Loan agreement of the credit institution in Vietnam

Loan agreement of the credit institution in Vietnam (Internet image)

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

1. Loan agreement of the credit institution in Vietnam

- The loan agreement must be made in writing, including the following minimum requirements:

+ Name, address and corporate identity code of the lending credit institution; name, address, number of identification card or citizen identification card or passport of the customer;

+ Loan amount; loan limit for a line of credit loan; provisional credit limit for a provisional line of credit loan; overdraft limit for a current account overdraft facility;

+ Loan purposes;

+ Currency unit used for extending a loan or repaying debt;

+ Lending method;

+ Loan term; duration to maintain the loan limit for a line of credit loan, effective period of provisional credit limit for a provisional line of credit loan; duration to maintain the overdraft limit for a current account overdraft facility;

+ Agreed lending interest rate and interest rate converted into percent (%)/year which is calculated on the basis of the actual amount outstanding and duration of maintenance thereof as prescribed by Clause 3 Article 13 of Circular 39/2016/TT-NHNN;

Principles and factors of determination of interest rate, time of determination thereof in case of application of variable interest rate; interest rate charged on the outstanding amount of overdue principal; interest rate charged on late payment interest; type and amount of loan fee applied;

+ Loan disbursement and use of payment instrument for disbursement of borrowed funds;

+ Loan principal and interest repayment, and priority order of recovery of loan principal and interest; early debt repayment;

+ Debt rescheduling; delinquency of the principal amount that a customer fails to repay at the agreed due date and the credit institution refuses to agree to reschedule; form and contents of notification of such delinquency referred to in Article 20 of Circular 39/2016/TT-NHNN;

+ Responsibilities of a customer for cooperating with the credit institution and providing documents regarding a loan in order for the credit institution to assess application for and grant a decision to offer a loan, inspect and supervise use of borrowed fund and debt repayment of the customer;

+ Cases of loan termination; collection of debt prior to the due date; delinquency of the principal amount that the customer fails to repay prior to the due date in the event of the credit institution's loan termination or collection of debt prior to the due date; form and contents of notification of thereof as prescribed by Clause 1 Article 21 of Circular 39/2016/TT-NHNN;

+ Loan debt treatment; penalty for loan default and compensation for any loss incurred; rights and liabilities of parties involved;

+ Entry into force of a loan agreement.

- In addition to provisions set forth in Clause 1 of Article 22 of Circular 39/2016/TT-NHNN, parties can agree on other terms and conditions in compliance with provisions of Circular 39/2016/TT-NHNN and relevant laws.

- The loan agreement referred to in Clause 1 and 2 of Article 22 of Circular 39/2016/TT-NHNN shall be established in the form of either a specific loan arrangement, or both framework and specific arrangement.

- Where using contract templates or general terms and conditions during conclusion of a loan agreement, the credit institution shall be obliged to:

+ Make a public notice of such contract templates and general contractual terms and conditions regarding lending activities at its office, and make posts on its website;

+ Provide adequate information on the standard form contract or contract containing general terms and conditions for the customer before entering into the loan agreement, and obtain the customer’s confirmation that the credit institution has already provided all necessary information

(Article 22 of Circular 39/2016/TT-NHNN, as amended by Clause 7 Article 1 of Circular 06/2023/TT-NHNN)

2. Eligibility requirements for a loan in Vietnam

A credit institution shall consider granting a decision to offer a loan to a customer who meets the following requirements:

- If that customer is a legal person, it must have civil capacity in accordance with the civil law jurisdictions. If that customer is a natural person, (s)he must be aged exactly 18 years or older and have full capacity for civil conduct in accordance with the civil law jurisdictions, or must be aged between exactly 15 and nearly 18 years and must not have his/her incapacity or restricted capacity for civil conduct as provided by laws.

- Demonstrate that customer’s demands for a loan to be used for legally accepted purposes.

- Establish that customer’s plan for effective use of borrowed fund.

- Prove the customer’s sound financial capability to repay debt owed.

(Article 7 of Circular 39/2016/TT-NHNN, as amended by Article 2 of Circular 06/2023/TT-NHNN)

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