CIRCULAR

AMENDMENTS AND SUPPLEMENTS TO CIRCULAR NO. 43/2016/TT-NHNN DATED DECEMBER 30, 2016 OF THE GOVERNOR OF THE STATE BANK OF VIETNAM ON CONSUMER LENDING SERVICES OF FINANCE COMPANIES

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

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

Pursuant to the Law on Amendments and Supplements to the Law on Credit Institutions dated November 20, 2017;

Pursuant to the Government's Decree No. 16/2017/ND-CP dated February 17, 2017, defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;

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

Pursuant to the Government’s Decree No. 16/2019/ND-CP dated February 1, 2019 on amendments and supplements to several articles of the Decrees on conditions for business transactions under the regulatory authority of the State Bank of Vietnam;

...

...

...

The State Bank’s Governor hereby promulgates the Circular on amendments and supplements to the Circular No. 43/2016/TT-NHNN dated December 30, 2016 of the Governor of the State Bank of Vietnam on consumer lending services of finance companies.

Article 1. Amendments and supplements to the Circular No. 43/2016/TT-NHNN dated December 30, 2016 of the Governor of the State Bank of Vietnam on consumer lending services of finance companies (hereinafter referred to as Circular No. 43/2016/TT-NHNN)

1. Point b of clause 2 of Article 3 shall be amended and supplemented as follows:

“b) Educational, medical examination and treatment, cultural, sports and physical activity demands;”.

2. Clause 5 shall be added to Article 3 as follows:

“5. Directly disbursed to customers refers to a finance company’s direct disbursement of consumer credit funds to customers in cash form or by means of non-cash payment services under terms and conditions of consumer leases, ensuring that borrowed funds are inspected and supervised with respect to their purposes in accordance with laws.”. 

3. Article 4 shall be amended and supplemented as follows:

“Article 4. Application of relevant legal instruments

1. As other lending regulations concerning consumer lending transactions performed by finance companies are not covered by this Circular, finance companies shall provide consumers with borrowed funds to meet their everyday life demands in accordance with regulations of the State Bank on lending business of credit institutions or foreign bank branches to customers.

...

...

...

4. Clause 2 of Article 5 shall be amended and supplemented as follows:

“2. Finance companies shall be required to administer, oversee and make statistical reports on consumer lending transactions in a manner that they are separated from other lending transactions of finance companies, and distinguish consumer loans directly disbursed to customers from those disbursed in other forms.

5. Clause 4 of Article 6 shall be amended and supplemented as follows:

“4. Finance companies shall report to the State Bank, subject to the following regulations:

a) Whenever it is necessary to substitute a manager or supervisor of a consumer credit counseling points, the finance company controlling such point must report to the State Bank branch in the province or city where the point is located under the following regulations:

- Methods of sending and receiving reports: A report must be made in writing and sent to a State Bank branch in a province or city in one of the following modes: sending reports directly, by post or via electronic mails of that State Bank branch;

- Time limit for sending reports: These reports must be sent within 05 (five) working days of receipt of the request for substitution of a manager or supervisor of a consumer credit counseling point;

- A report shall be made by using the sample report shown in the Appendix No. 01 hereto.

b) In case of opening, closure or proposed opening or closure of a counseling point, a finance company shall have to report to the Banking Inspection and Supervision Agency and a State Bank branch in the province or city where that finance company decides to open, close, propose opening or closing that counseling point in accordance with the following regulations:

...

...

...

- Report data shall be collected from the first day of the first month of the reporting quarter to the end date of the last month of the reporting quarter;

- Time limit for sending reports: A report must be sent within 05 (five) working days beginning the first month of the quarter immediately preceding the reporting quarter;

- A report of the Banking Inspection and Supervision Agency shall be made by using the sample report given in the Appendix No. 02 hereto; A report of a State Bank branch in a province or city shall be made by using the form given in the Appendix No. 03 hereto.”.

6. Point a of clause 2 of Article 7 shall be amended and supplemented as follows:

“a) Lending conditions; unqualified lending demands; lending approaches; disbursement methods (including the method of direct disbursement of borrowed funds to customers); interest rates and lending interest calculation method; lending documents and other documents submitted by customers to finance companies relevant to loan characteristics, types of borrowed funds and customers; debt collection; eligibility and documentation requirements and procedures for rescheduling of debt repayment; loan delinquency status;".  

7. Point dd clause 2 Article 7 shall be amended and supplemented as follows:

“d) Actions to be taken to push customers into repaying and collect debts which are relevant to specific customers, conform to laws and exclude any threat to customers. The maximum rate of sending debt repayment reminders shall be 05 (five) a day; the method and time frame of reminding debt repayment which are agreed upon in consumer lending contracts, especially such time frame that must be between 7 (seven) and 21 (twenty one) o’clock; a ban on sending debt repayment reminders, debt repayment requests and information about debt collection to organizations or individuals that are not liable to pay debts to finance companies, unless otherwise required by competent regulatory authorities regulated by law; customer information confidentiality prescribed by law;”.    

