Guidelines for managing foreign exchange in relation to foreign borrowing and debt repayment by enterprises (Effective November 15, 2022)

Foreign borrowing is an activity subject to state regulation regarding borrowing conditions, and foreign exchange transactions arising from foreign borrowing must also follow a prescribed procedure. The following are the implementation guidelines.

On September 30, 2022, the State Bank of Vietnam (“SBV”) issued Circular No. 12/2022/TT-NHNN This circular provides guidance on foreign exchange management for foreign borrowing and debt repayment by enterprises. It regulates the procedures for registering and amending foreign loans of enterprises not guaranteed by the Government; the opening and use of accounts by the borrower and lender; the withdrawal and transfer of funds related to loan implementation; the transfer of funds related to the implementation of security measures for foreign loans; the use of the website; and the reporting regime for foreign borrowing and debt repayment by enterprises not guaranteed by the Government.

Circular 12/2022 takes effect from November 15, 2022 and replaces Circular 03/2016/TT-NHNN dated February 26, 2016 guiding some contents on foreign exchange management for foreign borrowing and debt repayment by enterprises and related amending and supplementing documents.

1. What forms do foreign loans take?

Foreign loans as defined in Circular 12/2022/TT-NHNN include loans in the following forms:

Loan contract
Deferred payment contract for imported goods
Lending trust contract
Financial lease contract
Issuance of debt instruments on the international market by the Borrower

Note:

Foreign loans in the form of deferred payment for imported goods are those for which the first disbursement date is before the final payment date; in which, the disbursement date is:

The 90th day from the date of issuance of the transport document in cases where the bank providing the account service requires the payment documents to include a transport document.
On the 45th day after the completion of the inspection as stated on the customs declaration, customs clearance is granted in cases where the bank providing the account service does not require the payment documents to include transport documents.

Foreign loans in the form of deferred payment for imported goods are not subject to registration or registration of changes to foreign loans.

Transactions involving the repayment of principal and interest, and fees related to foreign loans under the deferred payment import scheme, are not required to be conducted through the foreign loan or debt repayment account.

However, foreign borrowers who import goods on deferred payment terms are still required to fulfill their reporting obligations to the State Bank of Vietnam as stipulated in Circular 12/2022/TT-NHNN.

2. How to use the website?

Borrowers use the State Bank of Vietnam's online foreign loan and repayment management system to:

Registration/amendment of medium and long-term loans (excluding foreign loans in the form of deferred payment for imported goods) [Optional but recommended]
Report on the implementation of foreign loans [Required]
Update changes to medium and long-term loans without reapplying. [Required]

The State Bank of Vietnam's website address is www.sbv.gov.vn or www.qlnh-sbv.cic.org.vn

The borrower registers for an account on the website following these steps:

Access the aforementioned website, follow the instructions, fill in the information on the electronic declaration form, and print the electronic declaration form for signing and stamping.
Submit this declaration form by post or in person at the State Bank of Vietnam branch in the province or city where the Borrower's head office is located.
The State Bank of Vietnam's provincial/city branch where the borrower's head office is located will approve and grant access to the account via the email address registered by the user within 3 working days from the date of receiving the application form. If the account is refused, an online response stating the reasons must be provided.

3. Reporting obligations of the Borrower

Periodically, monthly, no later than the 05th of the following month For each reporting period, borrowers must report online on the status of short-term, medium-term, and long-term loan disbursements via the website.

In the event that the website experiences technical errors and is unable to submit the report, the borrower shall submit a written report using the form in Appendix 05 issued with Circular 12/2022/TT-NHNN.

4. Required documents when conducting transactions related to borrowing and repaying foreign loans at the Bank.

When conducting money transfer transactions related to borrowing and repaying foreign loans, the parties involved need to provide the following documents:

General documents:

Foreign loan agreements, loan agreement amendments, and other agreements related to foreign loans.
Confirmation or termination of registration or registration of changes to foreign loans from the State Bank of Vietnam (if any)

Private document:

Transferring funds for foreign loan and debt repayment transactions:

The plan for using borrowed capital, investment projects using short-term foreign loans (with a commitment from the borrower that this plan has been approved by the competent authority in accordance with regulations on foreign borrowing and repayment conditions) (new point to note, except for foreign loans in the form of deferred payment for imported goods)
Documentation proving the borrower's compliance with the online reporting regime on short-term foreign loans and repayments (screenshot of the report on the website with confirmation from the borrower) (a new point to note, applicable to foreign loans in the form of deferred payment for imported goods).

