Tiếng Việt

Legal update relating to Finance and Credit (Monthly Legal Update – 04/2020)

by | Apr 6, 2020 | Banking, EN, Legal Update | 0 comments

1. LEGAL DOCUMENTS ARE EFFECTIVE FROM 01/04/2020

1.1. Circular No. 28/2019/TT-NHNN amending and supplementing a number of articles of Circular No. 19/2016/TT-NHNN dated on June 30, 2016 of the Governor of the State Bank of Viet Nam on bank card operations

  • Name of legal document: Circular No. 28/2019/TT-NHNN issued on 25/12/2019 by the State Bank of Viet Nam amending and supplementing a number of articles of Circular No. 19/2016/tt-nhnn dated on June 30, 2016 of the Governor of the State Bank of Viet Nam on bank card operations (referred to as the “Circular No. 28/2019/TT-NHNN”).

  • Effective date: 01/04/2020.

Some contents should be noted:

·        Firstly, amending the provison on non-physical card and supplement the provisions on domestic transactions which present the card and make non-payment transactions at merchants.

Specifically, Clause 1 Article 1 of Circular No. 28/2019/TT-NHNN stipulates: “Article 1. amending and supplementing a number of articles of Circular No. 19/2016/tt-nhnn dated on June 30, 2016 of the Governor of the State Bank of Vietnam on bank card operations

1. Amending Clauses 7, 19, 23 and 25 and adding Clauses 8a and 8b to Article 3 as follows:

“7. Non-physical card is a card that does not exist in physical form, exists in electronic form and contains information on the card as prescribed in Article 12 of this Circular (Circular No. 19/2016/TT-NHNN) and is issued by the card issuer to the cardholder for transaction on internet environment, application program on mobile devices; excluding cases that physical card registered functions for transactions on the internet environment, application programs on mobile devices. Non-physical cards may be printed by physical card issuers upon the request of cardholders.”.

“8a. Domestic transaction which presents the card is a card transaction in which the card is issued by a card issuer in Vietnam and is used to make card transactions at Automated Teller Machine and point of sale terminals in Vietnam.”

“8b. A non-payment transaction at a merchant is the use of card and card information to pay for goods or services but in fact does not generate or sell goods and services.”

…. ”

  • Secondly, Amending and supplementing the regulation on subjects entitled to use cards.

Specifically, Clause 5 Article 1 of Circular No. 28/2019/TT-NHNN stipulates: “Article 1. Amending and supplementing a number of articles of Circular No. 19/2016/TT-NHNN dated on June 30, 2016 of the Governor of the State Bank of Vietnam on bank card operations

…

5. Amend Point b, Clause 3, Article 16 as follows:

“b) Persons aged between full 15 and under 18 who do not lose or have limited civil act capacity may use debit cards, credit cards and prepaid cards;”.”

1.2. Circular No. 04/2020/TT-NHNN amending and supplementing a number of articles of Circular No. 26/2013/TT-NHNN dated December 5, 2013 of the State Bank of Viet Nam promulgating the tariff of charges for payment services offered via the state bank of Viet Nam

  • Name of legal document: Circular No. 04/2020/TT-NHNN issued on 31/03/2020 by the State Bank of Viet Nam amending and supplementing a number of articles of Circular No. 26/2013/TT-NHNN dated December 5, 2013 of the State Bank of Viet Nam promulgating the tariff of charges for payment services offered via the state bank of Viet Nam (referred to as the “Circular No. 01/2020/TT-NHNN”).

  • Effective date: 01/04/2020.

The content should be noted: providing on reduction of payment fees via the inter-bank electronic payment system.

Specifically, Article 1 of Circular No. 04/2020/TT-NHNN stipulates: “Article 1. Amending and supplementing a number of articles of Circular No. 26/2013/TT-NHNN as follows:

Article 1a is added as follows:

“Article 1a. Reducing 50% on payment fees at Points 1.1 and 1.2, Section 1 “Charge for payment transactions performed via the eIPS” in Part III “In-country payment service charge” Tariff of charges for payment services offered via the State Bank of Viet Nam issued together with this Circular (Circular No. 26/2013 / TT-NHNN) from April 1, 2020 to December 31, 2020.”.”

2. LEGAL DOCUMENTS ARE ISSUED IN 03/2020

2.1. Circular No. 01/2020/TT-NHNN debt rescheduling, exemption or reduction of interest and fees, retention of debt category to assist borrowers affected by Covid-19 pandemic

  • Name of legal document: Circular No. 01/2020/TT-NHNN issued on 13/03/2020 by the State Bank of Viet Nam debt rescheduling, exemption or reduction of interest and fees, retention of debt category to assist borrowers affected by Covid-19 pandemic (referred to as the “Circular No. 01/2020/TT-NHNN”).

