On 28 June 2023, State Bank of Vietnam issued Circular No. 06/2023/TT-NHNN (“Circular 06/2023”) amending several articles of Circular No. 39/2016/TT-NHNN (“Circular 39/2016”) regulating lending activities of credit institutions and foreign bank branches with customers. Circular 06/2023 will take effect from 01 September 2023, with several notable contents as follows:

1. Adding cases of which lending is not allowed:

Credit institutions shall not be allowed to approve the following loan demands:

1. Loans used for doing business or investing in sectors or activities prohibited by the Law on Investment;
2. Loans used for paying expenses or meeting financial demands of business or investment in sectors or activities prohibited by the Investment Law and other transactions or activities prohibited by law;
3. Loans used for purchasing or using goods or services on the list of prohibited sectors and activities under the Law on Investment;
4. Loans used for buying gold bullion;
5. Loans used for repaying loan debts owed to lending credit institutions, except those used for paying loan interest arising during the construction process which are accounted for in the total construction cost estimate approved by a competent authority in accordance with regulations of law;
6. Loans used for repaying foreign loan debts (excluding foreign loans granted in the form of deferred payment for purchased goods) or repaying loan debts owed to other credit institutions, except for a loan used for making early repayment of an existing loan that meets the conditions under the law;
7. Loans used for sending money to deposit accounts;
8. Loans used for making capital contributions, buying or receiving a transfer of stakes of a limited liability company or a partnership, or shares of a joint-stock company not yet listed on the securities market or registered for trading on the Upcom system;
9. Loans used for making capital contributions under capital contribution contracts, investment cooperation contracts, or business cooperation contracts for executing investment projects that are unfit for sale or for business operation as prescribed by laws when the credit institution issues its lending decision; and
10. Loans used for financial offsetting purposes, except for those meeting the conditions under the law.

2. Reducing loan restrictions to repay loans:

1. Under Circular 39/2016, loans to refinance existing loans must meet the following conditions:
   1. Be a loan used for business activities;
   2. The term of the new loan does not exceed the remaining term of the old one; and
   3. The old loan has not yet undergone any debt rescheduling.
2. Circular 06/2023 has removed condition (a) above, which means credit institutions are allowed to lend if the loans are used for any lawful purpose (for example, consumer loans) if the loan meets the conditions (b) and (c) above.

3. Loan repayment currency:

Circular 39/2016 requires the repayment currency to be the loan currency of the loan. However, Circular 06/2023 allows the borrower to repay the debt in another currency as stipulated in the agreement between the credit institution and the borrower.

The above is not official advice from BLawyers Vietnam’s lawyers. If you have any questions or suggestions about the above, please contact us at consult@blawyersvn.com. BLawyers Vietnam would love to hear from you.