New regulations on application for credit overextension submitted by VDB to the Ministry of Finance in Vietnam

New regulations on application for credit overextension submitted by VDB to the Ministry of Finance in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

On November 7, 2023, the Government issued Decree 78/2023/ND-CP amending and supplementing a number of articles of Decree 32/2017/ND-CP on State investment credit.

New regulations on application for credit overextension submitted by VDB to the Ministry of Finance in Vietnam

Application for credit overextension submitted by VDB to the Ministry of Finance for a single client or a single client and his/her related person includes:

- VDB’s written request form submitted to the Ministry of Finance for reporting to the Prime Minister to obtain his permission for credit overextension to a single client, a client and his/her related person;

- A document proving that VDB has met the conditions set out in clause 6 of Article 7, Decree 32/2017/ND-CP (amended in Decree 78/2023/ND-CP);

VDB shall, upon applying for credit overextension as prescribed in clause 4 of this Article, meet the following conditions:

(i) VDB has cooperated with other credit institutions in granting loan to a project offered credit overextensions while the need for loan of a single client exceeds the combined lending limit of VDB and other credit institutions; or has released the combined lending invitation letter to at least 05 other credit institutions, posted it on its website and mass media for at least 30 working days but no credit institutions participate in the combined lending;

(ii) At the time of applying for credit overextension, VDB shall meet the requirements for prudential ratios according to regulations of law applicable to VDB;

(iii) The limit on total amount of outstanding debts incurred from the credit extension is not more than four times VDB’s own capital and remaining balance of bonds guaranteed by the Government for a term of 05 years or more when calculating the credit overextensions in question.

- Record on VDB’s assessment of the borrower and their project that needs credit overextensions;

- Client’s written request for credit overextensions at VDB (copy taken from its master register or copy bearing VDB’s confirmation seal);

- Legal documents related to the applicant for credit overextensions (copies taken from their master registers or copies bearing VDB’s confirmation seal), including the Enterprise Registration Certificate or Establishment Decision issued by a competent authority (for public service provider exercising financial autonomy), audited financial statement for the last 03 years preceeding the application year and other relevant documents proving the client has fulfilled all conditions set out in clause 5 of Article 7, Decree 32/2017/ND-CP (amended in Decree 78/2023/ND-CP);

- Legal documents related to the project that needs credit overextensions (copies taken from their master registers or copies bearing VDB’s confirmation seal), including the Enterprise Registration Certificate or written approval for project granted by a competent authority and other relevant documents (if any);

- Status report on credit relationship and needs for credit overextensions of a single client or a client and his/her related person.

(Clause 7, Article 7, Decree 32/2017/ND-CP (amended in Decree 78/2023/ND-CP)

Procedures for considering granting credit overextensions in Vietnam

Procedures for considering granting credit overextensions in Vietnam are as follows:

- VDB sends the Ministry of Finance 01 set of documents prescribed in Article 4 hereof, whether directly or by post;

- Within 15 working days of receipt of all required documents from VDB, the Ministry of Finance shall request ministries, central and local authorities in writing for their advice on economic, engineering and legal aspects of the project, and client applying for credit overextension.

If these documents do not meet the conditions specified in clauses 5 and 6 of Decree 32/2017/ND-CP (amended in Decree 78/2023/ND-CP), the Ministry of Finance shall send a written notification clarifying which conditions are not met;

- Within 10 working days of receipt of the written request from the Ministry of Finance for advice, ministries, central and local authorities shall give their written opinions on issues under their respective jurisdiction to the Ministry of Finance.

Where necessary, the Ministry of Finance shall request VDB and client to explain issues on which ministries, central and local authorities have given their opinions within duration of 07 working days from the date on which the Ministry of Finance receives all opinions contributed by these entities.

Within duration of 07 working days of receipt of request from the Ministry of Finance, VDB and client shall send the Ministry of Finance written explanations for issues on which ministries, central and local authorities have given their opinions;

- Within duration of 10 working days of receipt of opinions from ministries, central and local authorities or explanations from VDB and client, the Ministry of Finance shall submit them to the Prime Minister for his review and grant of decision on VDB’s application for credit overextension;

- Within duration of 05 working days of receipt of the written opinion of the Prime Minister, the Ministry of Finance shall notify that opinion to VDB for their information and compliance.

(Clause 9, Article 7, Decree 32/2017/ND-CP (amended in Decree 78/2023/ND-CP))

More details can be found in Decree 78/2023/ND-CP effective from December 22, 2023.

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