Regulations on inspection of loan use in Vietnam

This article provides details of the inspection of loan use under the newest regulations in Vietnam

Regulations on inspection of loan use in Vietnam

Regulations on inspection of loan use in Vietnam (Internet image)

Regulations on inspection of loan use in Vietnam

The inspection of loan use in Vietnam is regulated in Article 24 of Circular 39/2016/TT-NHNN (amended by Circular 12/2024/TT-NHNN) as follows:

  • Customers are obligated to use the borrowed funds for the purposes committed, fully repay the principal, interest, and fees on time according to the agreement; report on the use of the borrowed funds and provide information, documents, and data proving that the borrowed funds are used correctly as per the purpose.

  • Credit institutions have the right and duty to inspect and supervise the use of borrowed funds and the repayment of debts by the customer as specified in Clause 1, Article 102 of the Law on Credit Institutions 2024; they have the right to request the customer to report on the use of the borrowed funds and provide information, documents, and data proving that the borrowed funds are used for the correct purpose.

  • For small loan amounts, credit institutions must have measures to inspect and supervise the use of borrowed funds to ensure they are used for the purposes committed and to ensure the repayment of the principal and interest fully and on time according to the agreement.

Regulations on provision of information when borrowing from banks in Vietnam

- Credit institutions are responsible for providing customers with complete information before establishing loan agreements: lending interest rates; principles and factors for determining, timing for determining interest rates in cases where adjustable interest rates apply; interest rates for overdue principal; interest rates for delayed interest payments; methods of calculating loan interest; types and levels of fees applicable to the loan; criteria for identifying customers eligible for loans based on lending interest rates as specified in Clause 2, Article 13 of Circular 39/2016/TT-NHNN.

- Customers are responsible for providing information, documents, and data to credit institutions that are truthful, accurate, complete, timely, and are held liable for the provision of this information, documents, and data:

  • The information, documents, and data specified in Clause 1, Article 9 of Circular 39/2016/TT-NHNN;

  • Reports on the use of the borrowed funds and supply of information, documents, and data proving the borrowed funds are used for the correct purposes as stated in the loan agreement;

  • Information, documents, and data on security measures for loans in cases where the credit institution and customer have agreed on the application of security measures.

(Article 16 of Circular 39/2016/TT-NHNN (amended by Circular 12/2024/TT-NHNN))

Regulations on rejected loan demands in Vietnam

Credit institutions in Vietnam shall not be allowed to approve the following loan demands:

  • To carry out investment business activities belonging to the prohibited industries and trades as specified in the Investment Law 2020.

  • To pay expenses, meet financial needs for investment business activities belonging to the prohibited industries and trades as specified in the Investment Law 2020 and other transactions or acts prohibited by law.

  • To purchase, use goods and services belonging to the prohibited industries and trades as prescribed in the Investment Law 2020.

  • To purchase gold bars.

  • To repay credit granted at the lending credit institution, except for loans to pay interest arising during construction project execution, where interest costs are calculated as part of the total construction investment approved by authorized agencies under legal regulations.

  • To repay foreign loans (excluding foreign loans in the form of deferred payment for goods), credit granted at other credit institutions, except for loans to repay early existing loans, provided all the following conditions are met:

    • The loan term does not exceed the remaining term of the previous loan;
    • The existing loan has not been restructured for repayment term.

(Article 8 of Circular 39/2016/TT-NHNN (amended by Circular 06/2023/TT-NHNN))

Nguyen Ngoc Que Anh

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