On 8 November 2023, the State Bank of Vietnam (SBV) issued Official Letter 8631 to publish answers to certain questions on lending regulations under Circular 6/2023 of the SBV dated 28 June 2023 (Circular 6/2023) amending Circular 39/2016 of the SBV dated 30 December 2016 on lending activities of credit institutions (CIs) and/or foreign bank branches with customers (Circular 39/2016).

The table below will highlight some notable answers of the SBV.

This post is written by Pham Thi Thu Trang and Nguyen Hoang Duy, and edited by Hoang Thi Thanh Thuy.

Questions	Responses of the SBV	Our comments
1. Question 1 and 2 on loan for living purpose	1.1. Regarding loans for living purposes: the customer must provide the information of the plan/project only if the loan s purpose is (i) to purchase residential house, (ii) to build/renovate residential house, or (iii) to purchase land use right to build residential house. The content of such plan/project is under the internal regulations of the CIs.	1.2. CIs should review its internal regulations and supplement with the information of the plan/project which its customers must provide for loans for such purpose.
2. Question 4: Can the CIs offer a loan to a customer to repay its foreign loans?	2.1. Yes, provided that such foreign loan satisfies the requirements at Article 8.6(a) and 8.6(b) of Circular 39/2016,[1] and the borrower satisfies the borrowing conditions under Circular 39//2016.	N/A
3. Question 6: Under what deposit forms which the CIs are not allowed to offer a loan for deposit purpose? Do those forms include deposit certificates issued by the CIs?	3.1. Under Article 4.13 of Law on CIs 2010, receipt of deposits includes on-call deposit, fixed term deposit, savings deposit, issuances of deposit certificates, promissory notes, bank notes, and other forms of receipt of deposits on the principle of full payment of principal and interest to the depositors under agreement. Accordingly, an CI is not permitted to grant loans for the purpose of purchasing deposit certificates issued by such CI or another CI.	3.2. See our comments at Question 8 below.
4. Question 8: Are the CIs allowed to offer a loan used for escrowing under Article 8.7 of Circular 39/2016?	4.1. Yes, provided that the customer meets the borrowing conditions and this lending complies with the CIs internal rules on lending and loan management.	4.2. It is not clear if escrow can be considered as a deposit. Under Article 330 of Civil Code 2015, escrow deposit means a sum of money, precious metals, gemstones or other valuable papers deposited by an obligor into an escrow account at a credit institution as security for the performance of an obligation . 4.3. Arguably, escrow can be considered as a deposit. If so, the answer of SBV to this Question 8 may conflict with that of Question 6 where the grant of loan for deposit purpose is prohibited.
5. Question 9: Is interest over unpaid overdue principal (nợ l i tr n nợ gốc qu hạn chưa trả) interest arising from the overdue principal or the unpaid interests within the repayment term? What is the order for collection of interest on overdue principal mentioned above?	5.1. Under Article 18.4 of Circular 39/2016, the unpaid interest on overdue principal (nợ l i tr n nợ gốc qu hạn chưa trả) is the interest arising from overdue principal. The order for collection of such interest will be subject to the agreement between the CIs and customers.	N/A
6. Question 10: Are the CIs obliged to prioritize the collection of the overdue debt with longest overdue period if customers have more than one overdue debt?	6.1. No, because Circular 39/2016 does not regulate the order for overdue debt collection in case customers have more than one overdue debt. This will be subject to the agreement between the CI and the customer.	N/A
7. Question 14: Are the CIs required to request the customers to provide documents proving the use of an overdraft loan?	7.1. Under Article 94.3 of the Law on CIs 2010, the CIs are obliged to inspect and supervise the customer s use of the loan. This obligation will also apply to the overdraft loan.	7.2. Since the SBV does not confirm clearly whether the CIs are obliged to request their customers to provide documents proving the use of an overdraft loan, this may lead to different interpretations (i.e. (i) the CIs must collect documents in order to inspect and supervise the use of an overdraft loan, or (ii) the CIs does not need to collect such documents as long as they can inspect and supervise the use of an overdraft loan). 7.3. If the first interpretation is adopted, the CIs may face challenges because collecting documents for overdraft loan could be impractical and not straightforward.
