ANTD.VN - The State Bank has spoken out about some concerns that Circular No. 06/2023/TT-NHNN, which will take effect from September 1, 2023, will create more "barriers", making access to credit more difficult than before.
Recently, the Ho Chi Minh City Real Estate Association (HoREA) sent a dispatch to the Prime Minister and the State Bank of Vietnam (SBV) requesting amendments to a series of circulars to unblock real estate credit.
In particular, with Circular 06/2023/TT-NHNN amending and supplementing Circular No. 39/2016/TT-NHNN dated December 30, 2016, HoREA is concerned that this Circular is like building more barriers when adding 4 capital needs that cannot be borrowed from banks. This leads to a situation where some businesses in various sectors of the economy need to borrow capital, including real estate businesses, home buyers, and real estate investors.
In response to the above concerns, the State Bank of Vietnam has just spoken out. Accordingly, the State Bank of Vietnam affirmed that the purpose of Circular 06 is to contribute to ensuring safety, efficiency, limiting risks arising in lending activities of credit institutions (CIs) to customers, controlling customers' use of loans for the right purposes, improving credit quality, but still ensuring compliance with actual needs.
Why are banks not allowed to lend money for deposits?
Regarding the regulations on some capital needs that credit institutions are not allowed to lend, the State Bank said that in fact, in the past, the State Bank has also issued warning documents to credit institutions regarding these capital needs.
For example, Circular 06 stipulates that credit institutions are not allowed to lend money to deposit money. According to the State Bank of Vietnam, in practice, through inspection and supervision, there have been cases in which credit institutions have provided loans to prove the financial capacity of borrowers when working or studying abroad in the form of borrowing money to deposit savings or customers mortgaging foreign currency savings books to borrow VND to deposit savings.
According to the State Bank, the nature of customers' savings deposits and financial transactions must be formed from the customers' own money; not money borrowed from credit institutions.
Accordingly, Circular 06 supplements the regulation that credit institutions are not allowed to lend capital for deposits in order to ensure control of the use of loans for the right purposes and control loan risks as well as ensure consistency with the nature of savings deposits and the nature of financial proof transactions.
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Businesses worry that Circular 06 will make it difficult to access bank capital. |
Listed enterprises are still allowed to borrow to contribute capital and buy shares.
The State Bank also said that Circular 06 only stipulates that credit institutions are not allowed to lend to pay for capital contributions, purchase, or receive transfers of capital contributions of limited liability companies or partnerships; contribute capital, purchase, or receive transfers of shares of joint stock companies that are not listed on the stock market or have not registered for trading on the UPCoM trading system.
For the purpose of contributing capital, purchasing, and receiving transfer of capital contributions at listed joint stock companies, credit institutions shall provide loans according to regulations.
According to the State Bank, the capital contribution in a limited liability company or partnership is the company's charter capital on the financial statements, so if it is formed from borrowed capital, it will not accurately reflect the company's financial capacity.
At the same time, recent practice shows that lending by credit institutions for this capital need in many cases is potentially risky. The reason is that it is difficult to control the purpose of using the loan because the credit institution cannot control the use of capital by the capital recipient, there is no basis for regular assessment of the financial situation, operating situation, debt repayment ability of the capital recipient and this is one of the forms that customers can use to conceal the form of mutual ownership.
In addition, the customer's source of debt repayment depends entirely on the source of money from the investor (repayment of capital contributions and profits); the loan value is quite large, the borrower may be a newly established enterprise, with no other source of debt repayment, or if there is another source of debt repayment, it is insignificant compared to the loan amount.
In fact, the capital recipient uses the capital contribution loan from customers at credit institutions mostly for business/exploitation projects; while these projects are not yet legally guaranteed, not qualified for implementation according to the provisions of law. In case of risks, due to the project not being legally guaranteed, the handling of collateral assets will arise many problems and be difficult to handle.
No lending for investment projects that do not meet business conditions
Circular 06 supplements the regulation that credit institutions are not allowed to lend to pay for capital contributions under capital contribution contracts, investment cooperation contracts or business cooperation contracts to implement investment projects that do not meet the conditions for putting into business according to the provisions of law at the time the credit institution decides to lend.
The State Bank affirms that for investment projects that are eligible to be put into business according to the provisions of law, credit institutions will continue to consider lending to customers to pay for capital contributions according to capital contribution contracts, investment cooperation contracts or business cooperation contracts according to regulations;
At the same time, to ensure risk control, in case credit institutions lend to customers for this capital need, Circular 06 supplements the regulation that credit institutions must have measures to inspect, monitor, and evaluate the financial situation and debt repayment sources of customers, ensure the ability to fully recover the principal and interest of loans on time as agreed, and control the use of loans for the right purpose.
Recent practice shows that lending for these capital needs to implement projects that do not meet the conditions for putting into business according to legal regulations is potentially risky.
The reason is: Business cooperation and capital contributions have fixed capital contribution periods and capital contribution returns, not depending on the production and business performance of the capital recipient; the source of debt repayment depends entirely on the investor's source of money, the borrower has no other source of debt repayment or if there is, it is insignificant compared to the loan amount.
If the project does not ensure legality and conditions for implementation, risks arise when the project has no revenue, affecting the customer's ability to repay debts and causing problems in handling secured assets.
No financial compensation loans
Circular 06 also stipulates that credit institutions are not allowed to lend for financial compensation, because this poses risks in the use of borrowed capital, due to the difficulty in assessing the suitability between the loan demand and the financial value of the customer borrowed, and the authenticity of the transactions.
However, in reality, there are some legitimate needs for compensatory loans, such as in the case of enterprises that are applying for medium- and long-term loans to carry out business projects. During the time the medium- and long-term loan has not been approved, the enterprise needs to pay some costs arising from the project, which have been included in the loan use plan and accordingly, the enterprise has to advance its own capital to pay and ensure project progress.
In this case, after the medium- and long-term loan is approved, the credit institution will disburse the amount of capital advanced by the enterprise to implement the project; at the same time, continue to consider disbursing to implement that project if the enterprise has a need.
Therefore, Circular 06 has added permission for credit institutions to continue lending in this case to create conditions for enterprises to maintain production and business activities, ensure project implementation progress, thereby increasing enterprises' access to credit capital.
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