Thông tư 43/2016/TT-NHNN về cho vay tiêu dùng của công ty tài chính

THE STATE BANK OF VIETNAM

Circular No.43/2016/TT-NHNN dated December 30, 2016 of the State Bank of Vietnam prescribing consumer lending by finance companies

Pursuant to the Law on the State Bank of Vietnam dated June 16, 2010;

Pursuant to the Law on Credit Institutions dated June 16, 2010;

Pursuant to the Government s Decree No. 39/2014/ND-CP dated May 7, 2014 on operations of finance companies and financial leasing companies;

Pursuant to the Government s Decree No. 156/2013/ND-CP dated November 11, 2013 on defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;

Upon the request of the Chief of Banking Inspection and Supervision Department;

The Governor of State Bank of Vietnam hereby introduces the Circular providing for consumer lending by finance companies.

Article 1. Scope of adjustment

1. This Circular deals finance company’s loan for customers

2. Credit activities performed through credit card issuance operations by finance companies in compliance with regulations set forth by the State Bank of Vietnam (hereinafter referred to as State Bank) regarding bank card operations, relevant laws and other regulations.

3. Other non-consumer lending activities performed by finance companies, as provided in Clause 1 of this Article, in compliance with regulations of the State Bank on lending transactions of credit institutions and/or foreign bank branches with customers.

Article 2. Subjects of application

1. Finance companies, including general finance companies and consumer finance companies.

2. Borrowing customer (hereinafter referred to as customer)

3. Other institutions or persons involved in consumption loans from finance companies.

Article 3. Definition

For the purposes of this Circular, the terms used herein is construed as follows:

1.Consumer lendingis defined as a finance company extending a loan expressed in Vietnamese dong to an individual customer in order to meet his/her demand of fund for purchase or use of goods or services for his/her personal or family purposes in which the total outstanding balance of consumer credit owed by a customer to that finance company is not greater than VND 100,000,000 (one hundred million Vietnamese dongs). The total outstanding balance of consumer credit prescribed by this Clause shall not apply to an auto loan under which the auto is pledged as collateral for that loan in accordance with laws.

2.Demand of fund for purchase or use of goods or services, referred to in Clause 1 of this Article,comprises of:

a) Demand of credit for purchase of means of transport, items or equipment for personal or family uses;

b) Demand of credit for payments of educational, medical, tourism, cultural, sports and fitness activity costs;

c) Demand of credit for payments of home repair costs.

3.Installment loanis defined as a form of consumer lending arrangement under which a finance company and a customer agree to repay the principal and interest in installments over a set period of time.

4.Plan to use a fundis defined as a collection of information about total needed amount, total loan amount, borrowing duration and purpose.

Article 4. Application of relevant legal instruments

Since other lending regulations concerning consumer lending operations performed by finance companies are not covered by this Circular, they shall carry out lending operations aimed at meeting living demands in accordance with regulations of the State Bank on lending transactions by credit institutions or foreign bank branches with customers.

Article 5. Principles of consumption lending and borrowing

1. Consumption lending operations shall be performed according to an arrangement between finance companies and customers and conform to regulations laid down herein and other relevant laws.

2. Finance companies will be required to manage, supervise and make a statistical report of consumer lending transactions which is separate from other lending transactions by finance companies.

3. Customers applying for loans from finance companies shall be bound to use these loans for the right purposes, make a due repayment of the outstanding amount of principal and interest within an agreed period.

Article 6. The place for credit services

1. Finance companies carrying out consumption lending activities shall be allowed to open place for credit services at the place where consumer goods and services are supplied to advise and promote consumer credit lines, collect and receive information and demands for loans from customers in order to facilitate consumer lending operations. Finance companies shall not be allowed to perform operations other than those stipulated in the previous paragraph at any place for credit services.

2. Finance companies shall be required to enter into a contract to open their place for credit services with consumer commodity or service suppliers having their business facilities where the consumer credit counseling points of these finance companies will be established under which rights and liabilities of parties involved as well as term of that contract must be clearly defined.

3. Finance companies shall assume responsibility for operating these consumer place for credit services and ensuring that information about consumer credit lines extended to customers at such points are consistent, adequate and authentic.

4. Within a period of 5 (five) first days of the beginning of each quarter, finance companies must prepare a quarterly written report on the list (including name and address) of place for credit services which have already been established or closed within the territory of a province or city for submission to the Banking Inspection and Supervision Departments or the State Bank branches of cities or provinces (where none of the Banking Inspection and Supervision Department is located) where these finance companies open or end operations of their place for credit services.

