LEGAL UPDATE RELATING TO FINANCE AND CREDIT (MONTHLY LEGAL UPDATE – 07/2024)

1.       LEGAL DOCUMENTS ARE EFFECTIVE IN 07/2024

1.1. Circular No. 22/2023/TT-NHNN amendments to Circular No. 41/2016/TT-NHNN dated December 30, 2016 of Governor of State Bank of Vietnam prescribing prudential ratios for operations of banks and foreign bank branches

• Name of legal document: Circular No. 22/2023/TT-NHNN issued on 29/12/2023 by the State Bank of Vietnam amendments to Circular No. 41/2016/TT-NHNNdated December 30, 2016 of Governor of State Bank of Vietnam prescribing prudential ratios for operations of banks and foreign bank branches (referred to as the “Circular No. 22/2023/TT-NHNN”).
• Effective date: 01/07/2024.

The content should be noted: Stipulating on the CRW applied to home mortgage loans.

Specifically, Clause 8 of Article 1 of Circular No. 22/2023/TT-NHNN stipulates: “Article 1. Amendments to Circular No. 41/2016/TT-NHNN

… 8. Point b clause 11 Article 9 is amended as follows:

“b) The CRW applied to home mortgage loans relative to the LTV ratio and DSC ratio is as follows:

(i) As for loans for purchasing of social home or home under the Government’s support programs/projects:

(ii) As for loans other than those specified in point b(i) clause 11 of this Article:

””

1.2. Circular No. 07/2024/TT-NHNN amendments and supplements a number of articles of Circular No. 39/2016/TT-NHNN dated December 30, 2016 of the Governor of the State Bank of Vietnam regulating lending activities of credit institutions and foreign bank branches to customers

• Name of legal document: Circular No. 07/2024/TT-NHNN issued on 21/06/2024 by the State Bank of Vietnam amendments and supplements a number of articles of Circular No. 39/2016/TT-NHNN dated December 30, 2016 of the Governor of the State Bank of Vietnam regulating lending activities of credit institutions and foreign bank branches to customers (referred to as the “Circular No. 12/2024/TT-NHNN”).
• Effective date: 01/07/2024.

The content should be noted: Stipulating on details of payment agent operation.

Specifically, Article 1 of Circular No. 07/TT-NHNN stipulates: “Article 4. Details of payment agent operation

The principal is entitled to appoint the Agent to perform one or more professional operations below:

1. Receive applications for opening of checking accounts, check and verify client identification information so as to send it to the principal and instruct clients to use their checking accounts.
2. Receive applications for issuance of bank cards, check and verify client identification information so as to send it to the principal and instruct clients to use their bank cards.
3. Receive clients’ requests for payment services, prepare, sign, control and process clients’ transaction documents, transfer clients’ transaction information to the principal, receive cash from clients or provide cash to clients in order to carry out the following transactions:a) Depositing/withdrawing cash into/from clients’ checking accounts opened at the principal;b) Depositing/withdrawing cash into/from clients’ debit cards or personalized prepaid cards issued by the principal;c) Depositing cash to pay clients’ credit cards issued by the principal;d) Providing payment order execution, collection order execution, money transfer, cash collection and payment services.
4. Within 01 working day from the receipt of the client’s request for payment services, the Agent shall process the client’s transaction document and transfer the client’s transaction information to the principal, unless any system breakdown and/or other force majeure event results in the client’s transaction not being able to be conducted.”

1.3. Circular No. 09/2024/TT-NHNN amendments and supplements a number of articles of circulars regulating limits and safety ratios in operations and internal control systems of credit institutions and foreign bank branches

• Name of legal document: Circular No. 12/2024/TT-NHNN issued on 28/06/2024 by the State Bank of Vietnam amendments and supplements a number of articles of circulars regulating limits and safety ratios in operations and internal control systems of credit institutions and foreign bank branches (referred to as the “Circular No. 09/2024/TT-NHNN”).
• Effective date: 01/07/2024.

The content should be noted: Stipulating on credit extension management.

Specifically, Clause 10 of Article 1 of Circular No. 09/2024/TT-NHNN stipulates: “Article 1. Amending, supplementing, replacing and abolishing a number of articles of Circular No. 22/2019/TT-NHNN dated November 15, 2019 of the Governor of the State Bank of Vietnam regulating limits and rates regulations to ensure safety in the operations of banks and foreign bank branches

… 10. Amend and supplement Article 13 as follows:

“Article 13. Credit extension management

1. Banks and foreign bank branches manage credit extension activities in accordance with the provisions of law and internal regulations on credit extension and credit extension management according to the provisions of this Circular and relevant regulations. .
2. Credit extension to the subjects specified in Point dd, Clause 1, Article 135 of the Law on Credit Institutions is carried out as follows:a) The Board of Directors, Board of Members of the bank, General Director (Director) of the foreign bank branch approves credit extensions to the person who appraises and approves credit extensions with a total outstanding balance. Credit debt at that bank or foreign bank branch has a value of VND 10 billion or more or another lower level according to the internal regulations of the bank or foreign bank branch.b) The remaining cases shall comply with the internal regulations of the bank and foreign bank branch.
3. Banks and foreign bank branches must report to:a) General Meeting of Shareholders, General Meeting of Members, credit extension to the subjects specified in Clause 1, Article 135 of the Law on Credit Institutions arising up to the time of collecting data for the General Meeting of Shareholders, Member congressb) Owners, capital contributing members, managers, and operators when credit is extension to the subjects specified in Clause 1, Article 135 of the Law on Credit Institutions;c) The State Bank regarding credit extension to subjects specified in Clause 1, Article 135 of the Law on Credit Institutions.””

