Some notes for FDI enterprises about borrowing and repaying foreign debt

Mar 04, 2024

In fact, during the project implementation process of foreign investors, part of the capital will come from borrowing activities such as borrowing from parent companies abroad. The following are some notes in borrowing and repaying foreign debt according to the correct procedures to avoid future penalties due to incorrect or incomplete procedures and procedures:

First, is to register the loan with the State Bank, and report on the status of foreign loan implementation

Second, Reporting requirement, is monthly

Third, Bank accounts used for withdrawal and repayment of foreign loans

  • Short-term: Either direct investment capital account (DICA) or foreign-loan borrowing and repayment account (FLA).
  • Mid and long-term: DICA is required in case the loan's currency and the DICA's currency are the same. In case the loan's currency is different from the DICA's currency, the Client could open and use another FLA at the bank where the DICA is opened.
  • Foreign loan in the form of imported goods with deferred payment: Repayment via current account is acceptable (new).

Documents for withdrawal and repayment of foreign loans

  • Loan agreement and its supplements/amendments (if any).
  • For mid and long-term loans: Written confirmation of registration of foreign loan, registration of changes of foreign loan (if any) of State Bank of Vietnam.
  • For short-term loans: IRC/ERC/Investment In-Principle Approval in case the foreign loan is used for investment implementation, or A plan on using foreign loan with a written commitment of the borrower (new).
  • Screenshot of the report on the Website with the Company's confirmation/ Written commitment to provide screenshot of the report (for the first drawdown only) (new).
    Documents evidencing the loan disbursement (applicable for loan repayment).
  • Documents showing that the borrower has hedged the FX risks for the payment period of the foreign loan (if any). (new- applicable as soon as a new Circular replacing Circular 12/2014/TT-NHNN comes into effect).
    Also, the Client should comply with other provisions in Circular 12/2012/TT-NHNN.

Thank you BIDV bank for sending us the information. If you need further advice on bank account issues, foreign investment capital accounts and foreign exchange related issues, please contact BIDV or the bank you are working with for more details. 

Source: NSO