Outstanding foreign currency loans among local banks is estimated at nearly 300 trillion VND (12.76 billion USD) (Photo: cafef.vn) Hanoi (VNS/VNA) - The State Bank of Vietnam (SBV) is drafting a new circular onforeign currency lending, allowing credit institutions and foreign bankbranches to extend loans to some borrowers in 2019 instead of cutting them offat the end of this year as planned.
Under the draft circular, which aims to revise Circular 24/2015/TT-NHNN,lenders will be permitted to provide short-term foreign currency loans toexporters who need the capital for importing input materials. Borrowers will berequired to have sufficient foreign currency revenue from exports to repay theloans.
The short-term loans will be also available to those who need foreigncurrencies to pay for imported goods and services to serve domesticconsumption, with the deadline for loans pushed back to March 31, 2019.
In addition, lenders will be allowed to consider the provision of medium andlong-term foreign currency loans for the payment of imported goods and servicesuntil September 30, 2019.
According to the SBV, the extension aimed to assist local exporters andproducers by reducing the borrowing costs, thereby helping them to enhancetheir competitiveness in international trade, especially in the context ofaccelerating global trade protectionism.
Exporters prefer to take out loans in dollar as interest rates for dollar loansare lower than those in dong. Currently, banks are listing interest ratesat 2.8-4.7 percent per year for short-term dollar loans and 4.5-6.0 percentfor medium and long-term dollar loans. Meanwhile, interest rates are 6-9percent per year for short-term dong loans, and 9-11 peryear for medium-and long-term dong loans.
Experts have also agreed with the SBV’s plan to extend foreign currencylending, saying that it was necessary to support the country’s exports.
Financial expert Nguyen Tri Hieu said the Vietnamese economy relied heavily onexports, so exporters needed to borrow foreign currencies at low interest ratesto reduce costs and increase competitiveness.
“I support the idea to continue lending in foreign currencies because it is notthe right time to end this measure,” said Hieu.
Expert Can Van Luc said the SBV should consider extending foreign currencylending after December 31 this year since Vietnam was integrating more with theworld and local demand for foreign currencies was legitimate.
Luc believed that removing foreign currency credit would negatively impact theexchange rate as the proportion of foreign currency loans was relatively small.
It was estimated that outstanding foreign currency loans, mainly in US dollars,of banks, especially State-owned ones, were nearly 300 trillion VND (12.76billion USD) by the end of June.
VietinBank topped the list with outstanding foreign currency loans of nearly 109.98trillion VND by the end of June, followed by Vietcombank with 99.25 trillionVND and BIDV with 86.25 trillion VND.
Some private banks also reported high foreign currency loans, such as Sacombankwith 12.73 trillion VND, Eximbank with 10.45 trillion VND and Techcombank with 10.1trillion VND.-VNS/VNA
Under the draft circular, which aims to revise Circular 24/2015/TT-NHNN,lenders will be permitted to provide short-term foreign currency loans toexporters who need the capital for importing input materials. Borrowers will berequired to have sufficient foreign currency revenue from exports to repay theloans.
The short-term loans will be also available to those who need foreigncurrencies to pay for imported goods and services to serve domesticconsumption, with the deadline for loans pushed back to March 31, 2019.
In addition, lenders will be allowed to consider the provision of medium andlong-term foreign currency loans for the payment of imported goods and servicesuntil September 30, 2019.
According to the SBV, the extension aimed to assist local exporters andproducers by reducing the borrowing costs, thereby helping them to enhancetheir competitiveness in international trade, especially in the context ofaccelerating global trade protectionism.
Exporters prefer to take out loans in dollar as interest rates for dollar loansare lower than those in dong. Currently, banks are listing interest ratesat 2.8-4.7 percent per year for short-term dollar loans and 4.5-6.0 percentfor medium and long-term dollar loans. Meanwhile, interest rates are 6-9percent per year for short-term dong loans, and 9-11 peryear for medium-and long-term dong loans.
Experts have also agreed with the SBV’s plan to extend foreign currencylending, saying that it was necessary to support the country’s exports.
Financial expert Nguyen Tri Hieu said the Vietnamese economy relied heavily onexports, so exporters needed to borrow foreign currencies at low interest ratesto reduce costs and increase competitiveness.
“I support the idea to continue lending in foreign currencies because it is notthe right time to end this measure,” said Hieu.
Expert Can Van Luc said the SBV should consider extending foreign currencylending after December 31 this year since Vietnam was integrating more with theworld and local demand for foreign currencies was legitimate.
Luc believed that removing foreign currency credit would negatively impact theexchange rate as the proportion of foreign currency loans was relatively small.
It was estimated that outstanding foreign currency loans, mainly in US dollars,of banks, especially State-owned ones, were nearly 300 trillion VND (12.76billion USD) by the end of June.
VietinBank topped the list with outstanding foreign currency loans of nearly 109.98trillion VND by the end of June, followed by Vietcombank with 99.25 trillionVND and BIDV with 86.25 trillion VND.
Some private banks also reported high foreign currency loans, such as Sacombankwith 12.73 trillion VND, Eximbank with 10.45 trillion VND and Techcombank with 10.1trillion VND.-VNS/VNA
VNA
