Removing obstacles, supporting customers to access credit capital

The Circular No.06/2023/TTNHNN dated June 28, 2023 (Circular No.06) amending and supplementing the Circular No. 39/2016/TT-NHNN dated December 30, 2016 taking effect from September 1, 2023 has removed a lot of contents in order to create favorable conditions for customers to access credit capital, contributing to the local economic recovery and development… For greater concern, we have just had a talk to Vo Dinh Phong, Director of the State Bank of Vietnam (SBV)’s Binh Duong Branch.

- What are the new features in the Circular No.06?

- The SBV issued the Circular No.06 to further improve the legal framework adjusting lending activities of credit institutions (CIs) to customers in accordance with the provisions of the Law on CIs 2010 (amended and supplemented), the Civil Law 2015, the Investment Law 2020 and related regulations. In this circular, many relevant regulations such as lending by electronic means in line with the Government and the banking sector’s orientation and policy of digital transformation have been added, thereby promoting CIs to actively apply technology and digital transformation to lending activities, contributing to simplifying loan processes and procedures, shortening loan processing time. Customers do not even have to directly go to the bank to make applications for small loans.

The Circular No.06 adds a number of other regulations to be consistent with the actual lending activities of CIs, contributing to ensuring safety and efficiency in lending activities and controlling the use of loans by customers for right purposes or consider, decide to let customers get loans to repay for other CIs for the purpose of serving life needs when meeting a number of conditions, instead of only applying to loans for production-business purposes. Or, CIs are considered for domestic loans to customers to repay foreign loans in the form of goods purchase and sale with deferred payment. In addition, the circular also adds regulations on capital use, requiring more information on plans and projects to serve the needs of life to buy, build, upgrade houses, and receive transfer of land use rights to build houses, instead of only applying to loans for business activities… The provisions of the Circular No.06 have concretized many important contents to overcome difficulties and inadequacies in the banking sector; ensure transparency in lending activities, protect the interests and rights of borrowers, create favorable conditions for people and businesses in accessing credit capital.

- Which cases does the Circular No.06 restrict credit institutions from lending?

- Cases of credit restriction are specified in the Law on Credit Institutions 2010 (amended and supplemented). The Circular No.06 does not stipulate cases of restriction on lending, but stipulates the capital needs of credit institutions that are not allowed to lend. According to regulations, credit institutions' capital needs are not allowed to lend specifically to 10 cases. For example, CIs are not allowed to lend for capital needs to carry out investment and business activities in industries banned from investment and business under the provisions of the Investment Law; pay expenses and meet the financial needs of business investment activities in industries banned from investment and business under the provisions of the Law on Investment and other transactions and acts prohibited by the law; or to buy gold bars, deposit money or to repay loans at CIs, etc. The capital requirements of credit institutions that are not allowed to lend are very clearly stated in the Circular No.06.

- How has the SBV’s Binh Duong branch implemented the Circular No.06?

 - On August 1, 2023, the SBV held an online training conference on the implementation of the Circular No.06 in order to disseminate regulations to the whole system of banks, professional staff and inspectors at units of the SBV, branches of the SBV in provinces and cities. The SBV’s Binh Duong branch has connected with credit institutions so that they can opportunely and fully grasp the new regulations in the Circular No.06.

- What conditions are province-based CIs creating for customers to have favorable access to capital?

- The SBV has implemented many measures to create favorable conditions for businesses and people to access capital such as reviewing and amending legal regulations on lending of credit institutions; continuously reduce interest rates; allocated credit growth targets to CIs, directing credit to production, business, priority fields, etc. CIs have also actively strengthened their connection with businesses through suitable forms; continue reducing costs to contribute to reducing lending interest rates. All have aimed at promoting lending activities under the regulations.

 - Thank you!

Reported by Thanh Hong-Translated by Kim Tin