Registration of foreign loans

Question: What are the regulations on registration of foreign loans?

Answer: Circular 25 replaces regulations relating to the registration of foreign loans stipulated in Circular 09/2014/TT-NHNN, dated December 21, 2004 and Circular 25/2011/TT-NHNN, dated August 31, 2011.

Accordingly, Circular 25 supplements foreign loans which must be registered with the State Bank in addition to foreign loans with more than a one-year loan term or foreign loans which have been extended with the total term over one year. They are short-term foreign loan which have no contact for term extension but still have the loan balance at the first one year anniversary of the initial capital drawdown, except where the borrower has completed repayment of the loan within ten days after such anniversary. For these foreign loans, within thirty 30 days as from date being one full year after the date of the initial drawdown, the borrower shall prepare an application file for registration of the foreign loan in accordance with the legal provisions.

Foreign invested enterprises who wish to register a foreign loan must have documents providing the lawful distributed profit from direct investment activities of the parent company and certification from the credit institution (where the borrower opened the investment capital account) on the status of the profit distribution and overseas remittance of the parent company when they register the loan.

If any change relevant to the foreign loan registered is made, the borrower must register such changes with the State Bank. However, to lessen administrative procedures for enterprises, Circular 25 stipulates that if the borrower changes its capital withdrawal plan or repayment plan within 10 days as compared to the plan which was certified by the State Bank previously, the borrower is not required to register these changes with the State Bank.

To maintain strict control of foreign loans, the State Bank supplements some documents in an application file for registration of foreign loans such as: report on compliance with State Bank regulations on the safety assurance ratio in banking activities for borrowers being credit institutions or foreign bank branches; certification from the credit institution on the status of capital withdrawal and repayment for short-term loans which are extended or still have a balanced amount, and some other documents for particular loans (such as foreign loans in VND, foreign loans arising from a contract for import of goods on deferred payment).

Circular 25 will take effect from November 1, 2014. Foreign loans which have been implemented prior to the effective date of this Circular shall continue to be implemented in accordance with the certification of registration and the certification of registration of the change (if any) of the State Bank. Any changes relevant to foreign loans which arise after November 1, 2014 must be registered in accordance with provisions of this Circular./.