1.4. Circular No. 12/2024/TT-NHNN amendments and supplements a number of articles of Circular No. 39/2016/TT-NHNN dated December 30, 2016 of the Governor of the State Bank of Vietnam regulating lending activities of credit institutions and foreign bank branches to customers

• Name of legal document: Circular No. 12/2024/TT-NHNN issued on 28/06/2024 by the State Bank of Vietnam amendments and supplements a number of articles of Circular No. 39/2016/TT-NHNN dated December 30, 2016 of the Governor of the State Bank of Vietnam regulating lending activities of credit institutions and foreign bank branches to customers (referred to as the “Circular No. 12/2024/TT-NHNN”).
• Effective date: 01/07/2024.

The content should be noted: Stipulating on loan application documents.

Specifically, Clause 8 of Article 1 of Circular No. 12/2024/TT-NHNN stipulates: “Article 1. Amending and supplementing a number of articles of Circular No. 39/2016/TT-NHNN

…4. Amending and supplementing Article 9 as follows:

“Article 9. Loan application documents

1. When needing a loan, customers must provide the credit institution with:a) Information, documents, and data proving eligibility for loans as prescribed in Article 7 of this Circular and other information, documents, and data guided by the credit institution;b) Information about related persons to the customer in the case specified in Clause 2 of this Article.

Information about related person as individials, including full name; personal identification number; nationality, passport number, date of issue, place of issue for foreigners; relationship with customers.

Information about the related person as an organization, including name, business code, head office address of the business, number of Business Registration Certificate or equivalent legal documents, legal representative, relationships with customers.

2. The provisions in Point b, Clause 1 of this Article is applied in the following cases:a) At the time of loan request at commercial banks, cooperative banks, foreign bank branches, the customer has a total credit balance (including the loan balance that the customer is requesting a loan) greater than or equal to 0.1% of the equity capital of that commercial bank, cooperative bank, or foreign bank branch at the end of the latest working day;b) At the time of loan request at a non-bank credit institution or microfinance institution, the customer has a total credit balance (including the loan balance that the customer is requesting). loan) greater than or equal to 0.5% of the equity capital of that non-bank credit institution or microfinance institution at the end of the latest working day;c) At the time of loan request at the People’s Credit Fund, the customer has a total credit balance (including the loan balance that the customer is requesting for) greater than or equal to 1% equity capital of that people’s credit fund at the end of the latest working day;d) In case a credit institution has negative equity capital, the above ratios are applied on the charter capital or capital allocated to foreign bank branches.”.”

2.       LEGAL DOCUMENTS ARE ISSUED IN 06/2024

2.1. Circular No. 06/2024/TT-NHNN amendment and supplements a number of articles of Circular No. 02/2023/TT-NHNN dated April 23, 2023 of the Governor of the State Bank of Vietnam regulating on credit institutions and foreign bank branches restructure debt repayment terms and maintain the same debt group to support customers in difficulty

• Name of legal document: Circular No. 06/2024/TT-NHNN issued on 18/06/2024 by the State Bank of Vietnam amendment and supplements a number of articles of Circular No. 02/2023/TT-NHNN dated April 23, 2023 of the Governor of the State Bank of Vietnam regulating on credit institutions and foreign bank branches restructure debt repayment terms and maintain the same debt group to support customers in difficulty (referred to as the “Circular No. 06/2024/TT-NHNN”).
• Effective date: 18/06/2024.

The content should be noted: Stipulating on debt repayment terms.

Specifically, Clause 2 of Article 1 of Circular No. 02/2024/TT-NHNN stipulates: “Article 1. Amending and supplementing a number of articles of Circular No. 02/2023/TT-NHNN dated April 23, 2023 of the Governor of the State Bank of Vietnam regulating credit institutions and foreign bank branches restructure debt repayment terms and maintain the same debt group to support customers in difficulty

1. Amend Clause 2, Article 4 as follows:

“2. The obligation to repay principal and/or interest arises during the period from the effective date of this Circular to December 31, 2024.”.

2. Amend Clause 8, Article 4 as follows:

“8. Restructuring the debt repayment period for customers according to the provisions of this Circular will be implemented from the effective date of this Circular until December 31, 2024.”.”

2.2. Circular No. 08/2024/TT-NHNN regulations on the management, operation and use of the National Interbank Electronic Payment System

• Name of legal document: Circular No. 08/2024/TT-NHNN issued on 25/06/2024 by the State Bank of Vietnam regulations on the management, operation and use of the National Interbank Electronic Payment System (referred to as the “Circular No. 08/2024/TT-NHNN”).
• Effective date: 15/08/2024.

The content should be noted: Stipulating on issuance, management and use of electronic signature certificates and electronic signatures participating in the National Interbank Electronic Payment System.

Specifically, Article 8 of Circular No. 08/2024/TT-NHNN stipulates: “Article 8. Issuance, management and use of electronic signature certificates and electronic signatures participating in the National Interbank Electronic Payment System

1. Electronic signatures are divided into 3 types:a) Electronic signature of the person making the order;b) Electronic signature of the person controlling the order;c) Electronic signature of the person approving the order.
2. The organization of decentralization of order makers, order controllers and order approvers at members and member units is regulated by the unit’s competent person, ensuring the principle that the person making the order, the person controlling the order, and the person approving the order are independent.
3. The State Bank issues an electronic signature certificate to the the person approving the order and an electronic signature certificate to authenticate the connection (connection certificate) between the software installed at member units and member units with the National Processing Center.

4. The issuance, management, and use of electronic signature certificates for the person approving the order and electronic signature certificates to authenticate connection to participate in the National Interbank Electronic Payment System shall comply with the regulations of the State Bank.”