Methods for calculating maximum credit extension exceeding the limits in Vietnam

Methods for calculating maximum credit extension exceeding the limits in Vietnam (Internet image)

Methods for calculating maximum credit extension exceeding the limits in Vietnam 

On July 1, 2024, the Prime Minister of Vietnam issued Decision 09/2024/QD-TTg regarding the conditions, documentation, and procedures for requesting approval for the maximum credit extension exceeding the limits of a credit institution, branch of a foreign bank. In that regard, the formula to determine the maximum credit extension exceeding the limits is stipulated in Article 5 of Decision 09/2024/QD-TTg as follows:

The maximum credit extension exceeding the limits for a customer or a customer and their related parties is determined by the formula:

MCTDTĐ = TMDN + ĐN

Where:

- MCTDTĐ is the maximum credit extension exceeding the limits;

- TMDN is the total current credit balance at the reporting time;

- ĐN is the newly approved credit amount.

In the above formula, TMDN and ĐN are determined as follows:

- Total current credit balance at the reporting time (TMDN) calculated into the maximum credit extension exceeding the limits is the total credit balance of a customer or a customer and their related parties at the credit institution at the reporting time, including:

+ Total credit balance granted within the permissible limit under the authority of the credit institution;

+ Total credit balance of credit grants allowed by the Prime Minister of Vietnam to exceed the limit still effective at the reporting time.

- Newly approved credit request (ĐN): The newly requested amount calculated into the maximum credit limit is the total amount of new credits approved by the Prime Minister of Vietnam to exceed the limit.

Procedures for Reviewing Credit Exceeding the Threshold

Step 1: The credit institution submits to the State Bank of Vietnam 01 dossier as stipulated in Clause 1, Article 4 of Decision 09/2024/QD-TTg directly at the One-Stop Department or through postal services.

Step 2: Within 15 days from the date of receipt of the complete dossier of the credit institution:

If the credit institution's dossier does not meet the conditions stipulated in Article 3 of Decision 09/2024/QD-TTg, the State Bank of Vietnam informs the credit institution in writing, specifying the conditions not met;

If the credit institution's dossier is valid, the State Bank of Vietnam seeks input from relevant ministries, central authorities, and local authorities on the economic - technical - legal aspects of the project, proposal, and customer requesting the credit exceeding the threshold.

Step 3: Within 15 days from the date of receipt of the request letter from the State Bank of Vietnam, relevant ministries, central authorities, and local authorities provide written feedback on matters within their management scope to the State Bank of Vietnam. Based on the feedback from the ministries, central authorities, and local authorities, the State Bank of Vietnam requests the credit institution and the customer to explain related issues (if any).

Step 4: Within 40 days from receiving feedback from the ministries, central authorities, and local authorities or explanations from the credit institution and customer, the State Bank of Vietnam reviews the reasonableness and validity of the dossier requesting the credit exceeding the threshold provided by the credit institution:

If the credit institution's dossier does not meet the conditions stipulated in Article 3 of Decision 09/2024/QD-TTg, the State Bank of Vietnam informs the credit institution in writing, specifying the conditions not met;

If the credit institution's dossier is reasonable and valid, the State Bank of Vietnam submits it to the Prime Minister of Vietnam for review and decision on the request for credit exceeding the threshold of the credit institution.

Step 5: Based on the request for credit exceeding the threshold of the credit institution, the feedback from the State Bank of Vietnam and the relevant ministries, central authorities, and local authorities, the Prime Minister of Vietnam decides on the credit exceeding the threshold of the credit institution.

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