On 13 October 2010 the State Bank of Vietnam (SBV) issued Official Letter No. 7824/NHNN-TD to warn against dubious loans offered by certain foreign partners (Letter). The Letter addressed SBV municipal and provincial branches and credit institutions.
According to the Letter several foreign entities and individuals have recently introduced themselves as representatives of international institutions and contacted some ministries, municipal and provincial bodies, and Vietnamese enterprises to offer big loans at low interest rates and long maturities or grants. They required Government guarantee via the Ministry of Finance or guarantees from the SBV or commercial banks. However, upon verification of their legal status and financial capacity, these offering partners turned out to be incapable of arranging or providing such loans to Vietnam.
To avoid any negative impact on credibility, waste of time and money, and risks for Vietnamese bodies and enterprises, the SBV has required its municipal and provincial branches and credit institutions to take preventive measures.
Credit institutions must comply with the regulations of the Government and the SBV on borrowing and repayment of foreign debts as well as the SBV's regulations on guarantee and other current regulations. In addition, credit institutions are required to work closely with public security agencies, law firms, foreign embassies, credit information centres, and their corresponding banks to obtain adequate information on the legal status and financial capacity of the offering partners and other related information. Credit institutions are not allowed to issue documents such as invitation letters, promises of guarantee, authorisation letters or other forms of commitments prior to obtaining such information.
SBV branches are required to make advisory reports to the local authorities on measures to prevent imminent risks in accepting loans offered by those foreign partners; to direct and coordinate with the local credit institutions to implement the SBV guidelines; to promptly report to the SBV Credit Department all of the loans offered by foreign partners; and to work closely with the credit institutions and the local authorities to collect adequate information on the offering partners.
The Letter also requested the credit institutions and SBV branches to send periodical reports to the SBV Credit Department on the loans offered by those foreign partners, as well as details of any problems on 30 June and 31 December every year.