Circular No. 06/2023/TT-NHNN dated 28 June 2023 (“Circular 06”) amending and supplementing a number of articles of Circular No. 39/2016/TT-NHNN dated 30 December 2016 of the Governor of the State Bank of Vietnam regulating the offering of loans to customers by credit institutions and foreign bank branches (“Circular 39”) came into force on 1 September 2023.

Circular 06 introduces important amendments to regulations on the lending activities of credit institutions and branches of foreign banks (“Credit Institutions”) to customers as follows:

Amendment on the categories of rejected loans demands 

Pursuant to Circular 06 Credit Institutions are not allowed to offer any loan to customers for: 

1. repaying onshore loans from any other Credit Institutions
2. repaying offshore loans. 

As an exemption from the above rule – a new loan may be offered to the customers for repaying offshore loans in the form of deferred payments for purchase of goods. 

Furthermore, as of 1 September 2023, the Credit Institutions may offer new loans for refinancing, before the maturity of original loans, solely if the two following requirements are met: 

1. The term of the new loan must not exceed the remaining term of the original loan; and
2. The original loan has not undergone any repayment rescheduling.

Tightening conditions for negotiating interest rate of short-term loan

Circular 06 stipulates that each Credit Institution needs to specify in its internal lending policy specific criteria to determine customers with transparent and healthy financial conditions. The Credit Institutions will rely on the initial assessment of the customer's financial situation to make a decision on whether to proceed with the interest negotiation on the short-term loans.  

Flexibility in currency for loan repayment

Circular 06 allows the parties to agree on a currency for loan repayment which can be different from the lending currency (subject to the relevant applicable laws).