Accordingly, under a new circular issued by the State Bank of Vietnam (SBV), the risk index of receivable lending for real estate and securities would be raised from 150 percent (the lowest level) as stipulated in Circular No 36 to only 200 percent.
This is lower than the cap of 250 percent as proposed earlier by the SBV, which has made property investors worry about capital shortage.
The increase will come into effect on January 1, 2017.
The new Circular 06/2016/TT-NHNN also specifies a roadmap for the maximum ratio of short-term funds used for medium and long term loans to be reduced from 60 percent to 40 percent.
Under the newly issued decision, the 60 percent ratio will be kept until December 31 this year. The ratio will be lowered to 50 percent from January 1, 2017 to December 31, 2017. It will drop to 40 percent from the beginning of 2018.
Currently, the amount of long-term deposits was less than the demand for long-term loans, thus a sudden and strong decrease in the ratio of short-term funds used for medium and long term loans would cause an increase in lending interest rates and a decrease in credit growth.
Foreign currency borrowing allowed on the same day, the SBV issued Circular 07/2016/TT-NHNN to supplement and amend some articles of Circular 24/2015/TT-NHNN on providing foreign currency loans by credit institutions and foreign bank branches. Under the new regulations, from June 1, companies who have demands for short-term loans in foreign currency can borrow from banks to satisfy their short-term capital needs. Borrowers must commit to have sufficient foreign currency revenue from exports to repay the loans. After getting the loans, borrowers must immediately sell the amount of foreign currency to the lending institutions under the spot foreign exchange trading method, except for the case that the foreign currency will be used to make payments. This decision will take effect until December 31, this year. According to the old regulations, commercial banks are not allowed to provide lending in foreign currency to exporters from 31 March this year.
Source: VNA