Forex Management for Overseas Lending and Guarantee to Non-Residents

The State Bank of Vietnam (SBV) issued Circular 37/2013/TT-NHNN providing guidance on some contents of managing foreign exchange for overseas lending and guaranteed debt collection from non- residents.

 

The Circular includes seven Chapters and 23 Articles. Regarding the adjustment scale, the Circular contains regulations on opening and using accounts to carry out foreign loans, performing debt guarantee and collection to non-residents of economic organisations after getting lending and guarantee permission from the Prime Minister; opening and using accounts to fulfil the obligations of debt guarantee and guaranteed debt collection to non-residents of the credit institutions (CI) and branches of foreign banks; registration and procedures to change account into those capable of lending abroad; registration and procedure to change collected guaranteed debt arising from the guarantee obligations to non-residents of economic organisation; registration and procedure to change collected guaranteed debt arising from guarantee obligations to non-residents of CIs and branches of foreign banks.

 

In addition to the Circular, the foreign debt lending, collecting and guarantee to non-residents of CIs and branches of foreign banks also must comply with current regulations of the SBV on foreign exchange management on lending and collecting overseas debt of CIs and regulations on bank guarantee.

 

According to the Circular, the lender or guarantor is responsible for investigating legal and financial capacity of a non-resident borrower or guaranteed party to ensure the collection of principal and interest under the loan agreement and guarantee agreement; to bear their own financial as well as legal risk in the conclusion and implementation of loan and guarantee agreements and other important relevant agreements; To comply with current relevant regulations of the state.

 

Regarding cases are not required to register of guaranteed debt collection, the Circular provides: In cases when debt arising from the guarantee obligations is paid by guaranteed party to guarantor party within 30 days from the date of the guarantee obligations, guarantor party can skip the registration of collected guaranteed debt under the provisions of this Circular.

 

The Circular will come into effect on February 14th 2014.