Transferring funds to fulfill the security obligation:

Agreement on guaranteeing or securing foreign loans with assets.
A document requesting the lender (or the organization representing the lender, or the organization representing the lender in handling the collateral) to fulfill its security obligations.
A confirmation document from the bank providing the borrower's account regarding the status of loan disbursements and repayments up to the time of requesting the transfer of funds to fulfill the security obligation.
Other documents as required by each bank's internal regulations.

5. Register for loan changes and notify loan changes.

1. Changes to the loan disbursement and principal repayment schedule within 10 working days of the schedule approved by the State Bank of Vietnam.

2. If the borrower changes their address but does not change the province or city where the borrower's head office is located, the borrower shall notify the competent authority responsible for registering and registering changes to the borrower's foreign loan of the change of address.

Competent authority:

Foreign Exchange Management Department – State Bank of Vietnam: for loans with a loan amount exceeding 10 million USD (or other currencies of equivalent value)
The State Bank of Vietnam's provincial/city branch where the borrower's head office is located: for loans up to 10 million USD (or equivalent in other currencies), excluding foreign loans denominated in Vietnamese Dong, approval by the Governor of the State Bank of Vietnam is required.

3. Changes to the Lender and related information regarding the Lender in a syndicated loan with designated representatives of the Lenders, except where the Lender is also a representative of the Lenders in the syndicated loan and the change of the Lender alters the roles of the representatives of the Lenders.

4. Changes to the commercial trading names of the account service provider bank and the bank servicing the secured transaction.

5. Changes to the interest and fee repayment plan of a foreign loan compared to the plan confirmed by the State Bank of Vietnam in the registration confirmation document or the registration change confirmation document for the foreign loan, but without changing the method of determining interest and fees as stipulated in the foreign loan agreement.
Note: The borrower is responsible for preparing a schedule of interest and fees payable so that the bank providing the account service has a basis for verification and monitoring when making money transfers.

6. Changes (increase or decrease) in the amount of principal withdrawal, repayment of principal, interest, and fees within 100 units of the foreign loan currency compared to the amount stated in the registration confirmation document or the foreign loan registration change confirmation document.

7. Changes in the actual amount of principal disbursement or repayment for a specific period to a smaller amount than that stated in the disbursement and repayment plan on the registration confirmation document or the foreign loan amendment registration confirmation document.

Note: Before withdrawing funds or repaying the remaining amount for that period, the borrower is responsible for registering a change in the withdrawal and repayment plan for the remaining unfulfilled amount.

6. Open and use a Vietnamese Dong account with the Lender to execute the foreign loan.

7. Opening and using foreign loan and debt repayment accounts of the Borrower

The lender opens and uses a Vietnamese Dong payment account of a non-resident at one credit institution or branch of a foreign bank in Vietnam for the purposes listed below. This account may only be used for purposes related to the execution of the foreign loan.

Loans in Vietnamese Dong:

The following conditions must be met:

The lender is a foreign investor who contributes capital to the borrower.
The borrower is a foreign-invested enterprise.
The source of funds for the loan is the profit from foreign direct investment activities in Vietnam.

Other foreign currency loans:

This applies if you fall under one of the following cases:

Debt recovery for short-term loans that are eligible for registration but do not meet the registration confirmation criteria, including short-term loans with extended principal repayment periods where the total loan term exceeds one year, or short-term loans without extension agreements but with outstanding principal at the time of one year from the date of the first disbursement.
Recovering outstanding foreign loans where the registration confirmation or registration change document is terminated due to fraudulent information or forged documents in the file.

Borrowers open and use loan accounts and repay foreign loans in the following cases:

Type	Loan type	Loan term	Account Type
Foreign-invested enterprises	Foreign loans in the form of deferred payment for imported goods.	Short/Medium/Long Term	Payment account
	Other forms of loans	Short-term	Direct investment capital account or foreign loan and debt repayment account
	Other forms of loans	Medium and long term	Direct investment capital account
Businesses without foreign investment	Foreign loans in the form of deferred payment for imported goods.	Short/Medium/Long Term	Payment account
	Other forms of loans	Short-term	Foreign loan and repayment accounts
	Other forms of loans	Medium and long term	Foreign loan and repayment accounts

The above is a brief guide to some important points. Circular 12 / 2022 / TT-NHNN by Expertis. If you need advice on borrowing and repaying foreign loans, please contact us.

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