Decision 09/2024/QD-TTg stipulating the dossier and procedures for requesting approval for credit limits exceeding the maximum limit.
Has Decision 09 of the Prime Minister the Government of Vietnam Regulated the Dossier, Procedures for Requesting Approval for Maximum Credit Level Exceeding Limits?
On July 1, 2024, the Prime Minister issued Decision 09/2024/QD-TTg regulating the conditions, dossier, and procedures for requesting approval for a maximum credit level exceeding the limit of credit institutions and foreign bank branches.
Decision 09/2024/QD-TTg applies to the following subjects:
(1) Credit institutions and foreign bank branches (hereinafter referred to as credit institutions) including:
- Banks: Commercial banks, cooperative banks, joint venture banks, banks with 100% foreign capital;
- Non-bank credit institutions: General finance companies, specialized finance companies;
- People's credit funds;
- Microfinance institutions;
- Foreign bank branches.
(2) Borrowers, organizations, and individuals involved.
Currently, the concept of credit granting is defined in Clause 4, Article 4 of the Law on Credit Institutions 2024. Specifically, credit granting is an agreement allowing organizations and individuals to use an amount of money or a commitment to use an amount of money on the principle of repayment through lending, discounting, financial leasing, factoring, bank guarantee, letter of credit, and other credit granting operations.
Decision 09/2024/QD-TTg regulating the dossier, procedures for requesting approval for the maximum credit level exceeding the limit? (Image from the Internet)
What Conditions Must Borrowers, Projects, and Plans Seeking Credit Exceeding Limits Meet?
Based on Clause 1, Article 3 of Decision 09/2024/QD-TTg, borrowers, projects, and plans seeking credit exceeding limits must meet the following conditions:
- The borrower fulfills all conditions for credit granting according to legal regulations, does not have bad debt at credit institutions for three consecutive years before the time of requesting credit exceeding limits, and has a debt-to-equity ratio recorded in the most recent financial statement at the time of requesting credit exceeding limits not exceeding three times;
- The borrower requires capital to implement projects or business plans to perform the nation’s socio-economic tasks under one of the following cases:
- Implementing projects or plans with significant socio-economic importance to perform socio-economic development tasks and serve essential needs of the people in sectors and fields such as electricity, coal, oil and gas, fuel, transportation, and other fields as directed by the Government of Vietnam and the Prime Minister of the Government of Vietnam at different times;
- Implementing investment programs and projects decided by the National Assembly or the Prime Minister of the Government of Vietnam;
- Investing in prioritized and encouraged sectors according to Resolutions of the National Assembly and the Government of Vietnam on socio-economic development at different times.
- Projects and plans requesting credit exceeding limits must be evaluated by the credit institution as feasible, with the borrower having the ability to repay, and must comply with current regulations on investment and construction, align with production and business plans, and have received approval or an Investment Registration Certificate from the relevant authority.
How is the Maximum Credit Level Exceeding Limits Determined?
Based on Article 5 of Decision 09/2024/QD-TTg, the maximum credit level exceeding limits for a borrower and related parties is determined by the formula:
MCTDTD = TMDN + DN
Where:
MCTDTD is the maximum credit level exceeding limits;
TMDN is the total credit balance at the reporting time;
DN is the amount of new credit approved.
In the above formula, TMDN and DN are determined as follows:
- Total credit balance at the reporting time (TMDN) is calculated into the maximum credit level exceeding limits as the total credit balance of a borrower and related parties at the credit institution at the reporting time, including:
+ The total credit balance granted within the permissible limit under the credit institution's authority;
+ The total credit balance of credit grants already approved by the Prime Minister for exceeding limits and still valid at the reporting time.
- New credit request approved (DN): The new amount requested is calculated into the maximum credit level as the total amount of new credit grants approved by the Prime Minister for exceeding limits.
