Governor of the State Bank of Vietnam issued Circular No.43/2016/TT-NHNN on lending for consumption purposes. The Circular takes effect from March 15, 2017.
SBV Head quarter
Circular 43/2016/TT-NHNN including 13 articles stipulates regulations on consumption lending in line with operational features of finance companies, protecting consumers’ rights, ensuring sustainable development of lending for consumption purposes.
For other regulations on lending concerning with consumption loans provided by finance companies that are not specifically stipulated in Circular 43/2017/TT-NHNN, finance companies are required to comply with SBV’s regulations on lending activities of credit institutions and foreign bank branches to their customers.
The Circular stipulates the definition of consumption loans. Specifically, the loans provided by finance companies to their customers are defined as lending for consumption purposes when (i) they are provided in VND; (ii) the borrowers are individual; (iii) the purposes of borrowing are to meet the demand of purchasing goods and services for living consumption of customers and their families including for buying transportation means, goods, family equipments; for paying studying fees, for medical treatment, tourism, culture and sport purposes.
The total outstanding of a consumption loan does not exceed VND 100 million, with the exception of consumption borrowing to buy a car and that car will be used as collateral for the loan in accordance with laws.
The Circular also asks finance companies to simplify the dossiers and procedures of approving the consumption loans and ensure the transparency in lending operations, as well as protect legal rights of the customers.
VMH