Vietnam - SBV gives its consent to four real estate groups to borrow capital

The State Bank of Vietnam (SBV)'s governor on November 14 issued an Official Document No 8844 on credit operations in the remaining months of this year.

As reported in this document, in the first ten months of this year, credit institutions and branches of foreign banks have been actively implementing measures on credit activities in accordance with the direction of the government and the requirements of the central bank, contributing to monetary policy management and credit activities effectively.

To carry out measures on the monetary policy and credit activities in the last months of 2011, based on money market and macro-economic conditions, the central bank requires credit institutions as follows:

First, providing credit for the economy with reasonable interest rates based on the capital mobilization situation of credit institutions and in accordance with the provisions of law, government's guidance in Resolution No. 11 and requirements of the central bank's Directive No. 01.

Second, arranging capital sources to timely meet the needs of credit for agriculture and rural areas, especially farmers in winter-spring rice crop, export, supporting industry and supporting the working capital for small and medium-sized enterprises (SMEs). In case of increasing credit sources for these sectors, leading credit growth for the whole year 2011 exceeding 20%, and credit institutions need to report to the central bank for consideration.

Third, credit institutions continue to implement measures to control lending activities for non-manufacturing sector; calculate total outstanding loans for non-manufacturing sector under the guidance in this dispatch and send to the central bank before the 12th day of the following reporting month.

Notably, the central bank also gave green light to help real estate sector whereby those who are in need of borrowing capital at banks for home purchase to live will have opportunities to access bank loans more easily.

The central bank also asked credit institutions and branches of foreign banks in Vietnam to report their total outstanding loans for real estate sector. However, in the newly-issued document, the central bank officially excluded four real estate groups from non-production credit.

Accordingly, consumer loans (house repair and house purchase for living) using salaries and wages to pay will be excluded from real estate credit group together with the loans to complete housing development projects for handover or putting into operation before January 1, 2012.

In addition, lending for house projects for sales, house for lease or houses for low-income earners, labourers in industrial zones, export processing zones and economic zones will be also excluded from non-production credit group.

Under this document, these four real estate groups will be not subject to credit growth regulation of 16% from now till the end of December 31, 2011.

Earlier, to perform the government's Resolution No 11, the central bank issued Directive No 01 asking all local banks and branches of foreign banks in Vietnam to bring the credit growth ratio for non-production sector (consumer, real estate and securities) on total outstanding loans down to below 22% on June 30 and it would be 16% as of December 31, 2011.

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