  • Effective date: 13/03/2020.

Some contents should be noted:

  • Firstly, providing on debt rescheduling.

Specifically, Article 4 of Circular No. 01/2020/TT-NHNN stipulates: “Article 4. Debt rescheduling

1. An outstanding debt, including the principal and/or interest (including the debts regulated by the Government’s Decree No. 55/2015/ND-CP) may be rescheduled if it fully satisfies the following conditions:

a) The debt is a loan or finance lease;

b) The principal and/or interest arises during the period from 23/01/2020 to the day after 03 months after the day on which the Prime Minister declares the end of the Covid-19 outbreak;

c) The borrower is unable to repay the principal and/or interest under the loan/finance lease agreement due to decrease in revenue caused by Covid-19 pandemic.

2. The debts mentioned in Clause 1 of this Article shall be rescheduled in the following cases:

a) The unpaid debt is undue or up to 10 days overdue according to the loan/finance lease agreement;

b) The debt is overdue (except for the cases in Point a of this Clause) during the period from 23/01/2020 to the 16th day from the effective date of this Circular (Circular No. 01/2020/TT-NHNN).

3. Credit institutions and FBBs shall decide the rescheduling of debts cases specified in Clause 1 and Clause 2 of this Article in consideration of the borrowers’ request and ability to fully repay the principal and/or interest after the debt is rescheduled. The rescheduling shall be suitable for the impacts of Covid-19 and follow these rules:

a) Debts that violate regulations of law shall not be rescheduled.

b) The debt shall not be deferred for more than 12 months from the initial repayment deadline according to the loan/finance lease agreement.”

  • Secondly, providing on reduction and exemption of interest and/or fees.

Specifically, Article 5 of Circular No. 01/2020/TT-NHN stipulates: “Article 5. Reduction and exemption of interest and/or fees

Credit institutions and FBBs shall, according to their own rules and regulations, decide reduction and exemption of interest and/or fees on extension of the debts (except purchases of corporate bonds) that are due during the period from 23/01/2020 to the day after 03 months after the Prime Minister declares the end of the Covid-19 outbreak and the borrowers are not able to repay the principal and/or interest by the deadline specified in the original agreement due to decrease in revenue caused by Covid-19.”

  • Thirdly, providing on Retention of debt category

Specifically, Article 6 of Circular No. 01/2020/TT-NHNN stipulates: “Article 6. Retention of debt category

1. Credit institutions and FBBs may retain the categories of the following debts if they have been categorized in accordance with regulations of the State bank of Vietnam (SBV) before 23/01/2020:

a) The debts that are rescheduled as prescribed in Article 4 of this Circular (Circular No. 01/2020/TT-NHNN);

b) The outstanding debts on which interest is exempted or reduced as prescribed in Article 5 of this Circular (Circular No. 01/2020/TT-NHNN);

c) The outstanding debts mentioned in Point a and Point b of this Clause, including the debts that are rescheduled, have interest reduced or exempt, or re-categorized as prescribed by SBV during the period from 23/01/2020 to the 16th day after the effective date of this Circular.

2. Credit institutions and FBBs shall classify and make bad debt provision for the debts mentioned in Clause 1 of this Article according to their rescheduled term without having to put them into a higher-risk category.

3. From the rescheduling date, credit institutions and FBBs are not required to record the interests on the outstanding debts that are rescheduled, debts on which interest is reduced or exempted, debts that remain current non-performing loans (Group 1) as prescribed in this Circular (Circular No. 01/2020/TT-NHNN) as revenue. Instead, they shall be monitored off-balance sheet and recorded as revenue when they are collected in accordance with regulations of law.

2.2. Decision No. 418/QĐ-NHNN on the interest rates for deposits in Vietnamese Dong of Viet Nam Development Bank, Social Policy Bank, People’s Credit Funds, and microfinance institutions at the State Bank of Viet Nam

  • Name of legal document: Decision No. 418/QĐ -NHNN issued on 16/03/2020 by the State Bank of Viet Nam on the refinancing interest rate, rediscount interest rate, overnight lending interest rate in inter-bank electronic payment and lending capital to offset the shortage of capital in the clearing of the State Bank of Vietnam for the banks (referred to as the “Decision No. 418/QĐ-NHNN”).

  • Effective date: 17/03/2020.

