What are the conditions for foreign loan purposes of credit institutions and foreign bank branches in Vietnam?
- What are the regulations on foreign loan agreement without Government's guarantee in Vietnam from August 15, 2023?
- What are the conditions for foreign loan purposes of credit institutions and foreign bank branches in Vietnam?
- What are the conditions for credit institutions and foreign bank branches in Vietnam to borrow short-term foreign loans?
What are the regulations on foreign loan agreement without Government's guarantee in Vietnam from August 15, 2023?
Pursuant to Article 9 of Circular 08/2023/TT-NHNN regulating foreign loan agreement as follows:
Foreign loan agreement
1. A foreign loan agreement is a document or a set of some documents recording specific agreements between the parties under which the lender provides or promises to provide the borrower with a sum of money or assets (in case a foreign loan is granted in the form of a finance lease contract) which shall be used for specific purposes within a given period of time on the principle of repayment of both principal and interests (if agreement on interests is made).
2. The foreign loan agreement must be made in writing. In case the foreign loan agreement is made in the form of electronic messages, it must comply with provisions of law on electronic transactions.
3. The foreign loan agreement must be signed before or on the day on which the foreign loan capital is withdrawn. The foreign loan agreement may be signed on the day on which the foreign loan capital is withdrawn if:
a) It is a short-term foreign loan which will be disbursed after the loan agreement is signed by the parties; or
b) It is a foreign loan converted from funds for investment preparations of projects granted investment registration certificate in accordance with regulations of law on management of foreign currency for foreign borrowing and debt repayment, and foreign direct investments in Vietnam.
Accordingly, a foreign loan agreement is a document or a set of some documents recording specific agreements between the parties.The foreign loan agreement must be made in writing. In case the foreign loan agreement is made in the form of electronic messages, it must comply with provisions of law on electronic transactions.
The foreign loan agreement must be signed before or on the day on which the foreign loan capital is withdrawn. In case the foreign loan agreement is made in the form of electronic messages, it must comply with provisions of law on electronic transactions.
What are the conditions for foreign loan purposes of credit institutions and foreign bank branches in Vietnam?
What are the conditions for foreign loan purposes of credit institutions and foreign bank branches in Vietnam?
Pursuant to Article 14 of Circular 08/2023/TT-NHNN regulating the purposes of foreign loans of credit institutions and foreign bank branches as follows:
Loan purposes
1. Short-term and medium/long-term foreign loans are used for:
a) increasing the borrower’s funding for credit extension activities to meet its credit growth target;
b) restructuring the borrower’s foreign debts;
2. When applying for a medium/long-term foreign loan, the borrower shall be required to prove its loan purposes by presenting:
a) The plan for use of foreign loan capital as prescribed in Clause 2 Article 7 of this Circular if the loan is used for the purpose defined in Point a Clause 1 of this Article; or
b) The debt restructuring plan as prescribed in Article 8 of this Circular if the loan is used for the purpose defined in Point b Clause 1 of this Article.
Accordingly, with medium and long-term loans, when applying for a medium/long-term foreign loan, credit institutions and foreign bank branches also need to meet the conditions on loan purposes according to legal regulations and prove the purposes. That goal is based on prescribed methods.
Accordingly, the purposes of foreign loans are used for:
- increasing the borrower’s funding for credit extension activities to meet its credit growth target;
- restructuring the borrower’s foreign debts;
What are the conditions for credit institutions and foreign bank branches in Vietnam to borrow short-term foreign loans?
Pursuant to Article 15 of Circular 08/2023/TT-NHNN regulating short-term foreign loan limits as follows:
Limit on short-term foreign loans
A borrower may apply for a short-term foreign loan if it meets the limit on short-term foreign loans as at December 31 of the year preceding the year in which the loan application is submitted. The limit on short-term foreign loans is the maximum ratio of total outstanding principal of short-term foreign loans to standalone equity, and shall not exceed:
1. 30% if the borrower is a commercial bank; or
2. 150% if the borrower is a FBB or another credit institution.
Accordingly, a borrower may apply for a short-term foreign loan if it meets the limit on short-term foreign loans as at December 31 of the year preceding the year in which the loan application is submitted
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