What is “Foreign Loan”?

Foreign loan is a generic term which means foreign loans that are not guaranteed by the Government as well guaranteed by the Government in all forms such as loan contracts, deferred payment contracts for import of goods, lending entrustment contracts, contracts for finance leasing or debt instrument issuance on the international market of the borrower[1].

Which foreign loan must be registered?

1. Loan term

Foreign loan registration only applies to foreign loans that are not guaranteed by the Government (also known as conventional loans). Specifically, the following three situations[2]:

1	Medium and long-term loans. Loan term shall be determined from the date of first drawdown to the scheduled date of the final principal repayment according to the terms and conditions of that foreign loan.
2	Short-term loans are extended such that the aggregate term of the extended loan exceeds one year. Loan term shall be determined from the date of first drawdown to the scheduled date of final principal repayment according to terms and conditions of foreign loan agreements and foreign loans extended agreements.
3	Short-term loans which are not extended but which is not repaid in principal in full (including outstanding interest included in principal) within01 (one) calendar year from the date of first drawdown, unless the borrower fully completes its debt repayment obligation within 30 working days from the first anniversary of the date of first drawdown. Loan term shall be determined from the date of first drawdown to the scheduled date of final principal repayment.

 

Note 1: Withdrawal date is determined as the date money is "credited" on the borrower's account for loans disbursed in cash; The date the lender makes payment to the non-resident providing goods and services under the goods and service purchase contract with the resident as the borrower; The date the borrower is recorded as completing the payment obligation to the lender in case the parties choose to withdraw capital from the medium or long-term foreign loan in the form of clearing payment according to the provisions of Point d Clause 1 Article 34 of Circular No.12/2022/TT-NHNN; The date the borrower receives the leased assets for loans in the form of foreign financial leases in accordance with relevant legal provisions; The date the borrower is granted a Enterprise Registration Certificate, License for establishment and operation according to specialized laws, date of signing an investment contract in the form of public-private partnership (PPP contract), the date the parties sign foreign loan agreement to convert investment preparation money into loan capital (depending on which day comes later), applicable to foreign loans arising from the transfer of investment preparation money of projects which has been granted a Investment Registration Certificate to foreign loan capital according to the provisions of law on foreign exchange management for foreign direct investment activities in Vietnam.

2.Lending forms

Foreign loan agreements which conducted the procedures of loan registration are made in the below forms:

1	The valid agreement having the effect to drawdown signed by the borrower and the lender who are non-residents.
2	Debt instruments issued by residents to non-residents.
3	Entrustment lending agreement or entrustment lending agreement along with the on-lending agreement in case the trustee is the party responsible for direct debt repayment to the trustor who is a non-resident.

 

Note 2: For agreements not having the effect to drawdown such as framework credit agreements, memorandums of understanding, or other similar agreements signed with non-residents, the borrower is not required to register for a loan. The borrower is only obliged to apply for a loan when there is a document enabling of the above agreements to be valid. In this case, the foreign loan agreement includes the original agreement and the documents that effect the validity for drawdown of such agreements.

Subject who must register for a foreign loan

1	A borrower who signs a foreign loan agreement with a lender who is a non-resident.
2	The entities that responsible for paying debts directly to the entrusting party if the credit institution or foreign bank branch signs a contract to receive entrustment for on-lending with the entrusting party being a non-resident.
3	The party obligated to repay the debt under the debt instrument issued outside the territory of Vietnam to the non-resident.
4	A lessee in the financial leasing contract with a lessor who is a non-resident.

Note 3: Foreign loan registration is only applicable to cases where the borrower being a resident that are enterprises, cooperatives, cooperative federations, credit institutions and foreign bank branches established and licensed within the territory of Vietnam.

Note 4: Lender include both individual and organization that are non-residents.

Note 5: In case the borrower is being of procedures of conducting a foreign loan registration but it be divided fully, partly divided, consolidated or merged, the successor shall take on the rights and obligations in relation to the foreign loan must register the loan.

 

Procedures for register a foreign loan

Deadline for a loan registration

Deadline for a loan registration corresponds to each loan registration case, including one of the following four cases:

1	30 working days from the date of signing the medium-term or long-term foreign loan agreement.
2	30 working days from the date of signing the agreement to extend the foreign loan agreement from short-term to medium- or long-term in which the signing date of extension is within 01 year from the date of first drawdown.
3	30 working days from the date the borrower is granted the Enterprise Registration Certificate, the License for establishment and operation under specialized laws, the date of signing the investment contract under the method of public-private partnership (PPP contract), the date on which the parties sign a foreign loan agreement to convert the amount of capital prepared for investment into borrowed capital (depending on which date comes later), applicable to foreign loans arising from the transfer of the amount of capital prepared for the investment of projects granted Investment Registration Certificates into foreign loans.
4	60 working days from the first anniversary of the date of first drawdown with regard to: -         Short term foreign loans may be extended to medium-term and long-term foreign loans, to which the date of signing the agreement will extend after 01 year from the date of first drawdown; or -         Short term loans without extension agreement but with outstanding principal balance (including outstanding interest included in principal) at the first anniversary of the date of first drawdown.

