Penalties for not registering for foreign loans in Viet Nam

by HaTrang

Loan registration is a mandatory administrative procedure for economic organizations being enterprises, cooperatives, unions of cooperatives, and credit institutions when borrowing money from abroad to return to Vietnam. Enterprises are responsible for registering loans, opening and using loan accounts, repaying foreign debts, withdrawing capital and transferring money for debt repayment, and reporting on loan performance accordingly regulations of the State Bank of Vietnam. So, what are penalties for not registering for foreign loans in Viet Nam? Let’s find out with LSX Lawfirm.

Legal grounds

Ordinance No. 28/2005/PL-UBTVQH11 of the Standing Committee of the National Assembly dated December 13, 2005

Ordinance No. 06/2013/PL-UBTVQH13 of March 18, 2013 amending and supplementing a number of articles of the Ordinance on Foreign Exchange;

Decree No. 219/2013/ND-CP dated December 26, 2013 of the Government on management of foreign loans and repayment of enterprises not guaranteed by the Government;

Decree No. 88/2019/ND-CP on sanctioning of administrative violations in the field of currency and banking

Obligation to apply for the initial foreign loan

Residents being enterprises, cooperatives, unions of cooperatives, credit institutions and foreign bank branches established and doing business in Vietnam with loans from abroad through loan contracts , goods import contract with deferred payment, loan entrustment contract, financial leasing contract or issuance of debt instrument in the international market of the Borrower; is obliged to register the loan with the Bank.

Obligation to register changes to foreign loans

When there is a change in any content related to the loan as stated in the written confirmation of loan registration of the State Bank, the Borrower is responsible for registering the change of foreign loans with the Bank. government.

Responsibility to notify the State Bank of any of the following changes:

  • Firstly, change of the Borrower’s address in the province or city; where the Borrower is headquartered;
  • Secondly, change of Lender, relevant information about the lender in a syndicated loan with the appointment of a representative of the lenders, unless the lender is concurrently the representative of the lenders in the syndicated loan and the change of the lender changes the role of the representative of the lenders;
  • Lastly, change the commercial transaction name of the account service provider bank.

Resgitation of foreign loans

Loans subject to registration with the State Bank include:

  • Medium and long-term foreign loans;
  • Short-term loans are extended for which the total term of the loan is over 01 year;
  • Short-term loans without an extension contract but with outstanding principal balance at the end of one year from the date of first capital withdrawal, unless the Borrower completes loan repayment within 10 days from the date of withdrawal.

Enterprises with the above loans are responsible for registering loans with the State Bank.

Sanctions for not registering loans with the State Bank

Penalties for not registering loans with the State Bank

Accordingly Decree No. 88/2019/ND-CP on administrative sanctions in the monetary field, the sanctions are as follows

Imposing a fine ranging from VND 20,000,000 to VND 30,000,000 for one of the following violations:

Failing to comply with the law on administrative procedures for: registration, registration for changes in foreign loans, international bond issuance; registration for changes in offshore loans, debt recovery guarantees for non-residents…

Thus, for individuals, the fine is 20 million to 30 million dong. For organizations, the fine level for organizations committing the same act of administrative violation is equal to 02 times the fine level for individuals. The fine for the organization will be 40 million to 60 million dong.

Penalties for withdrawing capital and paying debts for foreign loans in contravention of regulations

If the enterprise uses a loan without a loan account opened at a bank providing account services to withdraw capital, repay foreign loans and other money transfer transactions related to borrowing and paying Foreign debt, guarantee for foreign loans, but used through another account, violating the implementation of capital withdrawal and debt repayment for foreign loans, the specific penalties are as follows:

Imposing a fine ranging from VND 30,000,000 to VND 50,000,000 for one of the following violations:

To withdraw capital and repay foreign loans in contravention of regulations.

The fine level for individuals is from 30 million to 50 million, the fine level for organizations with the same violations is equal to 02 times the fine level for individuals. The fine will be from 60 million to 100 million dong.

Contact LSX Law firm

Finally, hope this article Foreign investors contribute capital to investment consulting companies is useful for you.

If you have any questions please contact Lawyer X for quick and best legal services: +84846175333 or email: hoangson@lsx.vn.

Related questions

What is the maximum penalty in sanctioning foreign loan violations?

The maximum fine for violations in the monetary and banking sectors for violating organizations is VND 2,000,000,000 and for violating individuals is VND 1,000,000,000;

Can I use another account to withdraw money?

For foreign loans that must be registered with the State Bank, the borrower may only withdraw capital and repay the principal and interest of the foreign loan after the loan is certified by the State Bank for registration.
If a business needs urgent capital and uses money from an account not registered with the State Bank, it is a violation of regulations on cash flow transparency.
In addition to applying for a loan, businesses also have reporting obligations. 
Quarterly, no later than the 5th of the month following the reporting period, the Borrower must send the Branch a written report on the performance of short, medium and long-term loans. 
If you do not report, you will violate the reporting regulations and be fined.

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