Term deposit in regard of foreign loans not guaranteed by the Government according to Circular No. 08/2023/TT-NHNN
On 30 June 2023, the Governor of the State Bank of Vietnam has promulgated Circular No. 08/2023/TT-NHNN on conditions on foreign borrowing not guaranteed by the Government, replacing Circular No. 12/2014/TT-NHNN dated 31st March 2014 and amending a number of provisions in Circular No. 12/2022/TT-NHNN dated 30 September 2022 (“Circular 08”).
Circular 08 shall come into force as from 15 August 2023, except for the regulations on limitation on short-term borrowing for the credit institutions, branches of foreign banks, whose effective date shall commence as from 1 January 2024.
A noteworthy point of Circular 08 is that the Circular further elaborates the principle of using foreign loan capital. In essence, the borrower must be fully responsible for the proper use of foreign loans for the legitimate purposes in accordance with this Circular. Furthermore, if the foreign loans have been withdrawn but temporarily not yet used for the lawful use purposes as ascribed by laws, the borrower is permissible to deposit such foreign loan capital source to the credit institutions, branches of foreign banks operating in Vietnam with a deposit term of 01 (one) month for the maximum.
In the said case of making term deposit of the loans to the credit institutions, branches of foreign banks, the borrower is obliged to keep record of each of the said unused amounts and present such records together with the evidencing documents to serve for the inspection on use of foreign loan capital of the competent authorities.
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For any concerns relating to regulations of Circular 08 or the compliance therewith, please do not hesitate to contact Mazars for assistance.
Contacts
Jean Marc Deschamps Senior Advisor
