Vietnam Eases Electronic Lending Limits: New Regulations Effective August 15

The State Bank of Vietnam (SBV) has updated its regulatory framework for electronic lending, removing the previous 100 million VND cap on individual consumer loans. Under Circular 29/2024/TT-NHNN, which amends Circular 39/2016/TT-NHNN, credit institutions are now authorized to independently determine loan limits for electronic transactions based on their internal risk management and technological capabilities. These changes go into effect on August 15, 2024.

Why the State Bank of Vietnam Removed the 100 Million VND Cap

The decision to lift the 100 million VND restriction follows feedback from credit institutions that the previous limit did not align with modern consumer credit demand. According to the State Bank of Vietnam, many institutions argued that they should be allowed to set limits proactively based on their specific risk appetite. Data collected by the central bank indicated that the average loan balance per client in popular credit funds had already climbed to nearly 300 million VND, rendering the 100 million VND threshold obsolete for many borrowers.

What Constitutes a “Small-Value” Loan Under New Rules

Circular 29 also redefines the criteria for small-value loans as outlined in Article 102 of the Law on Credit Institutions. Moving forward, the classification for small-value loans is set as follows:

• Popular Credit Funds: Loans must not exceed 200 million VND.
• Other Credit Institutions: Loans must not exceed 400 million VND.

This adjustment represents a significant increase from the previous 100 million VND ceiling. By raising these limits, the SBV aims to streamline the application process. Under the Law on Credit Institutions, borrowers seeking small-value loans are exempt from the requirement to provide extensive documentation regarding their financial capacity, specific capital utilization plans, and verified proof of the loan’s purpose, which is typically required for standard, larger-scale loans.

Operational Impacts on Credit Institutions

The regulatory shift allows banks and credit institutions to integrate these higher limits into their digital lending platforms, provided they remain in full compliance with the Law on Credit Institutions and existing legal frameworks. The new circular also introduces specific mandates for credit activities occurring under restructuring plans. If an institution is currently under “special supervision,” its lending operations must strictly adhere to the restructuring plan approved by the relevant authorities.

Additionally, the regulations regarding the use of loans to pay off other existing debts have been clarified. The new policy dictates that the repayment term for such loans cannot extend beyond the original deadline of the initial debt, ensuring that borrowers do not unintentionally prolong their debt cycles through refinancing.

Key Takeaways for Borrowers and Lenders

• Increased Access: Borrowers can now access electronic loans up to limits determined by credit institutions without the previous 100 million VND restriction.
• Streamlined Approval: Loans classified as “small-value” (up to 400 million VND for most institutions) benefit from reduced documentation requirements.
• Institutional Responsibility: Credit institutions are now responsible for setting their own risk-based limits, shifting the focus from a rigid central cap to internal institutional oversight.
• Effective Date: The new provisions under Circular 29 are legally binding starting August 15, 2024.

This policy update is expected to reduce administrative friction in the retail credit market, allowing households and micro-enterprises to secure necessary capital more efficiently through digital channels.