Cases in which withdrawal of loan proceeds or debt repayment is not carried out through foreign loan accounts in Vietnam

Cases in which withdrawal of loan proceeds is not carried out through foreign loan accounts in Vietnam

Pursuant to Clause 1 Article 34 of the Circular 12/2022/TT-NHNN (takes effect from 15/11/2022) stipulating cases in which withdrawal of loan proceeds is not carried out through foreign loan accounts in Vietnam as follows:

a) Withdrawing loan proceeds in the form that the borrower directly pays the non-resident beneficiary providing goods or services under goods or services sale and purchase contracts with residents being the creditor;

b) Withdrawing foreign loan proceeds in the form of finance lease;

c) Withdrawing loan proceeds through the account that the borrower opens abroad in case the borrower is allowed to open accounts abroad for arrangement of foreign loans;

d) Withdrawing loan proceeds from mid-term, long-term foreign loans through settling or clearing against direct payment obligations to the creditor, including: payment obligation under the goods import contract, obligation to repay foreign loan debt, the obligation to repay the indebtedness amount under the provisions of this Circular directly to the creditor;

dd) Withdrawing loan proceeds in case the amount of money for investment preparation is converted into a foreign loan as agreed between the parties in accordance with the law on foreign exchange management for foreign direct investment activities into Vietnam.

Cases in which withdrawal of debt repayment is not carried out through foreign loan accounts in Vietnam

Pursuant to Clause 2 Article 34 of the Circular 12/2022/TT-NHNN (takes effect from 15/11/2022) stipulating cases in which withdrawal of debt repayment is not carried out through foreign loan accounts in Vietnam as follows:

a) Paying debts by means of providing goods or services for the borrower;

b) Paying debts in the form that the creditor and the borrower agree to convert the outstanding debt into shares or contributed capital of the borrower;

c) Paying debts in the form that the creditor and the borrower agree to swap the outstanding debt into shares or contributed capital owned by the borrower;

d) Paying debts incurred from mid-term or long-term loans through settling or clearing against direct receivables with the borrower;

dd) Paying debts through the account that the borrower opens abroad (in case the borrower is allowed to open accounts abroad for arrangement of foreign loans).

What are regulations on bank providing secured transactions regarding foreign conventional loans in Vietnam?

Pursuant to Article 37 of the Circular 12/2022/TT-NHNN (takes effect from 15/11/2022) stipulating bank providing secured transactions regarding foreign conventional loans in Vietnam as follows:

1. Money transfer for performance of security obligations (including money transfer for performance of guarantee obligations and money transfer for performance of collateralized security obligations) must be done through 01 bank providing secured transactions, except for the cases specified in Clause 3, Article 36 of this Circular.

2. In case the bank providing secured transactions is also the bank providing account services of foreign loans, this bank is responsible for checking and keeping relevant documents in accordance with the provisions of this Circular when transferring money to perform security obligations as prescribed in this Circular.

3. In case the bank providing secured transactions is not a bank providing account services of foreign loans, when transferring money to perform security obligations, the bank shall have the following responsibilities:

a) Examine and keep documents and transfer money on the basis of documents mentioned in Clause 4 of this Article;

b) Within 07 working days from the date of money transfer to perform the security obligation, notify and send to the account service provider the documents proving the debt amount (principal, interest, fee) paid to the creditor through the performance of security obligations for the account service provider to monitor, determine the outstanding balance of principal, interest, and fees of the loan and serve as a basis for the transfer of funds to repay the indebtedness amount between the borrower and the grantor as prescribed in this Circular.

4. Documents for the authorized bank providing secured transactions to transfer money to perform the security obligation for the foreign loan, including:

a) Foreign loan agreement;

b) Agreements on guarantee, collateralized security related to foreign loans;

c) A written request for performance of security obligations from the creditor (or the creditor’s representative or the creditor’s representative to realize the collateral) according to the agreement of the parties to the guarantee; realization of collateral, specifying the payment obligations that the borrower is unable to perform the obligations under the loan agreement;

d) A written certification of the borrower's account service provider on the withdrawal of loan proceeds and loan repayment up to the time of request for money transfer to perform security obligations;

dd) Written confirmation of registration or registration for changes of foreign loans issued by the State Bank, identifying the security interests for foreign loans (applicable to the case in which foreign loans are subject to registration with the State Bank);

e) Other documents (if any) as prescribed by the bank providing secured transactions.

5. The borrower is responsible for notifying the grantor of the bank providing account services, the bank providing secured transactions and fully declaring information about these banks when registering and registering the change of foreign loan (in case the loan is subject to foreign loan registration as prescribed in this Circular).

Best regards!