When applying for a medium/long-term foreign loan, when shall the borrower that is a credit institution be required to prove its loan purposes by presenting the plan for use of foreign loan capital in Vietnam?
- Shall the plan for use of foreign loan capital which are not guaranteed by the Government of Vietnam be approved by an authorized approving authority?
- What are the contents of the plan for use of foreign loan capital prepared by the borrower that is a credit institution in Vietnam?
- When applying for a medium/long-term foreign loan, when shall the borrower that is a credit institution be required to prove its loan purposes by presenting the plan for use of foreign loan capital in Vietnam?
Shall the plan for use of foreign loan capital which are not guaranteed by the Government of Vietnam be approved by an authorized approving authority?
Pursuant to Clause 1, Article 7 of Circular 08/2023/TT-NHNN on plan for use of foreign loan capital:
Plan for use of foreign loan capital
1. The plan for use of foreign loan capital is the business plan to be financed by the foreign loan, in which the borrower justifies their lawful and reasonable purposes and the need of the foreign loan. The borrower’s plan for use of foreign loan capital must be approved by a competent authority in accordance with provisions of the Investment Law, the Law on Enterprises, the Law on Credit Institutions, the Law on Cooperatives, the borrower’s charter and other relevant law provisions (hereinafter referred to as “authorized approving authority").
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Thus, the borrower’s plan for use of foreign loan capital must be approved by a competent authority in accordance with provisions of the Investment Law, the Law on Enterprises, the Law on Credit Institutions, the Law on Cooperatives, the borrower’s charter and other relevant law provisions (hereinafter referred to as “authorized approving authority").
In particular, according to the provisions of Clause 1, Article 3 of Decree 219/2013/ND-CP:
Borrowing of a foreign loan means a borrower receiving a credit amount from a non-resident through signing and implementing a foreign loan agreement in the form of loan contract, contract on goods purchase and sale on deferred payment, loan provision entrustment contract, financial leasing contract, or issuance by the borrower of debt instruments.
What are the contents of the plan for use of foreign loan capital prepared by the borrower that is a credit institution in Vietnam?
Pursuant to Clause 2, Article 7 of Circular 08/2023/TT-NHNN on plan for use of foreign loan capital:
The plan for use of foreign loan capital prepared by the borrower that is a credit institution have the following contents:
- Name of the borrower, type of the credit institution, equity capital, address, license for establishment and operation of the credit institution or license for establishment of the FBB, outstanding debts incurred from short-term, medium/long-term loans as at the planning date;
- Business objectives, total demand for capital mobilization, and demand for foreign loan capital of the borrower;
- Information on the foreign loan to be obtained;
- Purposes of the foreign loan, including: information on target customers to who the borrower considers giving loans using the foreign loan capital, planned lending interest rate and loan term;
- Foreign borrowing scale: loan amount, credit growth target, credit growth rate as at the planning date, comparison of the foreign borrowing scale with the remaining credit growth scale as at the end of the year or with the credit growth scale of the previous year in case information on credit growth target of the current year is not available;
- Measures for management of risks arising from the foreign loan;
- Authority to approve the plan for use of foreign loan capital: approving authority and grounds for determining approving authority;
- Other contents (if any).
What are the contents of the plan for use of foreign loan capital prepared by the borrower that is a credit institution in Vietnam? (Image from the Internet)
When applying for a medium/long-term foreign loan, when shall the borrower that is a credit institution be required to prove its loan purposes by presenting the plan for use of foreign loan capital in Vietnam?
Pursuant to Clause 2, Article 14 of Circular 08/2023/TT-NHNN on foreign loan purposes:
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.
When applying for a medium/long-term foreign loan, the borrower that is a credit institution shall be required to prove its loan purposes by presenting The plan for use of foreign loan capital as prescribed in Clause 2 Article 7 of Circular 08/2023/TT-NHNN if the loan is used for the purpose of increasing the borrower’s funding for credit extension activities to meet its credit growth target.
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