8. Question 15: Is the provision At least once a year, the CIs will consider redefining the maximum credit limit and duration of maintenance of such limit understood that the maximum time of offering a credit limit is 12 months?	8.1. No. Article 27.4 of Circular 39/2016 does not limit the term of loans under the form of credit line.	N/A
9. Question 16: Are provisions of digital lending stipulated in Section 3 of Circular 39/2016 applied to the case of conducting one or several stages of lending by digital means or are they only applied to the case of conducting all stages of lending by digital means?	9.1. The case of conducting one or several stages of lending by digital means must also comply with the provisions of digital lending stipulated in Section 3 of Circular 39/2016.	N/A
10. Question 18: Are the digital lending provisions applied to both individuals and legal entities or are they applied to only individuals?	10.1. The digital lending provisions (excluding Article 32b) shall be applied to both individuals and legal entities. Regarding Article 32b on identifying customers and verifying customer identification information, it does not apply to customers being a legal entity, and only applies to individuals who use loans for living purpose, not for other purposes such as business activities or other activities.	N/A
11. Question 19: Are the CIs allowed to conduct digital lending of a loan used for purposes other than living purpose?	11.1. The CIs considers and decides to conduct digital lending of a loan used for living purpose, business activities and other activities under Section 3 of Circular 39/2016.	11.2. The answer of the SBV is not clear because it is not clear if the provisions of Section 3 of Circular 39/2016 will, by default, only apply to loan for living purpose, or such provisions can also apply for other loan purpose.
12. Question 29: Are the CIs responsible for assessment results, decision of lending, and for assigning duties to each individual or department of these stages if these stages are implemented on a third party s platform/system?	12.1. Yes, because under Articles 3, 17, 32dd of Circular 39/2016 (as amended), the CIs are responsible for assessment results, decision of offering a loan, and for duties assignment to each relevant individual, or department (even if these stages are implemented on a third party s platform/system)	N/A
13. Question 30: Is it reasonable that under Article 32e of Circular 39/2016 (as amended) an electronic loan agreement must comply with regulations of laws on electronic transactions and must include contents required in Article 23 of Circular 39/2016?	13.1. Yes. The laws on e-transactions already regulate the implementation of e-contracts, and the loan agreement must include minimum contents under Article 23.
14. Question 31: Under Article 32e of Circular 39/2016, is it mandatory that a loan agreement is concluded by only the CIs legal representative, or is it possible that anyone who is delegated/authorized can conclude such loan agreement as under a traditional method?	14.1. Circular 39/2016 does not govern the signing authority of a loan agreement, hence, the CIs must base on the applicable regulations to provide on such signing (in traditional or digital way) in its internal rules.	N/A
15. Question 35: Who is the person having the authority to sign the lending decision under Article 32g of Circular 39/2016?	15.1. The authorized signatory is the one who has the authority of: 15.1.1. approving the criteria/conditions on lending of information systems used for loan application assessment and lending decision-making stages; or 15.1.2. approving the lending under the internal rules of the CI.	N/A
16. Question 37: Guidance on the case where the Cis cannot keep and save the dossiers of individual customers since such customers (as personal data subjects) request to delete their personal information under their rights stipulated in Article 16 of Decree 13/2023.	16.1. Decree 13/2023 excludes cases stipulated by specialized laws. Therefore, the CIs will conduct the storage of the lending dossier according to Article 96 of Law on CIs.
17. Question 43: Is it mandatory that the debt acknowledgement (giấy nhận nợ) must comply with Circular 39/2016 (as amended) if the CIs and their customers have signed the framework agreement before 1 September 2023 but the loan disbursement is made after 1 September 2023?	17.1. If the framework agreement signed before 1 September 2023 does not include all minimum contents required by Article 23 of Circular 39/2016, the debt acknowledgement for the loan disbursement made after 1 September 2023 under such framework agreement must comply with the Circular 39/2016.	N/A

[1] i.e. the lending period must not exceed the remaining period of the existing foreign loan; and the existing foreign loan has not been restructured.

Vietnam Business Law