What are regulations on receipts and expenditures of foreign loan accounts denominated in foreign currencies in Vietnam?

What are regulations on receipts and expenditures of foreign loan accounts denominated in foreign currencies in Vietnam?

Pursuant to Article 28 of the Circular 12/2022/TT-NHNN (takes effect from 15/11/2022) stipulating receipts and expenditures of foreign loan accounts denominated in foreign currencies in Vietnam as follows:

Foreign loan accounts denominated in foreign currencies shall only be used for performing transactions relating to foreign borrowing and foreign debt repayment activities as follows:

1. Receipts from:

a) Withdrawing foreign loan proceeds;

b) Purchasing foreign currency from account service providers for the purpose of repaying debts (principal and interest) incurred from foreign loans or indebtedness amounts between the creditor and the grantor (of security interest) being a non-resident, or payment of fees in accordance with loan agreements;

c) Converting foreign currency from foreign loan proceed withdrawals in the event that the creditor's disbursements are not denominated in the currency unit used in the foreign loan account;

d) Foreign-currency payment account that the borrower opens at a credit institution licensed within the territory of Vietnam, and foreign currency account that the borrower opens abroad;

dd) Permissible amounts receivable from derivative transactions in conjunction with foreign loans;

e) Interests earned on account balances as per applicable laws.

2. Expenditures on:

a) transferring money to repay debts (principal and interest) incurred from foreign loans;

b) transferring money abroad to pay fees under loan agreements, pay compulsory debt owed to the non-resident grantor under the provisions of Chapter V hereof;

c) transferring money to the borrower’s foreign-currency payment accounts;

d) selling foreign currency to authorized credit institutions;

dd) transferring money to the foreign currency account that the borrower opens abroad to secure commitments stated in foreign loan agreements;

g) Buying foreign currency to pay debts (principal, interest) incurred from foreign loans in the event that currency used for debt repayment is not the one used in the foreign loan account;

g) Service charges for account management and money transfer through accounts as stipulated by the account service provider;

h) Permissible amounts payable to derivative transactions for preventing risks of exchange rates and interests relating to foreign loans.

What are regulations on receipts and expenditures of foreign loan accounts denominated in Vietnam dong?

Pursuant to Article 29 of the Circular 12/2022/TT-NHNN (takes effect from 15/11/2022) stipulating receipts and expenditures of foreign loan accounts denominated in Vietnam dong as follows:

Foreign loan accounts denominated in Vietnam dong shall only be used for performing transactions relating to foreign loans denominated in Vietnam dong as follows:

1. Receipts from:

a) transferring foreign loan proceed withdrawals in the event that the creditor uses Vietnam-dong payment accounts opened at credit institutions, foreign bank branches located within the territory of Vietnam;

b) withdrawing loan proceeds from sale of foreign currency to authorized credit institutions located within the territory of Vietnam in case the creditor does not use Vietnam-dong payment accounts opened within the territory of Vietnam for loan disbursement purposes;

c) transferring money from Vietnam-dong payment accounts of the borrower;

d) Interests earned on account balances as per applicable laws.

2. Expenditures on:

a) transferring money to Vietnam-dong payment accounts of the borrower to pay debts (principal, interest) in the event that the borrower uses Vietnam-dong payment accounts for the purpose of recovering debts agreed upon in loan agreements;

b) buying foreign currency to pay debts (principal, interest) incurred from foreign loans in case the borrower does not use Vietnam-dong payment accounts for the purpose of recovering debts agreed upon in loan agreements;

c) paying indebtedness amount between the borrower and the grantor under the provisions of Chapter V hereof;

d) paying fees denominated in Vietnam dong, and buying foreign currency to pay fees denominated in foreign currency in relation to foreign loans;

dd) transferring money to Vietnam-dong payment accounts of the borrower;

e) Service charges for account management and money transfer through accounts as stipulated by the account service provider.

What are regulations on the creditor's foreign loan account opened at a credit institution or foreign bank branch in Vietnam?

Pursuant to Article 30 of the Circular 12/2022/TT-NHNN (takes effect from 15/11/2022) stipulating the creditor's foreign loan account opened at a credit institution or foreign bank branch in Vietnam as follows:

1. The creditor opens and uses a Vietnamese dong payment account of a non-resident at a credit institution or foreign bank branch in Vietnam for the following purposes:

a) Disbursement and debt recovery of foreign loans in Vietnam dong in case the borrower that is a foreign-invested enterprise takes a loan from profits from direct investment activities in the Vietnamese territory of the creditor being a foreign investor that contributes capital to the borrower;

b) Recovering debts of loans subject to registration as prescribed in Clauses 2 and 3, Article 11 of this Circular but ineligible for registration confirmation;

c) Recovering outstanding debts of foreign loans but the confirmation of registration, registration for changes of foreign loans is cancelled due to fraudulent information, forged documents in the application in accordance with this Circular.

2. The creditor may not use the checking account in Vietnam dong specified in Clause 1 of this Article for other purposes except for the following transactions:

a) Receipt from the creditor’s profits distributed from direct investment activities in the territory of Vietnam

b) Expenditure on buying foreign currency to transfer to overseas creditor's account;

c) Expenditure on transfer to another checking account in Vietnam dong opened by the creditor at a credit institution or foreign bank branch in Vietnam;

d) Expenditure on service charges for account management and money transfer through accounts as stipulated by the account service provider.

3. The creditor's use of foreign currency accounts of non-residents at commercial banks for disbursement and debt recovery for foreign loans must comply with the provisions of law on restrictions on the use of foreign exchange on the territory of Vietnam.

4. In case of opening and using an account in the Vietnamese territory, the creditor is responsible for complying with the provisions of law on the opening and use of accounts of non-residents at commercial banks in Vietnam to conduct receipt and expenditure transactions related to foreign loans.

Best regards!