Procedures for registration of foreign loans in Vietnam

Foreign loan registration is an administrative procedure at the State Bank of an enterprise for medium- and long-term foreign loans or extended short-term loans whose total term is over 01 (one) year. Viet An Law hereby synthesizes legal information on procedures for registration of foreign loans in Vietnam.

Legal basis

• Circular 12/2014/TT-NHNN stipulating conditions for foreign loans of enterprises 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.

Foreign loans required to be registered

The following foreign loans are subject to registration with the State Bank:

• Foreign medium and long-term loans.
• Short-term loans are extended the principal repayment period, the total term of which is over 01 year.
• Short-term loans without an extension agreement but with outstanding principal balance (including principally entered interest) at the time of full 1 year from the date of first capital withdrawal, unless the borrower completes payment of outstanding loans. above-mentioned principal within 30 working days from the date of full 1 year from the date of first capital withdrawal.

Foreign loan contract

• Loan contract and foreign loan agreement for loan registration (hereinafter referred to as foreign loan agreement) are effective capital withdrawal agreements signed between the borrower and the lender as a source of development. debt repayment obligations of the Borrower.
• Borrowers are not required to carry out registration procedures such as framework credit agreements, memorandums of understanding and other similar agreements (hereinafter referred to as framework agreements) but no withdrawal agreement has yet arisen.
• Borrowers must register medium- and long-term loan contracts when there is a written agreement on capital withdrawal on the basis of a framework agreement.

Conditions for borrowing foreign capital

Enterprises with Vietnamese capital or foreign investment capital if they comply with and fully satisfy the regulations on foreign borrowing conditions, foreign exchange management for foreign borrowing and debt repayment activities specified in the Circular Circular No. 12/2014/TT-NHNN dated March 31, 2014 stipulating the conditions for foreign loans of enterprises that are not guaranteed by the Government can borrow foreign capital and register foreign loans with the State Bank of Vietnam. Vietnam.

Procedures for registration of foreign loans

Procedures for foreign loan registration follow the following steps:

Step 1: Sign a foreign loan contract

After selecting the lender as well as agreeing on the contents of the loan contract with the foreign party. The borrower signs a contract to borrow foreign capital.

Step 2: Open a foreign loan account

• Foreign loan and debt repayment account means the borrower’s payment account opened at a bank providing account services to withdraw capital and repay foreign loans; perform derivative transactions to prevent risks for foreign loans and other money transfer transactions related to foreign borrowing and debt repayment activities, and foreign loan guarantees.
• For the borrower being a foreign direct investment enterprise:

– For medium and long-term foreign loans

The borrower uses the direct investment capital account to conduct revenue and expenditure transactions related to foreign loans specified in Articles 28 and 29 of Circular 12/2022/TT-NHNN. In case the loan currency is not the currency of the direct investment capital account, the borrower may open another foreign loan and debt repayment account to make a foreign loan at the bank where the borrower opens the account. direct investment.

Borrowers can use 01 account for 01 or more foreign loans. The content of revenue and expenditure of this account is specified in Article 28 and Article 29 of Circular 12/2022/TT-NHNN.

– For short-term foreign loans: the borrower can use the direct investment capital account as prescribed in point a of this clause or other foreign loan and repayment accounts (not the capital account for foreign investment). direct investment) to conduct revenue and expenditure transactions related to foreign loans. Each loan specified in this clause can only be made through 1 bank providing account services. Borrowers can use one account for one or more short-term foreign loans. The content of revenue and expenditure of this account is specified in Article 28 and Article 29 of Circular 12/2022/TT-NHNN.

– For short-term loans with outstanding principal balance at the date of full 1 year from the date of capital withdrawal and the borrower will make repayment within 30 working days from the date of full 1 year from the date of capital withdrawal. , the borrower makes debt repayment through the foreign loan account or debt repayment being used for this loan;

– In case a foreign direct investment enterprise is an organization jointly liable for the debt repayment obligation of the original borrower after the division, separation, consolidation, merger, enterprises with foreign direct investment capital are not required to use direct investment capital accounts to repay debts for which this organization is jointly responsible.

• Borrowers who are not foreign direct-invested enterprises must open foreign loan and debt repayment accounts at account service providers to conduct money transfer transactions related to foreign loans. (withdrawal of capital, repayment of principal, debt of interest). Each foreign loan can only be made through 1 bank providing account services. Borrowers can use 01 account for 01 or more foreign loans. The content of revenue and expenditure of this account is specified in Article 28 and Article 29 of Circular 12/2022/TT-NHNN.

