Fees related to lending activities between credit institutions and customers in Vietnam

Fees related to lending activities between credit institutions and customers in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. Fees related to lending activities between credit institutions and customers in Vietnam

Specifically, in Article 14 of Circular 39/2016/TT-NHNN, the credit institution and its customer must agree on collection of fees related to lending operations, including:

- Exit fee paid by a customer for repayment of debt before the due date.

- Fee paid for provisional credit limit.

- Fee paid for syndicated loan arrangement.

- Fee paid for a commitment to borrowed fund withdrawal during the period from the date of entry into force of the loan agreement to the date of initial disbursement of borrowed fund.

- Other fees related to lending operations which are specified in relevant legal documents.

2. Loan category of credit institutions in Vietnam

According to Article 10 of Circular 39/2016/TT-NHNN, a credit institution shall consider granting a decision to offer a loan to a customer which is divided into the following categories:

- Short-term loan, defined as loans having the maximum loan term of 01 (one) year.

- Medium-term loan, defined as loans having the loan term between above 01 (one) year and 05 (five) years at the maximum.

- Long-term loan, defined as loans having the loan term of more than 05 (five) years.

3. Regulations on borrowed fund guarantee in Vietnam

Pursuant to Article 15 of Circular 39/2016/TT-NHNN stipulating borrowed fund guarantee as follows:

- The credit institution and its customer shall agree on whether or not a security for a borrowed fund is implemented. Agreement on security for the borrowed fund between the credit institution and its customer must conform to regulations of the laws on security and relevant legislation.

- The credit institution shall make its decision on and bear responsibility for any unsecured loan.

- The customer and guarantor must liaise with the credit institution to treat assets pledged as collateral for loans when there are sufficient grounds for such treatment under terms and conditions of loan agreements, loan guarantee contracts, laws and regulations.

4. Provision of information in lending activities in Vietnam

Provision of information in lending activities is specified in Article 16 of Circular 39/2016/TT-NHNN as follows:

- The credit institution shall be responsible for providing the customer with all necessary information before establishment of a loan agreement, including such information as

+ Loan interest rate, principles and factors for determination of interest rate, date of determination of interest rate in case of application of variable interest rate;

+ Interest rate charged for overdue principal; interest rate charged for interest of which payment is late;

+ Method for calculation of loan interest rate;

+ Type and amount of loan fee;

+ Criteria for classifying borrowing customers by loan interest rates as referred to in clause 2 article 13 of Circular 39/2016/TT-NHNN.

- The customer shall provide information for the credit institution and assume legal responsibility for accuracy, authenticity and integrity of submissions to the credit institution, including the following documents or materials:

+ Those stipulated by Article 9 of Circular 39/2016/TT-NHNN;

+ Report representing use of loan and evidence that the loan fund is used to serve the purposes specified in the loan agreement;

+ Documents evidencing implementation of security for the loan.

5. Assessment of loan application and grant of decision to offer a loan in Vietnam

Assessment of loan application and grant of decision to offer a loan are specified in Article 17 of Circular 39/2016/TT-NHNN as follows:

- The credit institution shall assess customer’s ability to satisfy loan requirements as prescribed by Article 7 hereof in order to consider granting a decision to offer a loan. In the course of such assessment, the credit institution can use the internal credit rating system associated with information available at the National Credit Information Center of Vietnam and other communications channels.

- The credit institution must establish loan approval procedures according to the principle of assignment of responsibilities in the assessment and decision-making stages.

- In the event of refusal to offer a loan, the credit institution shall notify the customer submitting loan application of reasons for such rejection.

Ho Quoc Tuan

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