 

Deadline for Competent authority to confirm or reject to confirm loan registration

1	12 working days from the date of receipt of valid and sufficient dossiers from borrowers in the event that borrowers filled in the loan declaration form on the website.
2	15 working days from the date of receipt of valid and sufficient dossiers from borrowers in the event that borrowers failed to fill in the loan declaration form on the website.

List of loan application documents

	List of General Dossiers
1	Foreign loan application form
2	A copy of the borrower's legal documents: Establishment licenses, enterprise registration certificates, cooperative registration certificates, cooperative federation registration certificates and amendments and supplements (if any) or other equivalent documents.
3	A copy or original copy of written proof of the following borrowing purposes:
3.1	As for loans for implementation of investment projects: Investment certificates, Investment registration certificates or Decision on approval of investment policy in accordance with the laws on investment applicable regulations of relevant laws.
3.2	As for loans for implementation of production and business plans other than investment projects: The plan to use foreign loans approved by a competent authority in accordance with the Law on Investment, the Law on Enterprise, and the enterprise’s charter, the Law on Cooperative and the cooperative's charter and other relevant legal documents.
3.3	As for loans for restructuring foreign debts of the borrower: The plan for restructuring foreign debts of the borrower approved by a competent authority in accordance with the Law on Enterprise and the enterprise's charter, the Law on Cooperative and cooperative’s charter and other relevant legal documents.
3.4	As for short-term loans extended to medium-term loans or long-term loans and short-term loans without an extension agreement but with outstanding principal balance (including outstanding interest included in principal) at the first anniversary of the date of first drawdown: Report on using of the initial short-term foreign loans that meet the requirements for short-term foreign loans (enclosed with supporting documents such as the borrower's plan for using foreign loans, foreign debt restructuring plan).
4	A copy in foreign language and Vietnamese translation of foreign loan agreement and agreements on extension of short-term loans into medium-term or long-term loans (if any).
5	Copy of foreign language and Vietnamese translation of guarantee commitment (letter of guarantee, guarantee contract or other form of guarantee commitment) in case the loan is guaranteed.
	In case the borrower is a state-owned enterprise
6	A copy of the competent authority's document approving the foreign loan in accordance with the law on assignment and decentralization of exercise of rights, responsibilities and obligations of the state owner, agency representing the state in accordance with regulations on management and use of state capital in enterprises for borrowers being state-owned enterprises.
	In case the borrower is a credit institution or foreign bank branch
7.1	Report on compliance with regulations of the SBV on safety limits and ratios in operations of credit institutions and foreign bank branches in accordance with regulations on condition for self-borrowed and self-repaid foreign loan at the end of the latest 3 months before the date of signing the loan agreement to the end of the latest month prior to the date of submission of full application for registration of foreign loan according to the form specified in Appendix 02 attached with Circular 12/2022/TT-NHNN; or
7.2	Document proving that the borrower is a credit institution supportted according to the approved recovery plan, a specially controlled credit institution that implements the prescribed safety ratio for these target groups at the Law on Credit Institutions.
	In case the borrower opens an account for foreign borrowing and debt repayment at the bank providing account service
8.1	In case of foreign loans to restructure foreign debts: A statement given by the borrower’s bank providing account service  on drawdown and repayment of debts at the time of loan registration with regard to foreign loan to be restructured from borrowed capital.
8.2	In case foreign investors’ disbursed fund transmitted to Vietnam which have already been used for meeting pre-investment expenses are converted into medium-term or long-term foreign loans of directly foreign-invested enterprises in accordance with prevailing relevant laws on foreign direct investment in Vietnam: Copy of foreign document and Vietnamese translation of a confirmation of collection and spending transactions relating to loan origination given by the bank providing account service to the creditor.
8.3	As for short-term loans extended to medium-term loans or long-term loans and short-term loans without an extension agreement but with outstanding principal balance (including interest included in principal) at the first anniversary of the date of first drawdown: A statement given by the bank providing account service to the borrower on drawdown and repayment of an initial short-term foreign loan.
	In case a foreign direct investment enterprise borrows from the profit sharing in Vietnam dong
9	Documents proving that profits are lawfully divided in Vietnam Dong from direct investment activities of the lender being a foreign investor contributing capital at the borrower.
10	Confirmation of the bank on the situation of sharing and repatriating profits of the lender.

