Notes on loans for living needs

Lending methods

Clauses 1, 4 and 6, Article 27 of Circular 39/2016/TT-NHNN (amended in Circular 06/2023/TT-NHNN) stipulate the applicable lending methods, including:

Single loan: Credit institutions and customers carry out loan procedures for customers, entering into loan agreements for each loan.

Lending by limit: The lending limit is determined and agreed upon by the credit institution and the customer. At the same time, the credit institution needs to review and revise the maximum lending limit and the time limit maintenance at least once a year.

Overdraft limit loan on payment account: Customers are approved to spend more than the amount in the payment account by a maximum overdraft level to make payments on the account. This maximum overdraft level is maintained for a maximum of 1 year.

In addition, based on the business conditions of the credit institution and the characteristics of the loan, Clause 1, Article 30 of Circular 39/2016/TT-NHNN has other lending methods combined with the prescribed methods.

Regulations on loan record keeping

Article 32 of Circular 39/2016/TT-NHNN stipulates the retention of loan records to serve the living needs of banks. Accordingly, loan records are responsible for being retained by credit institutions, the retention period is implemented according to the provisions of law and includes:

Loan application form.

Loan Agreement.

Report on customer's income situation during the loan period according to the credit institution's instructions.

Documents relating to loan security.

The loan decision must be signed by an authorized person; in case of a collective decision, there must be a record stating the approved decision.

Documents arising during the use of the loan related to the loan agreement as instructed by the credit institution.

Loan terms and principles

Article 31 of Circular 39/2016/TT-NHNN stipulates the term of bank loans for living expenses as follows:

Based on the customer's ability to repay, the loan source and the remaining operating term of the credit institution to agree on the loan term between the credit institution and the customer.

For individuals with foreign nationality residing in Vietnam, the loan term shall not exceed the remaining permitted residence period in Vietnam.

Article 4 of Circular 39/2016/TT-NHNN stipulates the principles of bank lending and borrowing as follows:

Lending activities of credit institutions to customers are carried out according to the agreement between the credit institution and the customer, in accordance with the provisions of Circular 39/2016/TT-NHNN and relevant legal provisions including laws on environmental protection.

Customers borrowing capital from credit institutions must ensure that they use the loan for the right purpose and repay the principal and interest on time as agreed with the credit institution.

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