The contents should be noted: providing on the interest rates of the State Bank of Viet Nam.

Specifically, Article 1 Decision No. 422/QĐ-NHNN stipulates: “Article 1. Stipulation on the interest rates of the State Bank of Viet Nam as follows:

  1. Refinancing interest rate: 5.0%/year.

  2. Rediscount interest rate: 3.5%/year.

  3. Overnight lending interest rate in inter-bank electronic payment and lending to offset the capital shortage in clearing of the State Bank of Viet Nam for banks: 6.0%/year.”

2.3. Decision No. 419/QĐ-NHNN on maximum interest rate for Vietnamese Dong deposits of organizations and individuals at credit institutions and branches of foreign bank as prescribed in Circular No. 07/2014/TT-NHNN of March 17, 2014

  • Name of legal document: Decision No. 419/QĐ -NHNN issued on 16/03/2020 by the State Bank of Viet Nam on maximum interest rate for Vietnamese Dong deposits of organizations and individuals at credit institutions and branches of foreign bank as prescribed in Circular No. 07/2014/TT-NHNN[1] of March 17, 2014 (referred to as the “Decision No. 419/QĐ-NHNN”).

  • Effective date: 17/03/2020.

The contents should be noted: providing on maximum interest rates for Vietnamese Dong deposits of organizations (except for credit institutions, branches of foreign bank) and individuals at credit institutions and branches of foreign bank according to Circular No. 07/2014/TT-NHNN of March 17, 2014.

Specifically, Article 1 Decision No. 422/QĐ-NHNN stipulates: “Article 1. Maximum interest rates for Vietnamese Dong deposits of organizations (except for credit institutions, branches of foreign bank) and individuals at credit institutions and branches of foreign bank according to Circular No. 07/2014/TT-NHNN of March 17, 2014 are as follows:

1. The maximum interest rate applicable to demand deposits and terms with less than 1 month is 0.5%/year.

2. The maximum interest rate applicable to deposits with terms from 1 month to less than 6 months is 4.75%/year; Particularly for People’s Credit Funds and Microfinance Institutions, the maximum interest rate applicable to deposits with a term of between 1 month and under 6 months shall be 5.25%/year.”

2.4. Decision No. 420/QĐ-NHNN on the maximum interest rates for short-term loans in Vietnamese Dong of credit institutions and branches of foreign bank to borrowers to meet the capital demand in service of a number of economic sectors and industries according to regulations. in Circular No. 39/2016/TT-NHNN dated December 30, 2016

  • Name of legal document: Decision No. 420/QĐ -NHNN issued on 16/03/2020 by the State Bank of Viet Nam on the maximum interest rates for short-term loans in Vietnamese Dong of credit institutions and branches of foreign bank to borrowers to meet the capital demand in service of a number of economic sectors and industries according to regulations in Circular No. 39/2016/TT-NHNN[2] dated December 30, 2016 (referred to as the “Decision No. 420/QĐ-NHNN”).

  • Effective date: 17/03/2020.

The contents should be noted: providing on on maximum interest rates for short-term loans in Vietnamese Dong that credit institutions and customers agree to meet a number of certain demands for borrowed fund.

Specifically, Article 1 Decision No. 420/QĐ-NHNN stipulates: “Article 1. Maximum interest rates for short-term loans in Vietnamese dong as prescribed in Clause 2, Article 13[3] of Circular No. 39/2016/TT-NHNN dated December 30, 2016 are as follows:

  1. Credit institutions and foreign bank branches (except for People’s Credit Funds and Microfinance Institutions), which apply the maximum short-term lending interest rate in Vietnamese Dong, shall be 5.5%/year.

  2. People’s credit funds and Microfinance Institutions apply the maximum interest rate for short-term loans in Vietnam dong at 6.5%/year. “”

2.5. Decision No. 421/QĐ-NHNN on interest rates of compulsory reserve deposits and deposits in excess of compulsory reserves of credit institutions and branches of foreign bank at the State Bank of Viet Nam

  • Name of legal document: Decision No. 421/QĐ -NHNN issued on 16/03/2020 by the State Bank of Viet Nam on interest rates of compulsory reserve deposits and deposits in excess of compulsory reserves of credit institutions and branches of foreign bank at the State Bank of Viet Nam (referred to as the “Decision No. 421/QĐ-NHNN”).

  • Effective date: 17/03/2020.

The contents should be noted: providing on interest rates applicable to compulsory reserve deposits and deposits exceeding the compulsory reserves of credit institutions and branches of foreign bank at the State Bank of Vietnam.

