On June 28, 2024, the Governor of the State Bank of Vietnam issued Circular 12/2024/TT-NHNN ("Circular 12") amending Circular 39/2016/TT-NHNN on lending activities of credit institutions and foreign bank branches to customers. Some important amendments and supplements of Circular 12/2024/TT-NHNN are as follows:
1. Providing information on related persons of the customer when borrowing
According to Clause 4, Article 1 of Circular 12 amending and supplementing Article 9 of Circular 39/2016/TT-NHNN, there are four cases where customers must provide information about related persons when borrowing:
- At the time of loan application at commercial banks, cooperative banks, or foreign bank branches, if the customer has a total outstanding credit amount (including the loan amount requested) greater than or equal to 0.1% of the bank’s own capital at the end of the most recent working day.
- At the time of loan application at non-bank credit institutions or microfinance institutions, if the customer has a total outstanding credit amount (including the loan amount requested) greater than or equal to 0.5% of the institution’s own capital at the end of the most recent working day.
- At the time of loan application at people's credit funds, if the customer has a total outstanding credit amount (including the loan amount requested) greater than or equal to 1% of the fund’s own capital at the end of the most recent working day.
- If the credit institution has negative own capital, the above ratios are applied to the charter capital or the allocated capital for foreign bank branches.
2. Loans under 100 million VND do not require a usage plan
Accordingly, Circular 12 stipulates that credit institutions may consider and decide to lend when customers meet the following conditions:
- Legal entities with civil legal capacity as prescribed by law. Individuals aged 18 years or older with full civil act capacity as prescribed by law or individuals aged 15 to under 18 years old who are not losing or having limited civil act capacity as prescribed by law.
- The loan is for a lawful purpose.
- There is a feasible plan for the use of funds. This condition is not mandatory for small loans.
- There is financial ability to repay the debt.
A small loan as defined in this Circular is a loan under Clause 2, Article 102 of the Law on Credit Institutions and does not exceed 100 million VND.
For these loans, Circular 12 requires credit institutions and foreign bank branches to have measures to check and monitor the use of loan funds for the purposes committed and the repayment of customers, ensuring the ability to recover the principal and interest on time as agreed. Credit institutions must also have at least the information on the lawful purpose of fund use and the financial ability of the customer before deciding to lend.
Circular 12 takes effect from July 1, 2024.
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