Note 6: Foreign loans of state-funded commercial banks in which the SBV is a controlling owner representative and have been approved by the State Bank in accordance with regulations on management and use of state funds in enterprises are not required to submit dossiers number 3.1, 3.2, 3.3 and 6.

Note 7: In case the borrower cannot provide dossier in number 8.1, 8.2 and 8.3 because the account service provider shuttered business or suspended operations before the borrower alters another account service provider; or the drawdown and repayment of the foreign loan are not required to be done via a foreign loan account. The borrower chooses one of the other documents proving the drawdown and loan repayment as follows: A copy of the audited or reviewed financial statement with information proving that the borrower has received the loan amount, outstanding debt up to the time of requesting the State Bank to confirm registration of foreign loan; A copy of foreign document and Vietnamese translation of the written certification of the overseas commercial bank where the borrower opens and uses a foreign currency account abroad to withdraw loan proceeds and repay the loan; A copy of foreign document and Vietnamese translation of the letter of confirmation from an overseas bank about the amount of money the creditor has directly paid to the beneficiary being a non-resident for the provision of goods and services under the goods and services sale contract with the resident being the borrower.

Competent authority registration

1	State Bank of Vietnam (Department of Foreign Exchange Management): deals with cases involving a loan of over USD 10 millions (or other currency of equivalent value)
2	State Bank of Vietnam branches of cities or provinces where the borrower's head office is located: deals with cases involving a loan amount of up to USD 10 million (or other currency of equivalent value).

How to submit the dossier

1	Direct submission to Competent authority.
2	Submission by post office.

Registration fee

Free

Results

1	A written confirmation of registration of foreign loans; or
2	A written refusal to confirm the registration of the foreign loan (including clear explanation from competent authority).

 

Images on the written confirmation of registration of foreign loans

 Sanctions imposed on breach of loan registration regulations

A fine of 40,000,000 VND to 60,000,000 VND might be imposed for failure to comply with the law on administrative procedures for registration and registration of changes to foreign loans (according to Article 3.3(b), Article 23.3(g) of Decree No.88/2019/ND-CP.

Frequently asked questions about foreign loans

1. What is a deferred payment foreign loan?

Deferred payment foreign loan is defined as the import of goods for which the first drawdown date is before the final payment date, in which:

• The drawdown date is (i) the 45^th day from the date of completion of inspection of the customs declaration, if the bill of lading is not required by the borrower's bank; or (ii) the 90th day from the date of issuance of the bill of lading, if the bill of lading is required by the borrower's bank.
• The final payment date is (i) the final payment date within the payment period specified in the contract; or (ii) the actual final payment date of the payment if not specified in the contract or if the contract does not specify a payment period.
• The loan term for the foreign loan with deferred payment is the period from the drawdown date to the final payment date.

2. When is it necessary to register the loan modification?

Except for the provisions of Clause 2 Article 17 of the Circular 12/2022/TT-NHNN, the borrower is responsible for registering any changes related to the loan as confirmed in the registration confirmation document, or the document confirming changes to the foreign loan by the State Bank of Vietnam. The registration must be made in accordance with the provision of the Circular 12/2022/TT-NHNN.

Cases where registration of loan changes is not required include:

• Changes in the drawdown and principal repayment schedule within 10 working days compared to the schedule confirmed by the State Bank of Vietnam;
• Changes in the borrower's address that do not involve a change in the borrower's province or city of residence. In this case, the borrower must notify the competent authority of the change and register the changes with the confirmation document;
• Changes of the lender, relevant information about the lender in the syndicated loan with designated representatives of the lenders, except in cases where the lender is also the representative of the lenders in the syndicated loan and the change of the lender changes the representative role of the lenders;
• Changes in the commercial transaction name of the bank providing account services and the bank providing secured transactions;
• Changes in the foreign loan interest and fee payment schedule in comparison with the schedule confirmed by the State Bank in the written confirmation of registration, confirmation of registration of changes in the foreign loan, but not the method of determining interest and fees specified in the foreign loan agreement. It is the responsibility of the Borrower to prepare a table for the calculation of interest and fees to be paid, so that the Bank providing account services has a basis for control and monitoring when making transfers;
• Changes (increase or decrease) in the amount of capital withdrawal, principal repayment, interest and fees within 100 currency units of the foreign loan currency in comparison with the amount specified in the document confirming the registration, document confirming the registration of changes in the foreign loan;
• in the actual amount of capital withdrawal or principal repayment for a certain period, which is lower than the amount stated in the capital withdrawal and debt repayment plan on the document confirming the registration or the document confirming the registration of changes in foreign loans.

