The Decision will come into effect starting this May.
Illustration photo.
|
Following the law, credit institutions and foreign bank branch include: banks (state commerical banks, joint stock commercial banks, joint-venture banks, wholly foreign-owned banks, cooperative banks), non-bank credit institutions (finance companies, financial leasing companies and other non-bank credit institutions), microfinance institutions, people's credit funds, and other related organizations and individuals.
To be considered for given credit over the limit, client must prove of having no bad debts in 3 consecutive years before the application date, while its payable debt is less then 3 times the own capital in the recent quarterly or yearly financial statement.
Clients with projects applying for credit over the limit must serve the purpose of socio-economic development, improving people's living standard in fields of electricity, coal, gas, petroleum, public transport and others following the government's instructions; implementing projects approved by the National Assembly or the Prime Minister; or projects in priority fields.
The projects given credit over the limit must be feasible, while the client to have adequate financial capability.
Credit institutions are requested to make excess loans in conformity with the law, in which the loans must not exceed 4 times of the client's own capital.
In special cases, in order to perform socio-economic tasks, if the extension of syndicated credit by credit institutions and foreign bank blanches fail to meet capital needs of a single client, the Prime Minister may decide on a maximum loan amount exceeding the limits specified in Clause I or 2 of this Article on a case-by-case basis.
The State Bank of Vietnam (SBV) has previously urged credit institutions to tighten lending to high-risk fields. In a statement, SBV urged banks to exercise caution in lending to fields such as real estate, consumption or stock trading, and focus instead on allocating capital for mid- and long-term loans in the manufacturing sector to ensure liquidity.
SBV also asked banks to undertake regular monitoring of their debtors' finances and progress made in their projects. Credit institutions are required to maintain credit growth within safe limits, and to improve credit risk management, especially on conditions for lending.
SBV requested banks to shift focus on lending toward production and manufacturing, and to meet the demand for capital in priority sectors such as agriculture, export, supporting industries, small and medium enterprises (SMEs), and hi-tech companies.
In 2017, loans for the real estate sector grew by 8.56%, accounting for 6.53% of total loans, lower than the respective rates of 12.86% and 7.71% in the same period in 2016. Loans for the securities sector were negligible.
Bad debt in Vietnam's banking sector, mostly incurred due to a slowdown in the country's real estate market in the early 2010s, had been cut to 2.34% by the end of September 2017, down from 2.46% at the end of last year, according to the SBV. The SBV set up an institution-Vietnam Asset Management Corp. (VAMC)-in late 2013 to deal with toxic loans.
