How does the State Bank in Vietnam regulate security transactions for foreign loans?

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. So how does the State Bank of Vietnam regulate the cost of foreign loans and security transactions for foreign loans? Thank you!

How are secured transactions for foreign loans regulated?

Pursuant to Article 8 of the Draft Circular on conditions for foreign loans of enterprises not guaranteed by the Government as follows:

- Borrowers and related parties agree on security transactions for foreign loans on the principle of self-responsibility to comply with the provisions of current law on secured transactions and other provisions of law. relevant law.

- In the case of a foreign loan with collateral in the territory of Vietnam, the lender and related parties must use a representative organization to handle collateral which is a credit institution or foreign bank branch. a foreign or other legal entity established and operating under the laws of Vietnam, unless the securing party and the secured party agree on the handling of the security property in the manner that the secured party receives the security property itself. as a substitute for the performance of a secured obligation.

How does the State Bank in Vietnam regulate security transactions for foreign loans?

How are foreign loan fees regulated?

Pursuant to Article 9 of the Draft Circular on conditions for foreign loans of enterprises not guaranteed by the Government as follows:

- Foreign borrowing costs shall be agreed upon by the Borrower, Lender and related parties but in no case shall exceed the following cost ceilings:

+ For foreign loans in foreign currencies:

++ Reference interest rate + 8%/year in case foreign loans use reference interest rate; or

++ SOFR Term Rate + 8%/year in case foreign loans do not use reference interest rates.

The SOFR Term Rate specified in this Clause is the SOFR Term interest rate of 6 months announced by CME on the CME's official website, determined at the nearest time before the date of signing the loan agreement. foreign loans and amendments and supplements related to foreign borrowing costs.

+ For foreign loans in Vietnam Dong: interest rate of Vietnamese Government bonds + 8%/year.

The interest rate of Vietnamese Government bonds specified in this Clause is the exercise interest rate of 10-year government bonds in Vietnam dong at the nearest time before the date of signing the foreign loan agreement and amendment agreements. , additionally related to the cost of foreign borrowing.

- Borrower is responsible for preparing a table of cost estimates for foreign loans, ensuring the following principles:

+ The cost of foreign borrowing is estimated at the time of signing the foreign loan agreement and any amendments and supplements related to foreign borrowing costs;

+ The estimate of foreign borrowing costs must be signed and certified by the legal representative of the borrower for accuracy.

- Borrowers provide information on foreign borrowing costs as follows:

+ For short-term foreign loans: Borrowers present an estimate of foreign borrowing costs when withdrawing capital and repaying loans so that the authorized credit institution where the account service is provided has facilities to serve the purpose of the loan. withdraw capital, transfer money to pay the Borrower's foreign borrowing costs and provide it to the State Bank upon request.

+ For medium and long-term foreign loans: Borrower declares estimated foreign borrowing costs in the Application for registration and registration for change of foreign loans when registering and registering for change of foreign loans. according to the current law on foreign exchange management for borrowing and paying foreign debts of enterprises.

Khanh Linh

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