Foreign loan registration documents are all legal documents that businesses need to prepare to register for foreign loans at the State Bank.
Types of loans to submit foreign loan registration documents
According to the current law, the following foreign loans must be submitted to the State Bank for registration of foreign loans:
Foreign medium and long-term loans
All foreign loans with a term of 01 year or more are calculated according to the term specified in the foreign loan agreement, foreign loan contract.
Foreign short-term loans
Short-term loans with an extension contract or without an extension contract, but the term expires one year from the date of the first capital withdrawal, and the borrower has not yet fully paid the debt to the foreign party according to the time limit agreed upon in Clause 1 of this Article. Except for the case where the short-term loan contract does not have an extension contract but the borrower has paid within 1 year and 10 days from the date of the first capital withdrawal.
Application dossier for foreign loan
Except for loans arising from goods import contract with deferred payment, the application file for foreign loan normally includes the following specific documents:
- Application for registration of foreign loans (made according to the form in Appendix 01 attached to Circular 03/2016/TT-NHNN);
- A copy (certified by the Borrower) of the Borrower and the Borrower’s legal documents in case the Borrower is not the Borrower;
- A copy (certified by the Borrower) or the original document proving the loan purpose;
- A copy and Vietnamese translation (certified by the Borrower) of the foreign loan contract or foreign loan agreement and the agreement to extend the short-term loan to medium or long-term (if any); or capital withdrawal document enclosed with the framework agreement;
- Copy and Vietnamese translation (certified by the Borrower) of the guarantee commitment (letter of guarantee, guarantee contract or other form of guarantee commitment) in case the loan is guaranteed;
- A copy (certified by the borrower) of the competent authority’s document approving the foreign loan in accordance with the law on assignment and decentralization of the rights, responsibilities and obligations of the owner State-owned enterprises (SOEs) and state capital invested in enterprises (SOEs) for borrowers being state-owned enterprises, unless the borrower is a commercial bank in which 100% of charter capital is held by the State.
- Report on compliance with regulations of the State Bank on credit extension limits and prudential ratios in operations of credit institutions, foreign bank branches at the end of the latest month before the date of signing the foreign loan agreement and the document proving the non-compliance with the provisions of law on credit limit and safety ratios approved by the Prime Minister or the Governor of the State Bank approve in accordance with the provisions of law (if any) for the borrower being a credit institution or foreign bank branch;
- Certification of the account service provider (in some cases specified in Clause 8 Article 14 of Circular 03/2016/TT-NHNN);
- Documents and documents proving that profits are legally distributed in Vietnam dong from direct investment by the lender being a foreign investor contributing capital to the Borrower and certification of the service-providing bank account on the distribution and repatriation of profits of the lender to prove the loan disbursement in case of foreign loans in Vietnam dong according to current regulations on conditions for foreign loans in Vietnam dong;
- A written explanation of the need for a foreign loan in Vietnam dong for the case of a foreign loan in Vietnam dong must be permitted by the Governor of the State Bank in accordance with the State Bank’s current regulations on conditions for foreign loans in Vietnamese Dong.
Notes on application documents for foreign loans
Borrowing purpose recorded in foreign loan agreement
Borrowers are only allowed to borrow abroad to serve the following purposes:
- Implement production, business and investment projects using foreign loans of the borrowing enterprises.
- Implementation of projects invested by borrowing enterprises and other entities (applicable only when borrowing medium and long-term foreign loans).
- Enterprises restructure foreign debts of borrowers without increasing borrowing costs.
Regarding the loan currency recorded in the foreign loan agreement
All foreign loans need to be specified in a foreign currency. Except where the borrower is an enterprise with foreign direct investment capital. FDI enterprises borrow from profits distributed in Vietnam dong from direct investment activities of the lender being a foreign investor contributing capital at the borrower. Special cases are allowed by the Governor of the State Bank.
Time limit for submission of application for foreign loan
For medium and long-term loans
- Within 30 days from the date on which the parties sign the medium- and long-term foreign loan agreement.
- Within 30 days from the date the parties sign the guarantee document in the case of a guaranteed loan.
- Within 30 days from the date on which the parties sign the written capital withdrawal agreement in case the parties agree on the capital withdrawal on the basis of the signed framework agreement and before the capital withdrawal.
For short term loan
- Within 30 days from the date the parties sign an agreement to extend short-term foreign loans into medium and long-term for self-pay loans.
- Within 30 days from the date of the short-term loan round 01 (one) year from the date of first withdrawal of capital for self-borrowing loans after being overdue 10 days from the date of the first full withdrawal of capital.
Procedures for registration of foreign loans
Please refer to the procedure for registering a foreign loan in the article: Procedures for registration of foreign loans in Vietnam.
Penalties for not carrying out procedures for foreign loan registration
According to Decree No. 88/2019/ND-CP on administrative sanctions in the monetary field, the fines for failure to carry out procedures for registration of foreign loans are as follows:
- A fine ranging from VND 20,000,000 to VND 30,000,000 shall be imposed for one of the following violations: Failure to comply with the law on administrative procedures for: registration or registration for change of account foreign loans, international bond issuance; registration, registration for changes in offshore loans, debt recovery guarantees for non-residents.
- Thus, for individuals, the fine for not registering for foreign loans is 20 million to 30 million dong.
- For organizations, the fine level for not registering foreign loans is equal to 02 times the fine level for individuals. The fine for organizations that do not register for foreign loans will be 40 million to 60 million dong.
Frequently asked questions about registration of foreign loans in Vietnam
How long does it take to register for a foreign loan after signing a loan contract?
According to regulations, within 30 days from the date of signing the Agreement, the foreign loan contract must register the foreign loan with the State Bank.
What is an unsecured loan?
Foreign loan that is not guaranteed by the Government (hereinafter referred to as “self-borrowing, self-paying”) means the borrower makes a foreign loan by the method of self-borrowing, self-responsibility for debt repayment to the other party.
What is the withdrawal date?
The date of capital withdrawal is the date of disbursement for loans disbursed in cash, the date of customs clearance of goods for loans in the form of foreign financial lease in accordance with relevant laws.
Do foreign loans under 1 year have to be registered with the State Bank?
Foreign loans with a term of less than 1 year are not required to carry out loan registration procedures at the State Bank. Enterprises only need to carry out loan notification procedures to the State Bank.
Can I use another account to withdraw foreign loans?
For foreign loans that must be registered with the State Bank, the borrower may only withdraw capital and repay the principal and interest of the foreign loan through the account registered with the State Bank.
Viet An Law provides the service of drafting foreign loan contracts, drafting foreign loan registration documents and a full package of procedures for registering foreign loans with the State Bank. Clients wishing to register for foreign loans and related legal procedures, please contact Viet An Law for the best support!