Vietnam: Regulations on direct disbursement of borrowed funds to customers should be noted

The direct disbursement of borrowed funds existing in cash form to customers or the direct disbursement of borrowed funds to customers by using non-cash payment services is guided in Clause 11 Article 1 of Circular No. 18/2019/TT-NHNN of the State Bank of Vietnam as follows:

- Directly disbursing borrowed funds existing in cash form to customers must conform to regulations of the State Bank on approaches to disbursing borrowed funds by credit institutions and foreign bank branches to customers as provided in clause 3, 4, 5 and 6 Article 8a and Article 7 of Circular No. 43/2016/TT-NHNN.

- Directly disbursing borrowed funds to customers by using non-cash payment services shall be subject to decisions of finance companies made based on information, documents and evidence related to payments which are provided by customers, and must conform to regulations laid down in clause 3, 4, 5, 6, 7 and 8 Article 8a and Article 7 herein as well as other legislative regulations on non-cash payments.

Specifically, finance companies shall only be entitled to disburse borrowed funds directly to customers who do not owe bad debts according to reports on credit relationships searched in the National Credit Information Center of Vietnam at the time most recent to the date of conclusion of a consumer lending contract.

The ratio of total outstanding debt of consumer loans directly disbursed to customers at a finance company to total outstanding debt of consumer credit facilities of that finance company at the end of a working day immediately preceding the date of conclusion of a consumer lease under which borrowed funds are directly disbursed to customers must fall within one of the maximum limits set according to the following schedule:

- From January 01, 2021 to December 31, 2021:   70%;

- From January 01, 2022 to end of December 31, 2022:   60%;

- From January 01, 2023 to end of December 31, 2023:   50%;

- From January 01, 2024:  30%.

In which:

- Total outstanding debt of consumer loans directly disbursed to customers and total outstanding debt of consumer credit facilities of a finance company shall include the amounts of consumer loans offered customers in the form of direct disbursement under consumer leases in effect prior to the date of conclusion of the consumer lease referred to in clause 4 Article 8a even through disbursement of such loans have not yet been made.

- Total outstanding debt of consumer loans directly disbursed to customers at a finance company shall cover any customer owing the outstanding debt of greater than 20,000,000 dong (twenty million dong) (including the amounts of consumer loans offered customers under consumer leases already in effect prior to the end of the signature date of the consumer lease prescribed in clause 4 Article 8a in the form of direct disbursements which have not yet been made to customers).

In particular, finance companies shall be obliged to inform customers of legislative regulations and internal rules on approaches to directly disbursing loans to customers by using non-cash payment services; inform customers, credit institutions and foreign bank branches involved in direct disbursement of loans to customers by using non-cash payment services of the daily time frame of transactions.

Customers shall be obligated to provide information, documents and evidence related to payments in accordance with regulations of finance companies to serve the purposes of considering decisions on approaches to directly disbursing loans to customers by using non-cash payment services. Customers shall be legally liable for accuracy and authenticity of information, documents and evidence provided to finance companies.

View other provisions at Circular No. 18/2019/TT-NHNN of the State Bank of Vietnam, effective from January 01, 2020.

Thu Ba

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