Circular 39/2016/TT-NHNN on lending by credit institutions, with regulations on principles, conditions, loan application documents, and interest rates for loans at commercial banks, other credit institutions, and branches of foreign banks for business, consumption, and living expenses.
Accordingly, some provisions in Circular No. 39/2016 regulating lending activities of credit institutions and branches of foreign banks to customers are as follows:
- Customers eligible for loans from credit institutions must be legal entities with full civil legal capacity, while individuals must be at least 15 years old and not have lost or had their civil capacity restricted; they must have a need for capital, a plan for using the capital, and the financial capacity to repay the debt.
- The following loan needs are not eligible for lending by credit institutions according to Circular 39/NHNN:
- Borrowing capital to conduct business in sectors or professions prohibited by law.
- Borrowing money to pay for expenses, carry out transactions, or engage in activities prohibited by law.
- Borrowing money to buy gold bars;
- Borrowing funds to repay loans from the same lending institution, or to repay loans from other credit institutions, and to repay foreign loans, except in certain cases as stipulated in Circular 39/2016.
- Borrowing money to purchase or use goods or services that are prohibited from being traded.
- Commercial banks and other credit institutions provide loans to customers in various forms, including short-term loans (maximum 1 year); medium-term loans (over 01 year and up to 05 years); and long-term loans (over 05 years).
- According to Circular No. 39/TT-NHNN, lending interest rates will be agreed upon by credit institutions and customers based on market supply and demand for capital, borrowing needs, and customer creditworthiness, except for certain loans serving agricultural and rural development, export businesses, small and medium-sized enterprises, supporting industries, and high-tech applications, where the agreed rate must not exceed the maximum rate stipulated by the State Bank of Vietnam.
- According to Circular 39, fees related to lending activities will be agreed upon by the customer and the credit institution, including early repayment fees; fees for standby credit limits; syndicated loan arrangement fees, commitment fees for capital withdrawal, and other related fees.
- The repayment of principal and interest on loans will be agreed upon by the customer and the credit institution, who will choose to repay the principal and interest in separate installments or within the same period. According to Circular No. 39/2016/NHNN, for overdue loans, the credit institution will collect the principal first, then the interest.
In addition, Circular No. 39 specifies the methods, loan terms, and record-keeping requirements for loans used for business and living expenses.
Circular 39/2016/TT-NHNN, regulating lending activities of credit institutions and branches of foreign banks to customers, came into effect on March 15, 2017.
