responsibility for establishing and closing their consumer credit counseling point; ethical standards, authority and obligations of staff working at their consumer credit counseling points; procedures for carrying out their business operations, inspection, prevention and control of fraudulent acts, prevention of risks arising from ethical behaviors of staff working at these points;

- Specific regulations on measures to control direct disbursement of borrowed funds to customers, ensure that customers use borrowed funds for agreed-upon purposes specified in consumer lending contracts.

Circular No. 18/2019/TT-NHNN stipulates that finance companies must send, whether directly or by post, internal consumer lending rules to the State Bank according to the following regulations:

- Sending the Banking Inspection and Supervision Agency within 10 (ten) working days from the date of publication of a new or revised version thereof;

- Sending State Bank branches of the provinces or cities where headquarters of finance companies are located, their branches, representative offices and service counseling points upon request.

View more details at Circular No. 18/2019/TT-NHNN of the State Bank of Vietnam effective from January 01, 2020 and Circular No. 43/2016/TT-NHNN.

Thu Ba

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