8. Point h of clause 2 of Article 7 shall be amended and supplemented as follows:

“h) In-charge department; forms of receiving, processing, and time limit for giving decisions on or responses to, complaints; duration of retention of feedbacks and complaints received from customers, organizations and individuals involved in a finance company’s consumer lending services;”.

...

...

...

“m) Specific regulations on measures to control direct disbursement of borrowed funds to customers, ensure that customers use borrowed funds for agreed-upon purposes specified in consumer lending contracts.”.

10. Clause 4 of Article 7 shall be amended and supplemented as follows:

“4. Finance companies must send, whether directly or by post, internal consumer lending rules to the State Bank according to the following regulations:

a) Sending the Banking Inspection and Supervision Agency within 10 (ten) working days from the date of publication of a new or revised version thereof;

b) Sending State Bank branches of the provinces or cities where headquarters of finance companies are located, their branches, representative offices and service counseling points upon request.”.

11. Article 8a shall be added after Article 8 as follows:

Article 8a. Direct disbursement of borrowed funds to customers

1. Directly disbursing borrowed funds existing in cash form to customers must conform to regulations of the State Bank on approaches to disbursing borrowed funds by credit institutions and foreign bank branches to customers as provided in clause 3, 4, 5 and 6 of this Article and Article 7 herein.

2. Directly disbursing borrowed funds to customers by using non-cash payment services shall be subject to decisions of finance companies made based on information, documents and evidence related to payments which are provided by customers, and must conform to regulations laid down in clause 3, 4, 5, 6, 7 and 8 of this Article and Article 7 herein as well as other legislative regulations on non-cash payments.

...

...

...

4. The ratio of total outstanding debt of consumer loans directly disbursed to customers at a finance company to total outstanding debt of consumer credit facilities of that finance company at the end of a working day immediately preceding the date of conclusion of a consumer lease under which borrowed funds are directly disbursed to customers must fall within one of the maximum limits set according to the following schedule:

a) From January 1, 2021 to December 31, 2021:   70%;

b) From January 1, 2022 to end of December 31, 2022:   60%;

c) From January 1, 2023 to end of December 31, 2023:   50%;

d) From January 1, 2024:  30%.

5. Total outstanding debt of consumer loans directly disbursed to customers and total outstanding debt of consumer credit facilities of a finance company, both of which are prescribed in clause 4 of this Article, shall include the amounts of consumer loans offered customers in the form of direct disbursement under consumer leases in effect prior to the date of conclusion of the consumer lease referred to in clause 4 of this Article even through disbursement of such loans have not yet been made.

6. Regulations laid down in clause 4 and 5 of this Article on total outstanding debt of consumer loans directly disbursed to customers at a finance company shall cover any customer owing the outstanding debt of greater than 20,000,000 dong (twenty million dong) (including the amounts of consumer loans offered customers under consumer leases already in effect prior to the end of the signature date of the consumer lease prescribed in clause 4 of this Article b in the form of direct disbursements which have not yet been made to customers).

7. Finance companies shall be obliged to inform customers of legislative regulations and internal rules on approaches to directly disbursing loans to customers by using non-cash payment services; inform customers, credit institutions and foreign bank branches involved in direct disbursement of loans to customers by using non-cash payment services of the daily time frame of transactions.

8. Customers shall be obligated to provide information, documents and evidence related to payments in accordance with regulations of finance companies to serve the purposes of considering decisions on approaches to directly disbursing loans to customers by using non-cash payment services. Customers shall be legally liable for accuracy and authenticity of information, documents and evidence provided to finance companies.”.

...

...

...

“3. Within 10 (tem) working days from the date of publication of new or revised versions of the consumer lending interest rate range chart, finance companies must send them directly or by post to the Banking Inspection and Supervision Agency and State Bank branches in cities and provinces where finance companies are based, their branches, representative offices and service counseling points in order to get them updated with such chart according to the Appendix No. 04 hereto.”. 

13. Point l of clause 1 Article 10 shall be amended and supplemented as follows:

“l) Measures to push customers into repaying debts or collect debts that conform to point dd of clause 2 of Article 7 herein and related law; actions to be taken in case of customer’s failure to discharge their obligations under consumer leases;”.

14. Clause 4 of Article 10 shall be amended and supplemented as follows:

“4. Finance companies shall provide customers draft consumer leases, give accurate, full and authentic interpretations about basic terms and conditions of consumer leases, including rights and obligations of borrowing customers, actions to push customers into repaying debts, collect debts, measures to deal with customer's failure to discharge their contractual obligations and customer's certifying that they have been provided information by finance companies in accordance with this clause, so that customers can consider before making their decisions to sign consumer leases.”. 

