Under the newly-issued document No 6960/NHNN-TTGSNH, the central bank once again reiterated that credit organisations and foreign bank branches must recover a loan’s entire principal and interest at the end of the lending period, as agreed in the credit contract with customers. They must not renew all or part of the original loan before the due date.
The requirement was first stated in a document issued two years ago.
This time, however, the SBV’s governor is taking a tougher appoach in the inspection, examination, and litigation of cases violating regulations. The governor is instructing the State Bank branches in provinces and cities, and the agencies of banking supervision and inspection in Hà Nội and HCM City, to take a stricter approach.
Some argued that the central bank should not prevent rollever lending, calling it an international practice, widely recognised in the world. They said the lending form benefits enterprises by providing enough flexible capital to serve production and help reduce borrowing costs.
Though the decision, to some extent, might adversely affect banks and businesses’ operations, it is expected to improve transparency and create a foundation to assess credit quality more precisely.
Source: VNS