- Circular 12/2014/TT-NHNN, as amended and supplemented by Circular 05/2017/TT-NHNN requirements for taking foreign loans applied to companies not guaranteed by the government;
- Circular 12/2022/TT-NHNN on guidelines for foreign exchange administration in respect of enterprise’s foreign borrowing and foreign debt repayment of enterprises.
What is a short-term foreign loans?
- A foreign loan is a general phrase to refer to foreign loans that are not guaranteed by the Government (hereinafter referred to as self-pay loans) and Government-guaranteed foreign loans in all forms through loan contract, goods import contract with deferred payment, loan entrustment contract, financial leasing contract or the issuance of debt instruments in the international market of the borrower.
- Self-borrowing and self-paying short-term foreign loans (hereinafter referred to as short-term foreign loans) are foreign loans not guaranteed by the Government for a term of up to one (01) year.
Conditions for short-term foreign loans
For the borrower being a credit organization, a branch of foreign banks
- Credit organizations and foreign bank branches must comply with the State Bank’s regulations on safety prudential ratios in banking operations, except in the case of non-compliance with the provisions of the law on safety prudential ratios approved by the Prime Minister or the Governor of the State Bank in accordance with the provisions of law;
- Credit organizations, foreign bank branches may only borrow short-term foreign loans to supplement short-term credit capital.
For the borrower who is not a credit organization or foreign bank branch
- Borrowers are not allowed to borrow short-term for medium and long-term capital use purposes;
- For borrowers being state-owned enterprises, short-term foreign loans of state-owned enterprises must be approved and appraised by a competent authority in accordance with the law on assignment and decentralization to perform the rights, responsibilities and obligations of the state owner to state-owned enterprises and state capital invested in the enterprise.
Dossier for extending short-term foreign loans in Vietnam
- Application for loan change using the form specified in Appendix 4 of Circular 12/2022/TT-NHNN;
- A copy and Vietnamese translation of signed loan change agreements (certified by the borrower) in case the changed contents need to be agreed upon between the parties.
- Copies of documents of competent authorities in accordance with laws on task and authority assignment in relation to implementation of authority, responsibilities and obligations of the state in state-owned enterprises and state-owned capital invested in enterprises on approval of changes of the foreign loan plan of the borrower who is a state-owned enterprise in case of increasing the loan proceeds or extending the loan term (not applicable to loans of commercial banks in which the State Bank is a controlling owner representative and have been approved by the State Bank in accordance with regulations on management and use of state funds in enterprises).
- Copy or original of written proof of borrowing purposes, including:
- As for loans for executing investment projects: Investment certificates, certificates of investment registration or decisions on approval for investment policy as per the investment law and applicable regulations of relevant laws;
- As for loans for implementing plans for production and business other than investment projects: Plan for use of foreign loans approved by the competent authority as per the Investment Law, Enterprise Law and charter of enterprises, Cooperative Law and charter of cooperatives as well as other relevant legislative documents;
- As for loans for restructuring foreign loans of the borrower: Foreign debt restructuring plans of the borrower approved by competent authorities in accordance with the Enterprise Law and charter of enterprises, Cooperative Law and charter of cooperatives as well as other relevant legislative documents;
- As for loans stipulated in clauses 2 and 3 Article 11 hereof: Report stating that use of short-term loans conforms to regulations on eligibility conditions for short-term foreign borrowing (enclosed with supporting documentation such as plan for use of foreign loan of the borrower, plan for restructuring of foreign loan);
- Types of documents prescribed in Points a, b and c of this Clause shall not apply to the loans of state-funded commercial banks in which the State Bank is a controlling owner representative and have been approved by the State Bank in accordance with regulations on management and use of state funds in enterprises.
- Document issued by the account service provider regarding confirmation of withdrawal of loan proceeds and debt (principal and interest) repayment till the date of registration for changes of loans in the event of registration for changes of the loan proceeds, or the plan for withdrawal of loan proceeds or debt repayment, or the date on which the commercial bank provides account servicest.
Procedures for extending short-term foreign loans
Step 1: Prepare the dossier
- Borrower prepares a dossier including all above documents.
- In case the borrower chooses the online form: The borrower declares the Loan Extension Application on the Website, prints the Application from the Website, signs and stamps the mark;
- In case the borrower chooses the traditional form: The borrower completes the application form as above-mentioned.
Step 2: Submit the dossier
- Within 30 (thirty) days from the date of signing the extension agreement or before the period of the content of the short-term loan extension, the borrower shall send the registration dossier for loan extension by post or submit directly at the loan registration confirmation agency or the latest loan change registration confirmation agency in case there is a loan change registration to perform the loan change registration according to the competent authority.
- Borrowers who choose a online form can choose to submit additional online dossiers according to the instructions on the Website.
Step 3: Receive the dossier
Competent authorities are responsible for:
- Check the consistency and accuracy of the loan change registration dossier and the information declared on the Website; update the dossier handling status on the Website for timely follow-up by the borrower in case the borrower chooses the online form;
- The organization enters relevant informations of the loan on the Website to store information in the database of foreign loans and debt repayments of enterprises that are not guaranteed by the government in case the borrower chooses the traditional form.
Step 4: Get the result
The State Bank shall issue a written confirmation or refusal to confirm the registration of loan changes within the following period:
- 12 (twelve) working days from the date of receipt of the complete and valid dossier of the borrower (in case the borrower chooses the online form), or;
- 15 (fifteen) working days from the date of receipt the complete and valid dossier of the borrower (in case the borrower chooses the traditional form);
- In case of refusal to confirm registration for loan change, the State Bank shall send a written stating clearly the reasons.
Authority to confirm registration for extension of short-term foreign loans
- The State Bank (Department of Foreign Exchange Management) shall confirm the registration and registration of loan changes with a loan turnover of more than 10 (ten) million USD (or other foreign currencies of equivalent value) and foreign loans in Vietnamese dong.
- State Bank branches in provinces and centrally run cities where the borrower’s head office is located shall confirm the registration and registration of change loans with a loan turnover of up to 10 (ten) million USD (or other foreign currencies of equivalent value).
Customers wishing to extend short-term foreign loans in Vietnam, please contact Viet An Law Firm for the best support!