The State Bank of Vietnam Has Published a Draft Circular on the Registration of Foreign Loans

Last month, the State Bank of Vietnam (“SBV”) published a new draft Circular for public comment on the registration of foreign loans. In particular, the draft proposes increasing time-limits for the registration of foreign loans, with three specific ideas put forth for consultation:

First, the draft Circular proposes that the “permitted period” for late repayment of a short-term loan (i.e. a foreign loan with a due date of under 12 months from the first fund drawdown) should be increased. The SBV has suggested increasing this from 10 days after 12 months in the current regulations to 30 days after 12 months in the draft Circular. Once this deadline has passed, the loan would be converted into a mid- or long-term loan and would then have to be registered with SBV.

Second, and in line with the first proposal above, the draft Circular proposes lengthening the deadline for registering a short-term loan which is converted into a mid- or long-term loan because it has not been repaid during 12 months or during the “permitted period” after 12 months from 30 to 45 days.

Third, the draft Circular proposes adding two new exceptions to the registration requirement of changes in registered content of mid- and long-term foreign loans. The first is that if there is a change in the plan for interest payments and fees (i.e. the time and number of payments), but no change in the principal amount or the method of determining interest and fees. The second is if the actual principal withdrawal or repayment for a specific period is less than that confirmed under the SBV’s written confirmation on the registration of or change in a foreign loan.

The draft Circular aims to replace previous legislation of the SBV. In particular, it is designed to supersede Circular No. 03/2016/TT-NHNN dated 26 February 2016 on foreign exchange controls of non-government guaranteed foreign loans borrowed by enterprises and loan repayment (“Circular 03”). Circular 03 was amended in 2016 and 2017 by Circular No. 05/2016/TT-NHNN dated 15 April 2016 and Circular No. 05/2017/TT-NHNN dated 30 June 2017.

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