Specifically, Article 1 Decision No. 421/QĐ-NHNN stipulates: “Article 1. The interest rates applicable to compulsory reserve deposits and deposits exceeding the compulsory reserves of credit institutions and branches of foreign bank at the State Bank of Vietnam are as follows:

  1. For compulsory reserve deposits in Vietnamese Dong: 1.0%/year.

  2. For compulsory reserve deposits in foreign currencies: 0%/year.

  3. For deposits exceeding the compulsory reserve in Vietnamese Dong: 0%/year.

  4. For deposits exceeding compulsory reserves in foreign currencies: 0.05%/year.”

2.6. Decision No. 422/QĐ-NHNN on the interest rates for deposits in Vietnamese Dong of Viet Nam Development Bank, Social Policy Bank, People’s Credit Funds, and microfinance institutions at the State Bank of Viet Nam

  • Name of legal document: Decision No. 422/QĐ -NHNN issued on 16/03/2020 by the State Bank of Viet Nam on the interest rates for deposits in Vietnamese Dong of Viet Nam Development Bank, Social Policy Bank, People’s Credit Funds, and microfinance institutions at the State Bank of Viet Nam (referred to as the “Decision No. 422/QĐ-NHNN”).

  • Effective date: 17/03/2020.

The contents should be noted: providing on interest rates applicable to Vietnamese Dong deposits of Viet Nam Development Bank, Social Policy Bank, People’s Credit Funds, microfinance institutions at the State Bank of Viet Nam.

Specifically, Article 1 Decision No. 422/QĐ-NHNN stipulates: “Article 1. Interest rates applicable to Vietnamese Dong deposits of Viet Nam Development Bank, Social Policy Bank, People’s Credit Funds, microfinance institutions at the State Bank of Viet Nam as follows:

  1. For deposits of Viet Nam Development Bank: 1.0%/year.

  2. For deposits from Vietnam Bank for Social Policies: 1.0%/year.

  3. For deposits of People’s Credit Funds: 1.0%/year.

  4. For deposits of microfinance institutions: 1.0%/year.”

2.7. Decision No. 423/QĐ-NHNN on the deposit interest rates of the State Treasury, Viet Nam Deposit Insurance at the State Bank of Viet Nam

  • Name of legal document: Decision No. 423/QĐ -NHNN issued on 16/03/2020 by the State Bank of Viet Nam on the deposit interest rates of the State Treasury, Viet Nam Deposit Insurance at the State Bank of Viet Nam (referred to as the “Decision No. 423/QĐ-NHNN”).

  • Effective date: 17/03/2020.

The contents should be noted: providing on interest rates applicable to deposits of the State Treasury, Viet Nam Deposit Insurance at the State Bank of Viet Nam.

Specifically, Article 1 Decision No. 423/QĐ-NHNN stipulates: “Article 1. The interest rates applicable to deposits of the State Treasury, Viet Nam Deposit Insurance at the State Bank of Viet Nam are as follows:

1. For Vietnamese Dong deposits of the State Treasury: 1.0%/year.

2. For deposits in foreign currencies of the State Treasury: 0.05%/year.

3. For Vietnamese Dong deposits of Viet Nam Deposit Insurance: 1.0%/year.”

[1] Circular No. 07/2014/TT-NHNN issued on 17/03/2014 of the State Bank of Viet Nam providing for the maximum interest rate applicable to VND deposits of entities, individuals at credit institutions

[2] Circular No. 39/2016/TT-NHNN issued on December 30, 2016 of the State Bank of Viet Nam prescribing lending transactions of credit institutions and/or foreign bank branches with customers

[3] Clause 2 Article 13 of Circular No. 39/2016: “Article 13. Loan interest rate

…

2. A credit institution and customer shall agree on the interest rate on short-term loan denominated in Vietnamese dong but shall not allow it to exceed the maximum interest rate decided by the State Bank’s Governor over periods of time in order to meet certain demands for borrowed fund as follows:

a) Loans taken out to support the agricultural and rural development sector under regulations of the Government on credit policies for agricultural and urban development;

b) Loans taken out to implement the export business plan in accordance with the Law on Commerce and other instructional directives thereof;

c) Loans taken out to finance business activities of small and medium-sized enterprises under the Government’s regulations on support for development of small and medium-sized enterprises;

d) Loans taken out to develop ancillary industries under the Government’s regulations on development of ancillary industries;

dd) Loans taken out to finance business operations of high technology application enterprises under the provisions of the Law on High Technology and other instructional directives thereof.”