3. What are the reporting requirements for borrowers?

Pursuant to Clause 1 Article 41, Article 42 of the Circular 12/2022/TT-NHNN, the borrower shall make monthly and unscheduled reports when necessary as follows:

• Every month, no later than the 5^th of the month following the reporting period, the borrower must report online on the implementation of short, medium and long-term loans on the website. In case the website has a technical error and cannot send a report, the borrower sends a written report according to the form in Appendix 05 issued with Circular 12/2022/TT-NHNN. (Note that the written report can be sent by e-mail)
• In unexpected cases or when necessary, the borrower and the bank providing account services shall make reports at the request of the State Bank

4. How is the registration and issuance of access accounts for users who are borrowers regulated?

Pursuant to Clause 3 Article 10 of the Circular 12/2022/TT-NHNN, the registration and issuance of access accounts for users who are borrowers are regulated as follows:

• The user fills in the information on the electronic declaration requesting an account according to the instructions on the website, prints the declaration from the website, signs and stamps;
• The user sends the declaration referred to in Point a Clause 3 Article 10 of the Circular 12/2022/TT-NHNN by mail or submits it directly to the branch of the State Bank referred to in Point a Clause 5 Article 10 of the Circular 12/2022/TT-NHNN;
• Within 03 working days from the date of receipt of the user's application for an account with complete and valid information, the competent authority as prescribed in Point Clause 5 Article 10 of Circular 12/2022/TT-NHNN shall approve and grant accounts via the email box that the user has registered. In case of refusal to grant an account, there must be an online response clearly stating the reason.

For details on how to create a credit registration account, companies can visit the following website: https://qlnh-sbv.cic.org.vn/qlnh/

5. How to register to change account information regulated?

Pursuant to Clause 4 Article 10 of the Circular 12/2022/TT-NHNN, registration to change account information is required as follows:

• The borrower shall registers to change account information when there are changes as follows: Borrower’s name, borrower's business type, address, tax code, contact phone, box address email;

• About the implementation process:

          The borrower fills in the information on the electronic declaration requesting to change the account information according to the instructions on the website;

          Within 03 working days from the date of receipt of the electronic declaration requesting the modification of the account information, the competent authority as prescribed in Point a Clause 5 Article 10 of the Circular 12/2022/TT-NHNN approves the content of the modification to the account via the email box that the user has registered. In the event of refusal, an online response must be made, clearly stating the reason.

6. Can borrowers use foreign loans for savings?

In accordance with Clause 2 Article 6 of the Circular 08/2023/TT-NHNN on the conditions for foreign loans not guaranteed by the Government. In cases where the loan has been withdrawn but is not temporarily used for legal foreign loan purposes, the borrower can use these funds to deposit savings at credit institutions and foreign bank branches operating in Vietnam with a maximum term of not more than 01 month. Thus, for each loan, the borrower can only deposit savings once with a maximum term of 1 month.

7. What are the cases of capital withdrawal not made through foreign loan repayment accounts?

Pursuant to Clause 1 Article 34 of the Circular 12/2022/TT-NHNN, the following are cases where capital withdrawal should not be executed through foreign loan accounts or debt repayment:

• Withdraw capital from the lender and direct payment to the non-resident beneficiary providing goods and services under a purchase contract with the resident as the borrower;
• Drawdown from foreign loans in the form of financial lease;

• Drawdown through the borrower's account opened abroad in case the borrower is permitted to open an overseas account for foreign loans;

• Drawdown from medium and long-term foreign loans through clearing, with obligations payable directly to the lender. This includes payment obligations under goods import contracts, debt repayment obligations for foreign loans, and obligations specified in this Circular for direct repayment to the lender;
• Drawdown in case the amount of investment preparation is converted into foreign loan capital according to the agreement between the parties, following the provisions of the law on foreign exchange management for foreign direct investment activities in Vietnam.

8. What are the cases in which debt repayment is not made through a foreign loan repayment account?

According to Clause 2 Article 34 of Circular 12/2022/TT-NHNN, the cases in which debt repayment may not be made through foreign loan or debt repayment accounts include:

• Debt repayment in the form of providing goods and services to the lender;
• Debt repayment by the agreement between the lender and the borrower to convert outstanding debt into shares or capital contribution in the borrower;
• Debt redemption through the agreement between the lender and the borrower to convert outstanding debt into shares or capital contribution owned by the borrower;
• Repayment of medium and long-term foreign loans through direct offset agreement with lenders;
• Debt repayment through the borrower's account opened abroad (if the borrower is allowed to open an account abroad to make a foreign loan)

It should be noted that debt repayment through the agreement between the lender and the borrower to convert the outstanding debt into shares or capital contribution in the borrower or owned by the borrower is not made through the foreign loan repayment account if the debt is fully converted. If the debt is partially converted, the remaining debt must still be paid by the borrower to the lender through the foreign loan repayment account.