Article 7. Internal regulations

1. Subject to provisions of the Law on Credit Institutions, this Circular and other relevant laws, finance companies shall issue internal rules on consumer lending and borrowed fund management as appropriate to operational characteristics of finance companies (hereinafter referred to as internal rules on consumer lending).

2. Internal rules on consumer lending shall be implemented in a consistent manner within the entire network of finance companies and address the following specific contents:

a) Loan eligibility criteria; rejected loan demands; lending methods; lending interest rate and method for calculating loan interest rate; customer’s lending application dossiers and other submissions to finance companies which are appropriate to loan features, types of loans and target customers; debt collection; conditions, processes and procedures for debt rescheduling; debt delinquency;

b) Procedures for processing, assessing, approving a loan application and deciding to extend a loan under which the maximum duration to process, assess a loan application and decide to extend a loan should be specified; delegation or assignment of rights and responsibilities for each individual or department in loan application processing, assessment, approval and grant of a loan decision and other workloads as part of the lending procedures;

c) Procedures for inspection and supervision of loan application, use and debt repayment of customers; delegation and assignment of rights and responsibilities of each individual and department for inspection and supervision of loan application, use and debt repayment of customers;

d) Requirement concerning security for loans, assessment of assets pledged as collateral for loans; management, supervision and monitoring of collateral appropriate to loan security, collateral features and customers;

dd) Actions to be taken to promote debt repayment and recovery which are appropriate to circumstances of each customer and legislation in which the time allowed to send a debt repayment reminder should be agreed upon in a consumer credit contract, begins at 7 a.m. and ends at 9 p.m., and in which threats and intimidation are prohibited;

e) Loan termination and treatment; loan interest rate and fee exemption and reduction;

g) Rules and standards of conduct in consumer lending operations and measures to be applied to ensure strict compliance with these rules and standards;

h) Specialized departments and methods of receiving and processing feedbacks or complaints of customers;

i) Information technology system or database necessary for consumer lending operations; collection, update and verification of figures, management of customer s information, identification of false information and prevention of fraudulent acts for the purpose of granting a lending decision, controlling loans and recovering debts;

k) Identification of risks that may arise during the lending process; procedures for monitoring, assessing and controlling risks; risk treatment methods;

l) With respect to finance companies owning consumer credit counseling points, internal rules must contain requirements concerning procedures, authority and responsibility for establishing and closing their consumer credit counseling point; ethical standards, authority and obligations of staff working at their consumer credit counseling points; procedures for carrying out their business operations, inspection, prevention and control of fraudulent acts, prevention of risks arising from ethical behaviors of staff working at these points.

3. At least once a year, finance companies shall review and assess their internal rules on consumer lending to make any proper amendment or adjustment to adapt to any change in applicable laws and actual contexts thereof.

4. Within a permitted period of 10 (ten) business days from the date of release or revision of internal rules on consumer lending, finance companies must submit these rules to the State Bank through the entities prescribed hereunder:

a) For finance companies whose main offices are located within the jurisdiction of the Banking Inspection and Supervision Department, submit the internal rules to the Banking Inspection and Supervision Agency and the Banking Inspection and Supervision Department;

b) For finance companies whose main offices are located outside of the jurisdiction of the Banking Inspection and Supervision Department, submit the internal rules to the Banking Inspection and Supervision Agency and the State Bank branches of cities or provinces.

Article 8. Methods of lending

Finance companies shall agree with customers on application of the following methods of consumption loans:

1. One-shot loan: The finance company and its customer implement lending procedures and sign the lending contract of consumption loan.

2. Line of credit loan: The finance company defines and agrees with its customer on the maximum outstanding balance of a loan which is maintained in a set period of time. Within a credit line, the finance company offers a one-shot loan. At least once a year, the finance company reviews and redefines the maximum outstanding balance of a loan and the period of time for maintenance thereof as appropriate to the customer’s financial capability.

Article 9. Interest rate of consumption loan

1. Interest rate of consumption loan fixed by a finance company shall conform to regulations of the State Bank on lending transactions of credit institutions and/or foreign bank branches with customers.

2. Finance companies shall issue regulations on the range of consumer loan interest rates to be used consistently in its entire network in specific periods of time, including the maximum and minimum interest rates applied to each consumer credit line.

3. Within a permitted period of 10 (ten) business days from the date of release or revision of internal rules its consumer loan interest rate range, the finance company must submit a report to the State Bank as prescribed in Point a, b Clause 4 Article 7 hereof on the interest rate range which specifically describes fundamental factors and principles of determination of interest rate of consumption loan, factors relating to costs of capital, cost of risk, return on equity, market interest rate, assurance that all related costs and risks will be offset, and assurance that interests of customers are reserved and growth of the finance company is certain to happen.