Step 3: Prepare documents to apply for foreign loans

• In case the Borrower chooses the online form: the Borrower declares the Loan Change Application on the Website, prints the application from the website, signs and stamps it;
• In case the Borrower chooses the traditional method: The Borrower completes the application form as prescribed.
• After preparing the loan application, the borrower prepares all the loan registration documents according to regulations to submit to the State Bank.

Step 4: Register your business online account

• Enterprises access the website https://qlnh-sbv.cic.org.vn/qlnh/ and register for an account, declare the necessary information and submit a registration request.
• The enterprise prints the account registration declaration, signs and stamps the declaration, then sends it to the State Bank with the investment registration certificate & the business registration certificate of the unit.
• After 03 working days from the date of receiving the application, the State Bank shall grant the account and notify the enterprise of the email address that the unit registered.

Step 5: Log in to your account

Enterprises access the website https://qlnh-sbv.cic.org.vn/qlnh/ and log in to the account according to the account information provided by the State Bank.

Step 6: Fill out the loan application declaration

• The account of the enterprise or unit that declares loan application information.
• After completing the loan application in the account, the enterprise will submit the application online.

Note about the procedure at step 5 and step 6

• Procedures in step 5 and step 6 only apply to enterprises whose short-term loans are converted into medium and long-term loans.
• In contrast, for enterprises applying for a medium and long-term loan for the first time, they only have to perform steps 5 and 6 after they have been granted a loan registration certificate by the State Bank and updated their registration information. loan (ie after step 8 and step 9).

Step 7: Submit application for foreign loan registration

The borrower sends 01 application for registration of a foreign loan to the competent authority to certify the registration as prescribed in Article 20 of Circular 12/2022/TT-NHNN within the time limit:

– 30 working days from the date of signing the medium- and long-term foreign loan agreement;

– 30 working days from the date of signing the agreement to extend the short-term foreign loan into a medium or long-term for the loan specified in Clause 2, Article 11 of this Circular. from the date of first withdrawal;

– 30 working days from the date the borrower is granted the Certificate of Business Registration, License for establishment and operation under specialized laws, the date of signing the investment contract under the mode of public-private partnership (public-private partnership contract). PPP), the date the parties signed a foreign loan agreement to convert the investment preparation amount into loan capital (whichever is later), applicable to foreign loans arising from the transfer of the standard performance amount investment equipment of projects that have been granted investment registration certificates into foreign loans.

– 60 working days from the full day of 01 year from the date of first capital withdrawal for:

+ Short-term foreign loans into medium and long-term that the agreement signing date is extended after 01 year from the date of first capital withdrawal;

+ Short-term loans without extension agreement but with outstanding principal balance (including principally entered interest debt) at the full date of 01 year from the date of first capital withdrawal.

Step 8: State Bank confirmation on foreign loan registration or refusal

The State Bank shall issue a written confirmation or refusal to confirm the loan registration (clearly stating the reason) within the time limit:

• 12 working days from the date of receipt of a complete and valid dossier of the borrower in case the borrower has declared loan information on the Website;
• 15 working days from the date of receiving the complete and valid dossier of the borrower in case the borrower fails to declare loan information on the Website;
• 45 working days from the date of receipt of a complete and valid dossier of the borrower, for the case of a loan in Vietnam dong, which must be considered and approved by the Governor of the State Bank in accordance with the provisions of Clause 3 of this Article. 20 of this Circular.

Note: For foreign loans in Vietnam dong, it must be approved by the Governor of the State Bank according to the provisions of point c, clause 2, Article 7 of Circular 12/2014/TT-NHNN. at the same time is the procedure for requesting the Governor of the State Bank to consider and approve the loan. The written confirmation of foreign loan registration is concurrently the loan approval document of the Governor of the State Bank.

Step 9: The State Bank updates information on foreign loans of enterprises

The State Bank/State Bank Branch checks the documents, updates the processing status on the Website or creates a loan code and stores the information in the foreign loan and debt repayment database of the State Bank of Vietnam. enterprises are not guaranteed by the Government.

Step 10: Make a statistical report on foreign loans to the State Bank

Periodic reports on foreign loans of enterprises

On a monthly basis, no later than the 5th of the month following the reporting period, the borrower must report online on the performance of short, medium and long-term loans at the Website. In case the Website encounters a technical error and cannot send the report, the borrower shall send a written report using the form in Appendix 05 issued together with Circular 12/2022/TT-NHNN.

