What is the indebtedness amount between the borrower and the grantor? What are the responsibilities of bank providing secured transactions in Vietnam?
What is a bank providing secured transactions in Vietnam?
Pursuant to the provisions of Clause 3, Article 3 of Circular No. 12/2022/TT-NHNN, bank providing secured transactions refer to credit institutions, foreign bank branches operating within the territory of Vietnam which provide money transfer for performing guarantee obligations or for realizing collateral relating to foreign loans.
Clause 1, Article 3 of Circular No. 12/2022/TT-NHNN stipulates that foreign loan is a generic term which means foreign loans that are not guaranteed by the Government (hereinafter referred to as conventional loan) and those that are guaranteed by the Government by means of foreign borrowing through borrowing contracts, deferred payment contracts for import of goods, lending entrustment contracts, contracts for finance leasing or debt instrument issuance on the international market of the borrower.
What is the indebtedness amount between the borrower and the grantor? What are the responsibilities of bank providing secured transactions in Vietnam? (Image from the Internet)
What is the indebtedness amount between the borrower and the grantor?
Pursuant to Article 38 of Circular No. 12/2022/TT-NHNN on indebtedness amount between the borrower and the grantor as follows:
Indebtedness amount between the borrower and the grantor
1. Indebtedness amount (if any) between the borrower and the grantor is a debt that the borrower is obliged to repay to the grantor after the grantor has performed the security obligation under agreements between the borrower, the grantor, the creditor in relation to the foreign loan (hereinafter referred to as the “indebtedness amount”).
2. The maximum indebtedness amount does not exceed an amount equivalent to the debt obligation under the foreign loan agreement that has been done through the performance of security interests.
3. In case the borrower and the grantor being resident have an agreement on interest and fees for the indebtedness amount, the agreement details on the interest and fees for the indebtedness amount must be consistent with current regulations of the Civil Code.
4. In case the borrower and the grantor being non-resident have an agreement on interest and fees on the indebtedness amount, the total amount of interest and fees paid by the borrower to the grantor, converted into an annual percentage on the total indebtedness amount that does not exceed the interest rate applicable to the late payment loan amount specified in the foreign loan agreement with security interests.
5. Agreement on currency used for indebtedness amount and currency used for payment for indebtedness amounts within a territory must be consistent with regulations on restrictions on use of foreign exchange in the territory of Vietnam.
Thus, it can be understood that indebtedness amount (if any) between the borrower and the grantor is a debt that the borrower is obliged to repay to the grantor after the grantor has performed the security obligation under agreements between the borrower, the grantor, the creditor in relation to the foreign loan.
In addition, the reimbursement of indebtedness amounts is specified in Article 39 of Circular No. 12/2022/TT-NHNN as follows:
Reimbursement of indebtedness amounts
1. The borrower shall carry out reimbursement of indebtedness amounts to the grantor on the basis of presenting the followings to the service account provider:
a) Foreign loan agreement and other documents on security relating to foreign loans;
b) Agreement of parties on reimbursement of indebtedness amount from the borrower to the grantor;
c) Documentation supporting that the grantor has performed security obligations related to the foreign loan (copies of money transfer document proving that the guarantor has acted on behalf of the borrower to repay debts, document proving that the amount for performance of security obligations has been transferred to the bank providing security transactions, document proving that the collateral has been handed over to perform the obligations);
d) Other document or records (if any) according to regulations of the account service provider.
2. Reimbursement of the indebtedness amount to the grantor must be carried out through foreign loan accounts. In the event that the currency for payment of the indebtedness amount is different with the currency of the foreign loan account, the borrower may do the reimbursement via another account opened at the borrower’s account service provider.
What are the responsibilities of bank providing secured transactions in Vietnam?
Pursuant to Article 44 of Circular No. 12/2022/TT-NHNN on the responsibilities of the bank providing secured transactions as follows:
- Provide money transfer services to fulfill security obligations as prescribed in this Circular.
- Check and keep documents when providing money transfer services to fulfill security obligations as prescribed in this Circular.
- Provide accurate information on the money transfer for performance of security obligations at the request of the competent authority, the borrower, the borrower's account service provider.
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