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The State Bank of Vietnam (SBV) has drafted an amendment to Circular 39 on bank loans, in order to keep credit risks under control.
The project prohibits bank loans to borrowers who use the loans to guarantee future transactions that are not qualified at the time of the loans.
The ban is expected to prevent the use of bank loans for the purchase of future real estate, which authorities have not given carte blanche due to a lack of building permits and proof of land use rights.
The Ho Chi Minh Real Estate Association (HoREA) believes that law-abiding real estate companies will not be affected by the ban, as bank loans remain available to borrowers who aspire to qualified real estate offered by the companies.
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“Unqualified real estate includes illegitimate plots and apartment blocks with foundations not yet completed under the Real Estate Act 2014. The bill is expected to protect investors against illegal practices, improving the real estate market,” it adds. the HOREA.
The association suggests that lenders be allowed to make loans to help borrowers prove their financial standing, as long as the borrowers can provide collateral for the loans.
The ban is expected to prevent the use of bank loans for the purchase of future real estate
It also suggests that collateral-backed loans be made available to borrowers who want to use the money to put up capital or invest in other businesses.
“Loan control should be imposed only on borrowers who use bank loans to engage in prohibited activities and conditional business activities, or to service overdue debts and hide bad debts,” HoREA said.
The association suggests that credit institutions be allowed to grant loans to help borrowers demonstrate their financial capacity
As for business activities that can only be the subject of restricted bank loans, the association urges the SBV to raise the level of demand for borrowers engaged in such activities to further reduce credit risk.
Specifically, the SBV is recommended to set limits on borrowers’ loan-to-loan ratios, including loan-to-guarantee ratios and loan-to-total debt ratios, to keep their loans under control.
Article republished from the Vietnamese state media VNA as part of an agreement between both parties to share content. Link to original article: https://vietnamnews.vn/Economy/1265921/state-bank-of-vietnam-announces-amendments-to-bank-loans-circular.html
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