Principles of performing foreign currency derivatives transactions in Vietnam for enterprises that are not guaranteed by the Government

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. What is the principle of performing foreign currency derivatives transactions for enterprises that are not guaranteed by the Government?

How is the general agreement on foreign loans regulated?

Pursuant to Article 6 of the Draft Circular on conditions for foreign loans of enterprises not guaranteed by the Government, foreign loan agreements must be signed in writing before or on the date of withdrawal of foreign loans. The signing of a foreign loan agreement on the date of withdrawal of the foreign loan capital is only done in the following cases:

- Credit institutions, foreign bank branches take short-term foreign loans;

- The portion of capital transferred by foreign investors into Vietnam used to meet investment preparation expenses shall be converted into foreign loans of the investment-receiving enterprise in accordance with current provisions of applicable laws. related guidance on foreign exchange management for foreign investment activities in Vietnam.

Principles of performing foreign currency derivatives transactions in Vietnam for enterprises that are not guaranteed by the Government

What are the rules for performing foreign currency derivatives transactions?

Pursuant to Article 10 of the Draft Circular stipulating the conditions for foreign loans of enterprises not guaranteed by the Government, foreign currency derivatives transactions are as follows:

- Borrowers must conduct foreign currency derivative transactions according to the following principles:

+ For short-term foreign loans, the borrower must conduct foreign currency derivative transactions for short-term foreign loans with a loan turnover of over USD 500,000 or another foreign currency of equivalent value; the time of implementation before or at the time of withdrawal of the loan; the minimum transaction value is 30% of the withdrawal value; The transaction term is consistent with the repayment plan of the foreign short-term loan.

+ For medium and long-term foreign loans, the Borrower must conduct foreign currency derivative transactions for remittances to repay the principal with a value of over USD 500,000 or another foreign currency of equivalent value; at least 3 months before the principal repayment date; the value of the transaction is at least 30% of the principal repayment amount; The term of the transaction is consistent with the principal repayment plan of the medium and long-term foreign loan.

- Responsibilities of the Borrower in the process of performing foreign currency derivative transactions

+ When repaying a foreign loan, the borrower is responsible for presenting to the authorized credit institution where the account service is provided records and documents proving that the foreign currency derivative transaction has been performed in accordance with the law. the principles specified in Clause 1 of this Article.

+ In case the Borrower does not conduct foreign currency derivative transactions because it is expected to have enough foreign currency revenue to repay the loan, but when the debt is due, the Borrower does not have or does not have enough foreign currency to repay the debt. Borrower and can prove that due to objective reasons, payment of foreign currency from production and business activities of the Borrower is delayed, the borrower is entitled to buy foreign currency at an authorized credit institution to repay the loan. . The borrower must commit to sell foreign currency to credit institutions that have sold foreign currency when receiving foreign currency from production and business activities.

- Responsibilities of authorized credit institutions

+ The authorized credit institution that provides account services for foreign loans is responsible for checking and storing documents provided by the borrower on the performance of foreign currency derivative transactions and documents. transfer money from an authorized credit institution where the Borrower conducts foreign currency derivative transactions to serve as a basis for checking the Borrower's compliance in performing foreign currency derivative transactions.

+ The authorized credit institution where the Borrower conducts the foreign currency derivative transaction is responsible for providing reference information about the foreign loan that the Borrower conducts the foreign currency derivative transaction at the money transfer wire to Licensed credit institutions that provide account services for foreign loans have facilities for checking and comparing information.

+ The authorized credit institution where the borrower buys foreign currency to repay the foreign loan in the case specified at point b, clause 3 of this Article is responsible for requesting the borrower to provide vouchers and supporting documents. Explain the objective reasons for the delay in payment of foreign currency from production and business activities of the borrower and request the borrower to commit to selling foreign currency when receiving foreign currency from production and business activities. 

Khanh Linh

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