Banks borrowing foreign capital must comply with regulations on prudential ratios in Vietnam

Banks borrowing foreign capital must comply with regulations on prudential ratios in Vietnam

Specifically, borrowers who are credit institutions or foreign bank branches borrowing foreign capital must comply with regulations on safety ratios as follows:

- When applying for a short-term foreign loan, the borrower shall be required to achieve the minimum levels of prudential ratios prescribed in the Law on Credit Institutions on the last day of each of the last 03 months prior to the signing date of the foreign loan agreement or agreement on increase in the foreign loan amount, except the case in Point c Clause 2 of Article 16 of Circular 08/2023/TT-NHNN.

- When applying for a medium/long-term foreign loan, the borrower shall be required to achieve the minimum levels of prudential ratios prescribed in the Law on Credit Institutions on the last day of each of the last 03 months prior to the signing date of the foreign loan agreement or agreement on increase in the foreign loan amount until the end of the month prior to the month in which an adequate application for administrative procedure processing is submitted as prescribed in current law regulations on management of foreign currency for foreign borrowing and debt repayment,

Except the following cases:

+ The medium/long-term foreign loan is eligible to be accounted for in tier-2 capital of the credit institution or FBB and will help the credit institution or FBB achieve the required levels of prudential ratios;

+ The borrower that gets a foreign loan in the form of issuance of bonds in the international market shall be required to achieve the minimum levels of prudential ratios imposed by the SBV in accordance with the Law on Credit Institutions on the last day of each of the last 03 months prior to the date of submission of an application for bond issuance registration;

+ The borrower that is an assisting credit institution under an approved recovery plan or a assisting credit institution placed under special control shall be required to achieve specific levels of prudential ratios imposed on them as prescribed in the Law on Credit Institutions.

More details can be found in Circular 08/2023/TT-NHNN taking effect on August 15, 2023, except for the cases specified in Clause 2, Article 21 of Circular 08/2023/TT-NHNN.

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