A branch of Orient Commercial Bank (Source: VNA) Hanoi (VNA) – Credit institutions and foreign banks will be allowedto grant loans to some prioritised borrowers in excess of lending limitsregulated by law beginning next month.
Under Decision No.13/2018/QD-TTg, which will take effect May 1, the PrimeMinister can consider approving loans exceeding credit limits in electricity,coal, oil and gas, transport and other prioritised industries, based upon thePrime Minister’s instructions.
According to the State Bank of Vietnam, the new regulation seeks to helplenders and borrowers develop initiatives to carry out their projects, whichare important to the nation’s socio-economic development.
To qualify for the loans, borrowers are required to prove they possess nonon-performing loans in the three consecutive years before the loan applicationdate, while their debt ratio must be less than three times their equitycapital, according to their latest quarterly or yearly financial statements.
Their projects must also assist in the nation’s socio-economic development,improving people’s living standards in the selected industries or otherpriority sectors, as approved by the National Assembly or the Prime Minister.
To receive loans over the regulated credit limits, the projects must beconsidered feasible, as appraised by the lenders, while the financial status ofthe borrowers is required to be solvent.
Credit institutions are requested to make excess loans in conformity with thelaw, in which the loans must not exceed four times the borrowers’ equitycapital.
Currently, the lending limits of credit institutions and foreign bank branchesare regulated in Circular 36, which states that total loans and extensions ofcredit outstanding to one client is not allowed to exceed 15 percent of equitycapital of the lender, while total loans and extensions of credit outstandingto a client and an associated entities do not exceed 25 percent of the equitycapital of the lender.
Circular 36 also regulates that total loans and extensions of creditoutstanding to one client are not allowed to exceed 25 percent of equitycapital of non-bank credit institutions, while total loans and extensions ofcredit outstanding to a client and an associated entities do not exceed 50percent of equity capital of non-bank credit institutions.
According to the National Financial Supervisory Commission, outstanding loansin the banking system, as of the end of March, were estimated to have risen by3.5 percent against December last year, of which loans in Vietnamese dong increasedby 3.3 percent and accounted for 91.9 percent of total outstanding loans.
The commission also reported that medium- and long-term loans during thisperiod increased by 4.3 percent against December last year, while the risingrate for short-term loans was 2.6 percent. It pushed the medium- and long-termloan ratio up some 53.2 percent, against 52.8 percent in December last year.
In the first three months, the rising rate of mobilised capital was almostequal to that of the credit growth, posting an expansion of 3 percent.
In the first quarter of the year, interest rates averaged 0.6 percent to 1percent per year for non-term and one-month deposits, and 4.3 percent to 5.5percent for one- to six-month deposits. The rate for six- to 12-month depositswas set at 5.3 percent to 6.5 percent, and 6.5 percent to 7.3 percent fordeposits above 12 months.
Commercial banks also listed the short-term lending rates at 6 percent to 6.5percent per year for prioritised industries and 6.8 percent to 9 percent fornormal loans.
The rate applied for medium- and long-term loans was 9.3 percent to 11 percent.-VNA
Under Decision No.13/2018/QD-TTg, which will take effect May 1, the PrimeMinister can consider approving loans exceeding credit limits in electricity,coal, oil and gas, transport and other prioritised industries, based upon thePrime Minister’s instructions.
According to the State Bank of Vietnam, the new regulation seeks to helplenders and borrowers develop initiatives to carry out their projects, whichare important to the nation’s socio-economic development.
To qualify for the loans, borrowers are required to prove they possess nonon-performing loans in the three consecutive years before the loan applicationdate, while their debt ratio must be less than three times their equitycapital, according to their latest quarterly or yearly financial statements.
Their projects must also assist in the nation’s socio-economic development,improving people’s living standards in the selected industries or otherpriority sectors, as approved by the National Assembly or the Prime Minister.
To receive loans over the regulated credit limits, the projects must beconsidered feasible, as appraised by the lenders, while the financial status ofthe borrowers is required to be solvent.
Credit institutions are requested to make excess loans in conformity with thelaw, in which the loans must not exceed four times the borrowers’ equitycapital.
Currently, the lending limits of credit institutions and foreign bank branchesare regulated in Circular 36, which states that total loans and extensions ofcredit outstanding to one client is not allowed to exceed 15 percent of equitycapital of the lender, while total loans and extensions of credit outstandingto a client and an associated entities do not exceed 25 percent of the equitycapital of the lender.
Circular 36 also regulates that total loans and extensions of creditoutstanding to one client are not allowed to exceed 25 percent of equitycapital of non-bank credit institutions, while total loans and extensions ofcredit outstanding to a client and an associated entities do not exceed 50percent of equity capital of non-bank credit institutions.
According to the National Financial Supervisory Commission, outstanding loansin the banking system, as of the end of March, were estimated to have risen by3.5 percent against December last year, of which loans in Vietnamese dong increasedby 3.3 percent and accounted for 91.9 percent of total outstanding loans.
The commission also reported that medium- and long-term loans during thisperiod increased by 4.3 percent against December last year, while the risingrate for short-term loans was 2.6 percent. It pushed the medium- and long-termloan ratio up some 53.2 percent, against 52.8 percent in December last year.
In the first three months, the rising rate of mobilised capital was almostequal to that of the credit growth, posting an expansion of 3 percent.
In the first quarter of the year, interest rates averaged 0.6 percent to 1percent per year for non-term and one-month deposits, and 4.3 percent to 5.5percent for one- to six-month deposits. The rate for six- to 12-month depositswas set at 5.3 percent to 6.5 percent, and 6.5 percent to 7.3 percent fordeposits above 12 months.
Commercial banks also listed the short-term lending rates at 6 percent to 6.5percent per year for prioritised industries and 6.8 percent to 9 percent fornormal loans.
The rate applied for medium- and long-term loans was 9.3 percent to 11 percent.-VNA
VNA
