New circular facilitates loan access: central bank

The State Bank of Vietnam has affirmed that its new circular has untangled many knots. (Photo: VietnamPlus)

Hanoi - The State Bank of Vietnam (SBV) has said its new circular has enabled clients to better access credit loans, thus ensuring a fresh supply of capital for production and business.

Circular No. 06/2023/TT-NHNN amending and supplementing a number of articles of Circular No. 39/2016/TT-NHNN dated December 30, 2016, on the operations of credit institutions and branches of foreign banks will take effect from September 1.

Despite the central bank’s affirmation, the document remains controversial.

Are clients put in difficult situation?

The circular includes four new regulations that state credit institutions are not allowed to lend for deposit purposes, for share purchase payments, under uncompleted contracts, and for financial reimbursement.

Le Hoang Chau, Chairman of the HCM City Real Estate Association, said such amendments have not only affected real estate business, but also adversely impacted development investment in general.

He added that a number of other investment projects will also be banned from getting loans, like those under the public-private partnership (PPP) in infrastructure facilities, roads, bridges, seaports, airports, power plants, hospitals and schools.

Sharing Chau’s view, Nguyen Quoc Hiep, Chairman of GP Invest, called the new regulations a challenge to enterprises, which would hinder the development of the real estate industry, given difficulties facing the sector and the Government’s desire for market stability.

Can Van Luc, member of the National Advisory Council on Financial and Monetary Policies, suggested the central bank review the eligibility of projects for credit loans, saying with the tightened conditions, the real estate sector will find it hard to grow.

Other experts pointed out that it is not easy for the businesses with big debts to access credit loans for "debt refinancing", thereby increasing the risk of bankruptcy.

They also opposed the prohibition of pledging foreign currency savings to borrow Vietnam dong for deposit purposes.

Not tightening credit conditions

Responding to the opinions, the central bank said the circular has many regulations aiming to facilitate loan access by clients, contributing to ensuring capital for business, production and economic recovery and development.

The document also stipulates lending via electronic channels, encouraging credit institutions to utilize technologies and digital transformation in their operations, the bank added.

The regulation will help boost lending for consumption, production, and business purposes, it said.

Notably, the SBV allows the electronic know-your-customers (eKYC), a paperless process implemented by financial institutions for identity verification and monitoring customer transaction activities.

Clearing up the concern that the circular tightens credit conditions, the bank said the document only follows the Law on Credit Institutions. Accordingly, borrowers must have legal borrowing purposes, feasible capital utilization plans, and repayment capacity.

"These are the minimum borrowing conditions that customers must meet according to regulations in the Law on Credit Institutions," a representative from the central bank said.

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