Unexpected report on foreign loans of enterprises

In exceptional cases or when necessary, the borrower and the account service provider bank shall make reports at the request of the State Bank.

Application file for foreign loan

Please refer to the application file for foreign loans at the article:  Registration of foreign loans in Vietnam.

Some notes for foreign loans so that businesses are not sanctioned for administrative violations

For short-term foreign loans

The borrower needs to perform the obligation to report monthly to the State Bank in the online form at the website: www.qlnh-sbv.cic.org.vn. Acts of failing to submit reports or failing to pay on time will be fined from VND 10,000,000 to VND 20,000,000.

For long-term foreign loans

• The borrower needs to perform the obligation to report monthly to the State Bank in the online form at the website: www.qlnh-sbv.cic.org.vn. Acts of not submitting reports or submitting reports on time shall be fined from VND 10,000,000 to VND 20,000,000.
• In case a short-term loan is converted into a medium- and long-term loan, the borrower needs to carry out loan registration procedures on time as prescribed by law. The act of failing to comply with the provisions of law on administrative procedures for the registration and registration of change of foreign loans shall be fined from VND 40,000,000 to VND 60,000,000.
• Loans need to be used for the right purposes prescribed by law, specifically, foreign loans can only be used for the purposes specified in Article 5 of Circular 12/2014/TT-NHNN. The act of using the loan for improper purposes will be fined from 300,000,000 VND to 400,000,000 VND.

Authority to confirm loan registration

State Bank (Foreign Exchange Management Department)

Perform registration confirmation, change registration for loans with loan turnover over 10 (ten) million USD (or other foreign currencies of equivalent value) and foreign loans in Vietnam dong .

State Bank branches in provinces and centrally run cities where the Borrower’s head office is located

Perform registration confirmation, change registration for loans with loan turnover up to 10 (ten) million USD (or other foreign currencies of equivalent value).

In case the change of increase or decrease in loan turnover, change of loan currency, change of head office of the Borrower, change of the borrower to an enterprise whose head office is located in another locality, changes in the competent authority are subject to change. competent to confirm registration of loan change, the agency confirming registration and registration for loan change initially shall act as the focal point to receive the borrower’s application for registration of loan change.

Some related questions about procedures for registration of foreign loans in Vietnam

When should businesses open a loan account?

Before carrying out the procedures for registering foreign loans, enterprises must open a loan account to register loan account information with the State Bank.

Which foreign loans must be registered with the State Bank?

• Foreign medium and long-term loans.
• Short-term loans are extended the principal repayment period, the total term of which is over 01 year.
• Short-term loans without an extension agreement but with outstanding principal balance (including principally entered interest) at the time of full 1 year from the date of first capital withdrawal, unless the borrower completes payment of outstanding loans. above-mentioned principal within 30 working days from the date of full 1 year from the date of first capital withdrawal.

Is it possible to borrow foreign capital in Vietnam Dong?

Foreign loans in Vietnam dong can only be done in the following cases:

• The borrower is a microfinance institution;
• Borrower being a foreign direct investment enterprise borrows from profits distributed in Vietnam dong from direct investment activities of the Lender being a foreign investor contributing capital at the Borrower.
• Other cases when considered and approved by the Governor of the State Bank based on the actual situation and necessary nature of each case.

What is a foreign loan?

Foreign loan is a general term used to refer to a foreign loan that is not guaranteed by the Government (hereinafter referred to as a self-borrowing loan). Foreign loans guaranteed by the Government in all forms of foreign loans through loan contracts, goods import contracts with deferred payment, loan entrustment contracts, financial leasing contracts or the issuance of debt instruments. in the Borrower’s international market.

How are medium and long-term foreign loans determined?

Medium and long-term foreign loans are foreign loans with a term of one year or more.

Foreign loan registration service of Viet An Law Firm

• Consulting on conditions for foreign loans for businesses.
• Consulting on foreign loan contracts.
• Review and draft foreign loan registration documents.
• Consulting on converting foreign loans into contributed capital of enterprises;
• Consulting on converting foreign loans for businesses;
• Consulting and supporting packages to help businesses carry out procedures for registering foreign loans with the State Bank.
• Representative of enterprises to submit dossiers, monitor and complete procedures for foreign loan registration;
• Consulting procedures for statistical reporting on foreign loans;
• Comprehensive consulting on arising issues related to foreign loans of enterprises.