The State Bank of Vietnam issued Circular No. 18/2016/TT-NHNN on June 30, 2016 which takes effect on August 22, 2016, amending a number of Articles of the Circular No. 21/2012/TT-NHNN dated June 18, 2012, regulation on operation of lending, borrowing; term purchase and sale of valuable papers with term among foreign credit institutions and bank branches.
Within that, the most importance content is the provision about the rate of lending interest between credit institutions or foreign banks’ branches. In accordance with this Circular, lending interest rate shall be subject to negotiation of credit institutions or foreign banks’ branches. The rate of interest on overdue principal balance shall be subject to negotiation of credit institutions or foreign banks’ branches in the loan agreement; however, the rate cannot exceed 150% of the interest rate on the loan prior to its maturity; the rate of late payment interest shall be subject to negotiation of credit institutions or foreign banks’ branches in the loan agreement but shall not exceed 10% per annum.
Besides, this Circular also prescribed some case that credit institutions or foreign banks’ branches are allowed to incur debts overdue 10 days or more to other credit institutions or foreign banks’ branches, includes: Credit institutions under special control, which are permitted to perform the transactions according to the approved plan for consolidating their organization and activities; Credit institutions under restructuring, which are permitted to perform the transactions according to the plan for restructuring their organization and operation as approved by the State Bank.
Another important regulation is the provision on adding bank for state policies in the list of organizations are allowed to purchase and sell State Bank bills; Government bonds; Government-guaranteed bonds; municipal bonds; valuable papers issued by credit institutions and foreign bank branches and Different types of bills, promissory notes and bonds issued by other organizations for certain terms. Therefore, from August 22, 2016, the organizations are allowed to purchase and sell for certain these valuable papers including: Commercial banks, financial enterprises, banks for state policies, cooperative banks and foreign banks’ branches.
