On June 28, 2023, the State Bank of Vietnam issued Circular No. 06/2023/TT-NHNN ("Circular 06") amending and supplementing certain provisions of Circular No. 39/2016/TT-NHNN ("Circular 39") regarding lending activities of credit institutions and branches of foreign banks (hereinafter referred to as "CIs") towards customers.
With the aim of limiting risks arising from lending activities of CIs, Circular 06 introduces various cases where borrowing is not allowed and additionally provides for electronic lending methods. Specifically, they are as follows:
1. Supplementing cases in which CIs are not allowed to lend
In addition to clarifying the cases where lending is not allowed as previously stipulated in Circular 39, Circular 06 supplements the cases where lending is not allowed for the following capital needs:
a. For deposit purposes;
b. For payment of capital contributions, purchases, receipt of non-listed shares, or shares not yet registered for trading on the stock market or on the Upcom trading system;
c. For payment of capital contributions under capital contribution contracts, investment cooperation contracts, or business cooperation contracts to implement investment projects that do not meet the conditions for business operation at the time the CIs decides to lend.
d. For financial compensation, except in cases where the loans meet the following conditions:
- The customer has contributed their own capital to pay for expenses related to the business project that occurred within 12 months prior to the CIs' loan decision.
- Expenses that have been paid using the customer's own capital to carry out the business project, specifically expenses that have utilized the CIs' loan funds according to the capital utilization plan submitted to the CI for consideration of medium- and long-term loans to implement the business project.
2. Allow CIs to provide capital for repayment of foreign loans, even in cases that do not serve business purposes
Circular 39 only permits CIs to provide capital for repayment of foreign loans when certain conditions are met, with the first condition being that the loan must serve business activities. However, Circular 06 removes this condition. As a result, borrowing for consumer purposes can also be approved.
3. Recognize the electronic lending method for individuals borrowing for personal needs
a. Maximum loan balance: Not exceeding 100 million Vietnamese dongs per customer at one CIs.
b. Evaluation, appraisal, and loan agreement process: Conducted electronically.
c. Disbursement of loan funds: Transferred to the customer's payment account at the service provider organization for the customer to make payments to the beneficiary according to the committed purpose of the loan serving personal needs.
Circular 06 takes effect from September 1, 2023.
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