15. Article 10a and 10b shall be added after Article 10 as follows:

Article 10a. Finance company’s responsibilities

1. Comply with provisions of this Circular and other provisions of relevant laws.

2. Publicly inform the followings at their main offices, branches, service counseling points and on their websites:

...

...

...

b) Forms of receiving contributed opinions, feedbacks and complaints from customers, organizations and individuals involved in a finance company’s consumer lending services.

3. Post contact information of finance companies, list (including name and address) of service counseling points, things that customers should know about consumer lending services (inter alia, including fundamental rights and obligations of customers agreed upon according to law) and frequently-asked questions as to consumer lending services on finance company’s websites. 

4. Elaborate regulations on responsibilities of managers and supervisors of service counseling points for making reports, providing information and documents requested by State Bank branches in cities and provinces where service counseling points are located.

5. Apply forms of receiving contributed opinions, feedbacks and complaints from customers, organizations and individuals regarding consumer lending services rendered by finance companies in accordance with laws, ensuring authenticity of information about complaints provided by customers, organizations and individuals concerned to finance companies, inter alia, including the following two forms:

a) Directly sending such information in care of in-charge individuals or departments at their main offices, branches and service counseling points;

b) Indirectly sending such information by means of documents, electronic means and telephone hotlines (such hotlines must be equipped with a sound recorder function to operate at least within 7 (seven) to 21 (twenty one) o’clock and by using other indirect forms prescribed by law.

6. Process and respond to complaints of customers, organizations and individuals concerned within 48 (forty eight) hours (except Saturdays, Sundays and holidays) of receipt of these complaints about loan amounts, interest rates, measures to push customers into repaying debts or collect debts prescribed in consumer leases; about debt repayment requests sent to unliable organizations and individuals, and incorrect information about debt obligations posted on the National Credit Information Center of Vietnam, and within 07 (seven) working days of receipt of complaints about other issues.

7. Regularly review and improve quality of personnel recruitment, employee assessment and restrict moral hazards; provide finance companies’ staff with training and refresher courses in improvement of skills and quality of customer consultancy services, awareness of compliance with laws, internal rules and regulations and moral ethics.

8. Carry out regular inspection, assessment and control of compliance with laws, internal rules, regulations and policies on consumer lending services provided to individuals, departments and units concerned at main offices, branches, representative offices and service counseling points of finance companies in order to ensure compliance with laws, these internal rules, regulations and procedures. Promptly detect any suspicious sign of violation against laws which arises from consumer lending services, give notifications and alerts within finance companies in order to take actions to prevent and restrict risks and violations.

...

...

...

10. If a finance company sells debts to the third party authorized to buy debts under law, the debt purchase and sale contract must contain that third party’s commitments to implementing regulations agreed upon with customers in the consumer lease (including measures to push customer into repaying debts and collect debts) in accordance with regulations laid down herein and other provisions of relevant laws. 

Article 10b. Responsibilities of State Bank’s affiliates

1. Responsibilities of the Banking Supervision and Inspection Agency:

a) Inspect and supervise finance companies’ compliance with regulations laid down herein;

b) Consider handling, within its jurisdiction, or petition competent entities to handle, any violation against laws and ensure finance companies’ compliance with this Circular and relevant laws;

c) Receive reports specified in point b of clause 4 of Article 6 and clause 4 of Article 7 and clause 3 of Article 9 herein.

2. Responsibilities of State Bank branches in cities and provinces:

a) Inspect and supervise, or cooperate with State Bank branches in other cities and provinces in inspecting and supervising, business of branches, representative offices, service counseling points of finance companies within their ambit in accordance with law;

b) Consider handling, within its jurisdiction, or petition competent entities to handle, any violation against laws, ensure compliance of finance companies, their branches, representative offices, and service counseling points within their remit, with this Circular and relevant laws;

...

...

...

d) Cooperate with competent entities in receiving and handling information, notifications and alerts from other finance companies, their branches, representative offices and service counseling points within their remit in order to seek any measure to prevent and restrict risks, violations against law and protect legitimate rights and benefits of customers and finance companies.”.

16. Appendix No. 01, 02, 03 and 04 as attached hereto shall be added.

Article 2. Implementation responsibilities

The Chief of the Office, Chief Banking Inspector and Supervisor, Heads of affiliates of the State Bank, Directors of State Bank branches in centrally-affiliated cities and provinces, Chairmen of Governing Boards, and Chairmen of Boards of Directors, General Directors (Directors) of finance companies, shall be responsible for implementing this Circular./.

Article 3. Entry into force

This Circular shall take effect on January 01, 2020./.

PP. GOVERNOR
DEPUTY GOVERNOR




Doan Thai Son

...

...

...