SBV announces new circulars for credit institutions

11:19 | 02/06/2016 Finance - Banking

The SBV on May 27 issued Circular 07/2016/TT-NHNN to supplement and amend some articles of Circular 24/2015/TT-NHNN on providing foreign currency loans by credit institutions and foreign bank branches.

SBV announces new circulars for credit institutions

From June 1, companies who have demands for short-term loans in foreign currency can borrow from banks to satisfy their short-term capital needs — Photo thesaigontimes.vn

Under the new regulations, from June 1, companies who have demands for short-term loans in foreign currency can borrow from banks to satisfy their short-term capital needs.

Borrowers must commit to have sufficient foreign currency revenue from exports to repay the loans.

After getting the loans, borrowers must immediately sell the amount of foreign currency to the lending institutions under the spot foreign exchange trading method, except for the case that the foreign currency will be used to make payments.

This decision will take effect until December 31, this year.

According to the old regulations, commercial banks are not allowed to provide lending in foreign currency to exporters from 31 March this year.

Banking expert Nguyen Tri Hieu said that the decision would help enterprises, especially small- and medium-sized ones, to reduce costs for capital by getting loans in foreign currency at low interest rates, thereby making exports more competitive.

However, he warned that the policy would raise demand of exporters for foreign currency, thus have effects on the stability of the foreign exchange rate in the near future. Therefore, companies should take careful consideration related to foreign exchange rate.

He suggested that the SBV allow commercial banks to increase the interest rates for US dollar deposits to raise the banks' liquidity./.

 

Source: VNS

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