Estimated conditions for credit institutions, state bank branches in Vietnam to borrow foreign capital?

The State Bank of Vietnam is collecting comments on the draft Circular stipulating conditions for foreign loans of enterprises not guaranteed by the Government, this Circular will replacing Circular 12 with stricter foreign loan conditions. Accordingly, there are specific regulations on conditions for credit institutions and state bank branches to be allowed to borrow foreign capital.

What is the limit on foreign loans?

Pursuant to Article 13 of the Draft Circular stipulating conditions for foreign loans of enterprises not guaranteed by the Government as follows:

- When taking short-term foreign loans, the Borrower must ensure that the maximum ratio of the total outstanding short-term foreign loans (including short-term foreign loans expected to be realized) is calculated on the equity capital at working days. at the end of the year immediately preceding the time of signing the foreign loan agreement according to the schedule as follows:

+ In 2023: 25% for credit institutions and 100% for foreign bank branches;

+ From 2014 onwards: 20% for credit institutions and 80% for foreign bank branches.

- When borrowing medium and long-term foreign loans, the Borrower must ensure the total net withdrawal (withdrawal value minus the repayment value) of the Borrower's medium- and long-term foreign loans during the year (including including medium and long-term foreign loans expected to be implemented) based on equity capital as at the last working day of the month immediately preceding the time of signing the foreign loan agreement, the maximum amount shall not exceed:

+ 10% applies to the borrower being a commercial bank;

+ 50% applies to the borrower being a bank fee credit institution, foreign bank branch, cooperative bank, policy bank.

Estimated conditions for credit institutions, state bank branches in Vietnam to borrow foreign capital?

What is the national debt safety ratio?

Pursuant to Article 14 of the Draft Circular stipulating the conditions for foreign loans of enterprises not guaranteed by the Government as follows:

- When taking short-term foreign loans, the Borrower must ensure compliance with the regulations of the State Bank on safety ratios specified in Clause 1, Article 130 of the Law on Credit Institutions for a period of 3 years. months prior to the date of signing the foreign loan agreement, unless the non-compliance with the provisions of law on safety ratios approved by the Prime Minister or the Governor of the State Bank in accordance with regulations of the State Bank of Vietnam. law.

- When borrowing medium-term and long-term foreign loans, the borrower is responsible for complying with the regulations of the State Bank on the safety ratios specified in Clause 1, Article 130 of the Law on Credit Institutions for a period of time. 3 months before the date of submission of the application for registration of a foreign loan, the application for registration of an increase in foreign loan turnover, except for the following cases:

+ Failure to comply with legal provisions on safety ratios approved by competent authorities in accordance with law;

+ Eligible medium- and long-term foreign loans are included in the tier-two capital of credit institutions and foreign bank branches and the implementation of this loan helps credit institutions and foreign bank branches meet comply with regulations on safety ratios.

Thus, in order to control and maintain safe debt thresholds approved by the National Assembly, the Prime Minister assigned the State Bank to more closely regulate foreign borrowing by the private sector.

Khanh Linh

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