Recently, the State Bank of Vietnam issued Official Dispatch 1576/NHNN-CSTT in 2017 to address questions related to the regulations on lending activities of credit institutions and foreign bank branches to customers under Circular 39/2016/TT-NHNN.
Article table of contents
Response to several issues such as:
- Scope and Subjects of Application:- Is the Vietnam Bank for Social Policies subject to the regulations of Circular 39?- Can branches of Vietnamese credit institutions established and operating abroad carry out lending activities as stipulated in Circular 39?- Explanation of Terms:- How should lending be conducted for subjects without legal personality such as cooperatives, households, and private enterprises that need to borrow funds?- How should family relationships be determined to conduct lending for personal needs?- ...- Conditions for Loans- Prohibited Lending Purposes:- Can credit institutions lend for purchasing jewelry gold?- Circular 39 does not stipulate the annulment of Official Dispatch 6960/NHNN-TTGSNH dated September 16, 2016, requesting the cessation of new prepayment loans and revolving credit. Can credit institutions lend for prepayment loans and revolving credit?- Can credit institutions lend to meet capital demands for paying off debts to individuals and entities that are not credit institutions?- Can credit institutions lend for the prepayment of the entire loan amount?- In cases where customers have loans due at a credit institution but their savings book is not due for withdrawal, can they pledge the savings book to borrow funds to repay the credit institution?- Lending Interest Rates:- According to Clause 1, Article 13 of Circular 39, credit institutions and customers agree on lending interest rates. Is this interest rate agreement subject to the provisions of Article 468 of the Civil Code?- Can credit institutions omit specifying the percentage interest rate in the loan agreement, mentioning instead that the interest rate will apply to each withdrawal and will be specified in the withdrawal slip cum promissory note?- When a loan repayment period is restructured, can credit institutions impose late repayment penalties on the principal and loan interest during the extension period?- Explain the minimum lending interest rate as stipulated in Clause 5, Article 13.- ...- Fees Related to Lending Activities: For loans with prolonged withdrawal periods divided into multiple stages, where the customer commits to withdraw a specific amount at each stage, if the customer fails to withdraw the committed amount in subsequent stages after the first disbursement, can the bank charge a commitment fee for those stages?- Information Provision: Can credit institutions provide customers with complete information before entering into loan agreements by disclosing such information at transaction counters and/or on the official website of the credit institution?- Repayment of Principal and Loan Interest: In cases where the customer is overdue on interest payments, what is the order of debt recovery? If the customer is overdue on interest but not principal, and upon the principal repayment date the customer has incoming funds insufficient to cover both the due principal and overdue interest, how should the credit institution prioritize debt recovery?- *Restructuring Loan Repayment Period;- Overdue Debts:- If a loan has not yet become overdue for principal repayment but has overdue interest, should it be converted to an overdue debt?- Does the conversion of overdue debts apply only to the principal amount that the customer cannot repay on time? Does this regulation conflict with regulations on debt classification and provisioning according to Circular 02/2013/TT-NHNN?- *Loan Agreements;- *Use of Loan Funds;- Penalties and Compensation for Damages: If within the loan agreement the credit institution and customer agree that the customer commits to withdraw a minimum amount corresponding to the loan limit but during disbursement the customer withdraws less than the agreed amount, can the bank impose a penalty for violation?- Lending Methods:- For limit-based lending methods, does the credit institution and customer need to follow loan procedures and sign a loan agreement for each disbursement?- The term of effectiveness for standby credit limits not exceeding one year should be understood how?- ...- Loan Terms: For banks with short remaining operational terms, can they lend for periods exceeding their operational terms?- Loan Documentation Retention.
See detailed content in Official Dispatch 1576/NHNN-CSTT dated March 14, 2017.
