Central Bank adjusts loan risk coefficient in real estate sector
In an effort to tighten lending to real estate dealers, the State Bank of Vietnam on May 27 announced Circular No. 06/2016/TT-NHNN, revising Circular No. 36 issued in 2014, on prudential ratios of credit institutions and foreign bank branches.
Accordingly, the risk coefficient of loans in the real estate sector will be raised to 200 percent from 150 percent as regulated in Circular No. 36. Meanwhile, the ratio of short-term funds used for providing medium- and long-term loans will be kept at 60 percent till the end of 2016 and then gradually be reduced to 50 percent to be applied throughout 2017 and 40 percent from the beginning of 2018.
The Circular says foreign bank branches and state commercial banks may use 35 percent and 25 percent, respectively, of their short-term funding sources to purchase or invest in government bonds. This ratio was 15 percent under Circular No. 36.
From June 1 this year, credit institutions and foreign bank branches will resume providing foreign currency loans for exporters, according to Circular No. 07 also issued on May 27 to amend Circular No. 24 of 2015, on provision of foreign currency loans by credit institutions and foreign bank branches for resident borrowers.
Specifically, resident borrowers who have demands for short-term loans in foreign currencies may take loans from credit institutions and foreign bank branches for production and trade of goods exported via Vietnamese border gates.
However, these borrowers are required to have sufficient export revenues in foreign currencies to repay the loans.
After getting the foreign currency loans, borrowers must immediately sell them to the lenders by the method of spot foreign exchange transaction, unless their payment transactions must be conducted in foreign currency as prescribed by law.
This regulation will take effect through December 31 this year.