Penalties and remedial measures for violations against regulations on credit extension in Vietnam

Penalties and remedial measures for violations against regulations on credit extension in Vietnam (Image from the Internet)

Violations against regulations on credit extension are specified in Article 14 of Decree 88/2019/ND-CP (effective from December 31, 2019) as follows:

1. A fine ranging from VND 10.000.000 to VND 15.000.000 shall be imposed for committing one of the following violations:

a) failing to comply with regulations on retention of credit extension-related documents;

b) failing to issue guarantee commitments according to the form designed by the credit institution or FBB; or

c) failing to publish or provide adequate information and documents to customers as prescribed by law.

2. A fine ranging from VND 15.000.000 to VND 20.000.000 shall be imposed for failing to inspect the use of borrowed funds and repayment by borrowers as prescribed by law.

3. A fine ranging from VND 20.000.000 to VND 30.000.000 shall be imposed for committing one of the following violations:

a) making a credit extension agreement or contract without sufficient contents required by law;

b) granting exemption or reduction of interest rates on credit extensions before promulgating internal rules or inconsistently with promulgated internal rules;

c) approving debt rescheduling or delinquency against law regulations;

d) imposing interests on extensions of credit against law regulations;

dd) collecting interests on delinquent debts against law regulations; or

e) collecting overdue loan debts against law regulations.

4. A fine ranging from VND 30.000.000 to VND 40.000.000 shall be imposed for committing one of the following violations:

a) collecting extension of credit-related fees against law regulations; or

b) employing disbursement methods against law regulations, except for the case prescribed in Point g Clause 4 Article 23 hereof.

5. A fine ranging from VND 40.000.000 to VND 50.000.000 shall be imposed for committing one of the following violations:

a) extending credit without entering into a written agreement or contract;

b) extending credits to entities ineligible for credit extension as prescribed by law;

c) extending credits without guarantee or extending credits with preferential conditions to entities prescribed in Clause 1 Article 127 of the Law on Credit Institutions;

d) committing any violations against regulations on credit extension in Clause 3 Article 127 of the Law on Credit Institutions;

dd) granting loans to meet loan demands which must be rejected as prescribed by law;

e) signing agreements or commitments on issuance of guarantee beyond the power prescribed by law; or

g) providing factoring for one or some cases in which factoring is not allowed as prescribed by law.

6. A fine ranging from VND 80.000.000 to VND 120.000.000 shall be imposed for committing one of the following violations:

a) committing violations against regulations on limits of credit in Clauses 2, 4 Article 127, Clauses 1, 2 and 8 Article 128 of the Law on Credit Institutions;

b) extending credits in other forms without obtaining the written approval from SBV; or

c) committing violations against regulations on maximum loan amounts granted by credit institutions for outward investment.

7. A fine ranging from VND 120.000.000 to VND 180.000.000 shall be imposed for committing violations against limits on and conditions for extension of credits for investment or trading in shares or corporate bonds by credit institutions and FBBs.

8. A fine ranging from VND 250.000.000 to VND 300.000.000 shall be imposed for extending credits to the entities prescribed in Clauses 1, 3, 4, 5 and 6 Article 126 of the Law on Credit Institutions.

9. Remedial measures:

a) Enforced recovery of the amounts of credit extended beyond the prescribed limits within a maximum duration of 06 months from the effective date of the decision on administrative penalty imposition if the violation prescribed in Point a Clause 6, Clause 7 of this Article is committed;

b) Enforced recovery of debts within a maximum duration of 06 months from the effective date of the decision on administrative penalty imposition if the violation prescribed in Points b, dd Clause 5, Point b Clause 6, Clause 8 of this Article is committed;

c) Enforced transfer of shares/stakes by majority shareholders or founding shareholders in accordance with law regulations within a maximum duration of 06 months from the effective date of the decision on administrative penalty imposition if the violation prescribed in Points b, c, d Clause 5, Point a Clause 6 of this Article is committed;

d) Proposed suspension of violating entities and/or persons responsible for the violation from holding the management or supervision position for 01 – 03 months, proposed dismissal or prohibition from holding the management or supervision position at a credit institution or FBB if any of the violations prescribed in Clause 5, Point a Clause 6, Clause 7 and Clause 8 of this Article is committed.

Proposed dismissal and implementation of other appropriate measures against violating entities within the competence of a credit institution or FBB.

Above is the content of the regulations regarding the issue you are wondering about.

Best regards!