Legal update relating to Finance and Credit (Monthly Legal Update – 11/2022)

1. LEGAL DOCUMENTS ARE EFFECTIVE FROM 01/11/2022

1.1. Circular No. 12/2022/TT-NHNN guidelines on foreign exchange management for foreign loans and foreign debt repayment of enterprise

• Name of legal document: Circular 12/2022/TT-NHNN issued on 30/09/2022 by the State Bank of Vietnam guidelines on foreign exchange management for foreign loans and foreign debt repayment of enterprise (referred to as the “Circular No. 12/2022/TT-NHNN”).

• Effective date: 15/11/2023.

The content should be noted: Stipulating on monitoring foreign borrowing and repayment of borrowers being commercial banks or foreign bank branches

Specifically, Article 27 of Circular No. 12/2022/TT-NHNN stipulates: “Article 27. Monitoring foreign borrowing and repayment of borrowers being commercial banks or foreign bank branches

1. Commercial banks, foreign bank branches that are borrowers are not required to open and use foreign loan and debt repayment accounts at a credit institution or foreign bank branch to make the foreign loans.

2. Commercial banks, foreign bank branches being borrowers are responsible for monitoring their transactions related to foreign loans in strict accordance with current regulations on accounting and bookkeeping for commercial banks, foreign bank branches; be responsible for and ensure the implementation of transactions related to foreign loans in accordance with the contents of the State Bank’s document certifying the registration and registration of changes to foreign loans of the commercial bank orforeign bank branches.”

1.2. Decision No. 1826/QD-NHNN on the announcement of procedure amended and supplemented in the field of foreign exchange activities performed in the one-stop department subject to the management functions of the State bank of Vietnam

• Name of legal document: Decision 1826/QD-NHNN issued on 26/10/2022 by the Governor of the State Bank of Vietnam on the refinancing rate, rediscount rate, overnight rate for inter-bank electronic payment, and interest rate for (referred to as the “Decision No. 1826/QD-NHNN”).

• Effective date: 15/11/2022.

The content should be noted: The list of administrative procedures which are performed at the State Bank of Vietnam and branches of the State Bank in provinces, cities under central have been amended and supplemented subject to the management functions of the State Bank.

Specifically, Item A, Section 1, Part I of administrative procedures to amend and supplement in the field of foreign exchange activities subject to the management function of the State Bank of Vietnam promulgated together with Decision No. 1826/QD-NHNN stipulates:

“ADMINISTRATIVE PROCEDURES TO AMEND AND SUPPLEMENT IN THE FIELD OF FOREIGN EXCHANGE ACTIVITIES SUBJECT TO THE MANAGEMENT FUNCTION OF THE STATE BANK OF VIETNAM

(Promulgated together with Decision No. 1826/QD-NHNN dated October 26, 2022 of the Governor of the State Bank of Vietnam)

PART I.

LIST OF ADMINISTRATIVE PROCEDURES

1. The list of administrative procedures have been amended and supplemented subject to the management functions of the State Bank

”

2. LEGAL DOCUMENTS ARE ISSUED IN 10/2022

2.1. Decision No. 1809/QD-NHNN on the refinancing rate, rediscount rate, overnight rate for inter-bank electronic payment, and interest rate for loans for covering the capital shortfall regarding clearing of the State bank of Vietnam for credit institutions and branches of foreign banks

• Name of legal document: Decision 1809/QD-NHNN issued on 24/09/2022 by the Governor of State Bank of Vietnam on the refinancing rate, rediscount rate, overnight rate for inter-bank electronic payment, and interest rate for loans for covering the capital shortfall regarding clearing of the State bank of Vietnam for credit institutions and branches of foreign banks (referred to as the “Decision No. 1809/QD-NHNN”).

• Effective date: 25/10/2022.

The content should be noted:

• Firstly, stipulating on interest rates of the State Bank of Vietnam.

Specifically, Article 1 of Decision No. 1809/QD-NHNN stipulates: “Article 1. Regulations on interest rates of the State Bank of Vietnam are as follows:

1. Refinancing rate: 6,0%/year.

2. Rediscount rate: 4,5%/year.

3. Overnight rate for inter-bank electronic payment and interest rate for loans for covering the capital shortfall regarding clearing of the State Bank of Vietnam for credit institutions and foreign bank branches: 7,0%/year.”

• Secondly, stipulating on the effective time of Decision No. 1809/QD-NHNN.

