Banks requested to control loans with savings books as collateral
The State Bank of Vietnam (SBV) has warned local commercial banks to tighten control of loans that use savings books as collateral to ensure the safety of the banking system.
Commercial banks are required to strictly oversee capital use purposes and the disbursement of loans related to savings books (Photo: cafef.vn)
Hanoi (VNA) - The State Bank of Vietnam (SBV) has asked localcommercial banks to tighten control of loans that use savings books ascollateral to ensure the safety of the banking system.
According to the SBV, commercial banks are not allowed to let their clients usesavings books as collateral to take out loans, pointing out that this processis illegal if these borrowers have no plans to use the capital.
The warning was made after several banks offered loans to customers usingsavings books as collateral, but these customers did not present capital useschemes as required in the SBV’s Circular 39/2016/TT-NHNN.
Therefore, the lending process violates the central bank’s rules on usingnon-cash means of payment for loan disbursement, the SBV said.
Holders of long-term savings books prefer this form of lending as they will nothave to close their savings book before the maturity date and can still receivehigh interest rates for the savings if they unexpectedly need the capitalbefore the maturity date.
According to banks’ policy, savings books closed before the maturity date willget an interest rate of below 1 percent as applied for demand savings.Meanwhile, interest rates for long-term savings are much higher, rangingbetween 7 and 8.5 percent per year depending on the bank.
To stabilise the monetary market and ensure the secure operations of thebanking system, SBV has asked credit institutions to shun unhealthy competitionand follow regulations on lending and interest rates and the use of non-cashmeans of payment for loan disbursement.
Banks are required to strictly oversee capital use purposes and thedisbursement of credit guaranteed by such collateral as savings books. Thecentral bank will take strict action against credit institutions caughtbreaking the rule, according to the notice./.
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Commercial banks are required to strictly oversee capital use purposes and the disbursement of loans related to savings books (Photo: cafef.vn) 
