Circular 06/2023/TT-NHNN: Notable point regarding lending transactions of credit institutions in Vietnam from September 1, 2023

Hello, Lawnet would like to answer the following:

On June 28, 2023, the Governor of the State Bank of Vietnam issued Circular 06/2023/TT-NHNN providing amendments to the Circular 39/2016/TT-NHNN prescribing lending transactions of credit institutions and foreign bank branches with customers

1. Rejected loan demands from September 1, 2023 in Vietnam

According to the provisions of Clause 2, Article 1 of Circular 06/2023/TT-NHNN, 10 rejected loan demands include:

- Loans used for doing business or investing in sectors or activities prohibited by the Investment Law.

- Loans used for paying expenses or meeting financial demands of business or investment in sectors or activities prohibited by the Investment Law and other transactions or activities prohibited by laws.

- Loans used for purchasing or using goods or services in the list of prohibited sectors and activities under the Investment Law.

- Loans used for buying gold bullion.

- Loans used for repaying loan debts owed to lending credit institutions, except those used for paying loan interests arising during the construction process which are accounted for in the total construction cost estimate approved by a competent authority in accordance with regulations of law.

- Loans used for repaying foreign loan debts (excluding foreign loans granted in the form of deferred payment for purchased goods) or repaying loan debts owed to other credit institutions, except for a loan used for making early repayment of an existing loan that meets the following conditions:

+ The term of the new loan does not exceed the remaining term of the old one;

+ The old loan has not yet undergone any debt rescheduling.

- Loans used for sending money to deposit accounts.

- Loans used for making capital contribution to, buying or receiving transfer of stakes of a limited liability company or a partnership, or shares of a joint-stock company that is not yet listed on the securities market or registered for trading on the Upcom system.

- Loans used for making capital contributions under capital contribution contracts, investment cooperation contracts or business cooperation contracts for executing investment projects that are unfit for sale or for business operation as prescribed by laws when the credit institution issues its lending decision.

- Loans used for financial offsetting purposes, except for those meeting the following conditions:

+ The customer has used their own funds for paying costs incurred from their business project for a period of less than 12 months by the time of grant of lending decision by the credit institution;

+ Costs paid using the customer’s funds for executing a business project are costs to be covered using the fund borrowed from the credit institution under the plan to use borrowed fund submitted to the credit institution when applying for a medium-term or long-term loan for executing that business project.

Thus, Circular 06/2023/TT-NHNN has added 04 additional rejected loan demands compared to Circular 39/2016/TT-NHNN.

2. Digital lending rules: The outstanding amount of loans for individuals shall not exceed VND 100.000.000 in Vietnam

According to the provisions of Clause 11 Article 1 and Article 4 of Circular 06/2023/TT-NHNN lending activities by electronic means, individuals may borrow no more than 100 million VND at a credit institution:

- Each credit institution must adopt solutions and technologies for identifying its customers and verifying customer identification data during its provision of digital lending services; shall assume responsibility for all risks that may arise, and meet the minimum requirements as prescribed.

- The outstanding amount of loans for living purposes given by a credit institution to an individual customer who has been identified or has his/her identification information duly verified as prescribed shall not exceed VND 100.000.000 (one hundred million).

- When there is a demand for a loan, a customer must send a credit institution documents/data evidencing its eligibility for such loan as prescribed, and others as referred to in the credit institution’s instructions.

- The credit institution shall organize assessment and approval of digital loan applications according to the principle of assignment of responsibilities to each individual or department for establishment and operation of the information system used for loan application assessment and lending decision-making stages. The credit institution must adopt mechanisms for determining the individual or department responsible for a risk whenever it arises, and promptly take actions against such a risk so as to ensure its efficient and safe assessment and approval of digital loan applications.

- The loan agreement shall be made in writing. If a loan agreement is made in the form of an electronic contract, it shall comply with regulations of law on electronic transactions. A loan agreement must meet minimum information requirements laid down in Article 23 of Circular 39/2016/ TT-NHNN.

- With regard to a loan agreement or credit contract signed before the effective date of this Circular, the credit institution and its customer shall continue complying with terms and conditions of the signed loan agreement or credit contract in accordance with regulations and laws in force at the date of signing of that loan agreement or credit contract. Any revisions to the signed loan agreement or credit contract must comply with the provisions of Circular 06/2023/TT-NHNN.

Thus, individuals taking loans to serve their daily needs and being able to identify and verify customer identification information according to regulations must not exceed VND 100 million at a credit institution.

Best regards!

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