Specifically, Article 2 of Decision No. 1809/QD-NHNN stipulates: “Article 2. This Decision comes into force from October 25, 2022 and replaces Decision No. 1606/QD-NHNN dated September 22, 2022 of the Governor of the State bank of Vietnam on the refinancing rate, rediscount rate, overnight rate for inter-bank electronic payment, and interest rate for loans for covering the capital shortfall regarding clearing of the State Bank of Vietnam for credit institutions and foreign bank branches.”

2.2. Decision No. 1812/QD-NHNN on maximum interest rates of deposits in Vietnam dong of organizations and individuals at credit institutions and foreign bank branches according to Circular No. 07/2014/TT-NHNN dated March 17, 2014

• Name of legal document: Decision 1812/QD-NHNN issued on 24/10/2022 by the Governor of State Bank of Vietnam on maximum interest rates of deposits in Vietnam dong of organizations and individuals at credit institutions and foreign bank branches according to Circular No. 07/2014/TT-NHNNdated March 17, 2014 (referred to as the “Decision No. 1812/QD-NHNN”).

• Effective date: 25/10/2022.

The content should be noted:

• Firstly, stipulating on maximum interest rates of deposits in Vietnam Dong of organizations and individuals at credit institutions and branches of foreign banks according to Circular No. 07/2014/TT-NHNNdated March 17, 2014.

Specifically, Article 1 of Decision No. 1812/QD-NHNN stipulates: “Article 1. Maximum interest rates of deposits in Vietnam Dong of organizations (except credit institutions and foreign bank branches) and individuals at credit institutions and branches of foreign banks according to Circular No. 07/2014/TT-NHNN dated March 17, 2014 are as follows:

1. The maximum interest rate applicable to demand deposits and term deposits under 1 month is 1,0%/year.

2. The maximum interest rate applicable to term deposits from 1 month to less than 6 months is 6,0%/year; except People’s Credit Funds and microfinance institutions, which shall apply the maximum interest rate of 6,5%/year with respect to term deposits from 1 month to less than 6 months.”

• Secondly, stipulating on the effective time of Decision No. 1812/QD-NHNN.

Specifically, Article 2 of Decision No. 1812/QD-NHNN stipulates: “Article 2.

1. This Decision comes into force from September 25, 2022 and replaces Decision No. 1607/QD-NHNN dated September 22, 2022 of Governor of State Bank of Vietnam on maximum interest rates of deposits in Vietnam Dong of organizations and individuals at credit institutions and foreign bank branches according to Circular No. 07/2014/TT-NHNN dated March 17, 2014.”

2.3. Decision No. 1813/QD-NHNN on the maximum short-term loan interest rate in Vietnam dong of credit institutions and foreign bank branches for borrowers to satisfy the capital requirements for certain economic fields and sectors according to Circular No. 39/2016/TT-NHNN dated December 30, 2016

• Name of legal document: Decision 1813/QD-NHNN issued on 24/10/2022 by the Governor of State Bank of Vietnam on the maximum short-term loan interest rate in Vietnam dong of credit institutions and foreign bank branches for borrowers to satisfy the capital requirements for certain economic fields and sectors according to Circular No. 39/2016/TT-NHNNdated December 30, 2016 (referred to as the “Decision No. 1813/QD-NHNN”).

• Effective date: 25/10/2022.

The content should be noted:

• Firstly, stipulating on the maximum short-term loan interest rates in Vietnam dong according to clause 2 Article 13 of Circular No. 39/2016/TT-NHNNdated December 30, 2016.

Specifically, Article 1 of Decision No. 1813/QD-NHNN stipulates: “Article 1. The maximum short-term loan interest rates in Vietnam dong according to clause 2 Article 13[1] 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) shall apply a maximum short-term loan interest rate of 5,5% per year.

2. People’s Credit Funds and microfinance institutions shall apply a maximum short-term loan interest rate in Vietnam Dong of 6,5% per year.”

• Secondly, stipulating on the effective time of Decision No. 1813/QD-NHNN.

Specifically, Article 2 of Decision No. 1813/QD-NHNN stipulates: “Article 2.

1. This Decision comes into force from October 25, 2022 and replaces Decision No. 1730/QD-NHNN dated September 30, 2020 of the Governor of the State Bank of Vietnam on the maximum short-term loan interest rate in Vietnam dong of credit institutions and foreign bank branches for borrowers to satisfy the capital requirements for certain economic fields and sectors according to Circular No. 39/2016/TT-NHNN dated December 30, 2016.”

[1] Clause 2 Article 13[1] of Circular No. 39/2016/TT-NHNN dated December 30, 2016 stipualates: “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.”