| THE STATE BANK ------- | SOCIALIST REPUBLIC OF VIET NAM Independence - Freedom - Happiness ---------- |
| No: 10/2006/TT-NHNN | Hanoi, December 21, 2006 |
CIRCULAR
GUIDING THE PROVISION OF LOANS BY CREDIT INSTITUTIONS TO THEIR CUSTOMERS FOR OFFSHORE DIRECT INVESTMENT
Pursuant to the Government's Decree No. 78/2006/ND-CP of August 9, 2006, providing for offshore direct investment (below referred to as Decree No. 78/2006/ND-CP for short), the State Bank of Vietnam guides the provision of loans by credit institutions to their customers for offshore direct investment as follows:
1. Subjects of application
a/ Credit institutions that may provide loans to their customers for offshore direct investment are credit institutions licensed to conduct foreign exchange operations.
b/ Borrowing customers are investors defined in Clauses 1, 2, 3, 4, 5 and 6, Article 2 of Decree No. 78/2006/ND-CP.
2. Responsibilities of credit institutions
Credit institutions that provide loans to their customers for offshore direct investment have the responsibilities:
a/ To properly implement the provisions of Decree No. 78/2006/ND-CP, this Circular and relevant provisions of law.
b/ To balance capital and foreign currency sources by themselves so as to meet customers' borrowing demand.
c/ To evaluate investment projects, capital borrowing conditions and loan repayment capability of customers so as to make lending decisions and take responsibility for their decisions.
3. Capital borrowing conditions
Credit institutions shall consider and decide on the provision of loans to those customers that seek capital for offshore direct investment and fully meet the following conditions:
a/ Having investment projects not on the list of domains in which offshore direct investment is banned or restricted, which is promulgated by the Prime Minister.
b/ Satisfying all conditions for offshore direct investment and transfer of investment capital abroad according to the provisions of Article 4 and Clause 1 of Article 23 of Decree No. 78/2006/ND-CP.
c/ Satisfying all capital borrowing conditions defined in Article 7 of the Regulation on the provision of loans by credit institutions to their customers, issued together with the State Bank Governor's Decision No. 1627/2001/QD-NHNN of December 31, 2001.
d/ Having equity capital (including equity capital, funds and undistributed profits) in the total investment capital of offshore direct investment projects under regulations of credit institutions.
4. Demands for loan capital
Credit institutions shall provide loans to those customers that have Vietnam dong or foreign-currency capital demands for offshore direct investment as follows:
a/ For capital contributions in cash in order to execute offshore direct investment projects.
b/ For making expenses on or buying assets in Vietnam or foreign countries for offshore direct investment projects, including machinery, equipment; supplies, raw materials, fuels, goods being finished or semi-finished products; value of industrial property rights, technical know-how, technological processes, technical services, intellectual property rights and other lawful assets.
Credit institutions may not provide loans to those customers that need capital to make expenses or buy assets banned or restricted from transfer abroad under Vietnamese law or assets banned or restricted from trading under the laws of investment-receiving countries.
5. Loan security
a/ Credit institutions shall consider and decide on the provision of loans with or without security to customers for offshore direct investment in accordance with law and take responsibility for their decisions.
b/ When loans are secured by assets of borrowing customers or a foreign third party, or assets of legal entities created from their offshore direct investment projects, the concerned parties shall abide by the laws of investment-receiving countries if such compliance or results of such compliance do not contravene the basic principles of Vietnamese law; credits institutions accepting security assets located in a foreign country must be able to manage these assets throughout the lending process and handle them for debt recovery, if borrowing customers fail to pay their debts.
6. Dossiers for borrowing capital
When wishing to borrow capital, customers shall send written requests for loans and documents proving their satisfaction of borrowing conditions specified in Clause 3 of this Circular. They shall take responsibility for the accuracy and legality of their documents sent to credit institutions. Credit institutions shall guide the submission of documents in a capital loan dossier in accordance with specific characteristics of each type of investment project and form of offshore direct investment, and the lending modes.
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