Article 10. Contract of consumption loan

1. The contract of consumption loan must be made in writing under which the following minimum requirements are included:

a) Name, address and corporate identity code of the finance company; name, address, identification card or citizen identification card or passport number of the customer;

b) Amount of loan to be extended; credit limit for a line of credit loan;

c) Loan purposes;

d) Lending method;

dd) Loan term; term of credit limit maintenance for a line of credit loan;

e) Contractual consumption loan interest rate and consumption loan interest rate converted into percent (%)/year (one year is composed of three hundred and sixty five of days) which is calculated on the basis of the actual credit exposure and time period for maintenance thereof; principles and factors of determination of interest rate, time of determination thereof in case of application of variable interest rate; interest rate applied to overdue principal; interest rate applied to late payment interest; method of calculating loan interest rate; type and amount of fee on a loan;

g) Loan disbursement and use of payment instrument for loan disbursement;

h) Payment and priority for recovery of principal and/or interest; method for notifying the customer of the official schedule of payment of loan principal and interest where any adjustment is made;

i) Terms and conditions concerning loan prepayment under which requirements for debt prepayment, exit fee amount and method for notifying customers of the plan to pay principal and interest with respect to the residual outstanding amount of principal in the event that the customer has repaid a part of consumer loan debt amount;

k) Rescheduling of debt repayment; delinquency of the principal amount that a customer fails to repay at the agreed repayment period and the finance company refuses to agree to reschedule; form and contents of notification concerning debt delinquency. The minimum contents of such notification include overdue principal amount, time of debt delinquency and interest rate applied to such overdue principal amount;

l) Actions to be taken to promote debt repayment and recovery which conform to laws and regulations; sanctions to be applied and measures to deal with a customer s default on repayment of debt due;

m) Responsibilities of a customer for cooperating with a finance company and providing documents regarding its loan in order for the finance company to assess application for and grant a decision to offer a loan, check and supervise use of borrowed fund and debt repayment of the customer;

n) Cases of loan termination; collection of debt prior to its payment due date; delinquency of the principal amount that a customer fails to repay prior to the payment due date in the event of the finance company s loan termination or collection of debt prior to the due date; form and contents of notification thereof. The minimum contents of such notification include the deadline for loan termination and collection of debt prior to due payment date, the principal amount to be recovered prior to the due date; deadline for repayment of principal amount to be recovered prior to the due date, date of debt delinquency and interest rate applied to the principal amount to be recovered prior to the due date;

o) Loan debt treatment; penalty for loan default and compensation for any loss incurred; rights and liabilities of parties involved;

p) Effect of the contract of consumption loan.

2. In addition to provisions set forth in Clause 1 of this Article, parties can agree on other terms and conditions in compliance with regulations of this Circular and relevant laws.

3. The contract of consumption loan referred to in Clause 1 and 2 of this Article shall take the form of a specific loan contract (with respect to a one-shot loan) or revolving line of credit agreement and specific credit facility (with respect to a line of credit loan).

4. The finance company shall provide a customer with a draft consumer loan contract for his/her review and decision made prior to signature. The finance company shall explain specific requirements set out in a consumer loan contract in an accurate, sufficient and honest manner at a customer s request.

5. Where using a contract template or general terms and conditions during conclusion of a consumption loan contract, the finance company shall be obliged to:

a) make a public notice of such contract templates and general contractual terms and conditions regarding consumption lending activities at its office, consumer credit counseling points, and make posts on its website;

b) provide a full amount of information about these contract templates and general terms and conditions of which a customer should be informed prior to signing of a consumer loan contract, and obtain customer’s confirmation that (s)he has already provided with all necessary information relating to his/her consumer loan.

Article 11. Transitional provisions

Any finance company having consumption loan contract prior to the effect date of this Circular and in compliance with laws applicable at the signature date shall be allowed to keep on implementing signed contracts till their expiry date. Any revision of such contracts shall be permitted only if revised requirements thereof agree with regulations of this Circular and relevant laws.

Article 12. Effect

This Circular takes effect on March 15, 2017.

Article 13. Implementation organization

The Chief of the Office, Chief of the Banking Inspection and Supervision Agency, Heads of affiliated entities of the State Bank, Directors of the State Bank branches of centrally-affiliated cities and provinces, Chairpersons of the Board of Directors, Chairpersons of the Board of Members, and General Director (Director) of finance companies shall implement this Circular.

For the Governor

The Deputy Governor

Nguyen Dong Tien