The State Bank of Vietnam recently issued Circular 29, which amends and supplements various regulations concerning the lending activities of credit institutions, effective from 15/8.

Previously defined as not exceeding 100 million dong, the limit for small-value loans will be raised to 400 million dong or less for credit institutions and 200 million dong for people's credit funds under the new regulation.

According to the State Bank of Vietnam, this increase in the small-value consumer loan limit aims to align with the current economic context.

For these small-value loans, the Law on Credit Institutions permits banks and financial companies to disburse funds without requiring borrowers to provide documents or data proving financial capability or a feasible capital usage plan, unlike other loan types.

Transactions at a commercial bank. *Quynh Tran*

Furthermore, the new Circular mandates that for overdue debts, credit institutions must collect the principal before collecting loan interest. Previously, parties could mutually agree on the order of collecting principal and interest.

Regarding electronic lending activities, credit institutions must establish outstanding balance limits for each customer and identify and verify customers in accordance with the State Bank of Vietnam's regulations on opening and using payment accounts. For existing customers, credit institutions can proactively implement appropriate verification measures and technologies to manage risks.

Quynh Trang