Extending Foreign Currency Loans to Resident Borrowers

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By Mattia Capsoni

Apr. 18 – The state bank of Vietnam issued Circular No. 03/2012/TT-NHNN on March 8 in order to define new lending opportunities for banks and borrowers. The primary aim is to lower the pressure and the demand of foreign currency supplies, and the consequent effects these have on the exchange rate.

From now on, Vietnamese credit institutions as well as foreign bank branches that possess a license to provide foreign exchanges services may extend foreign currency loans to resident borrowers.

This possibility, though, is curbed to the purpose of making overseas payments for imported goods and services and to those borrowers who have sufficient foreign currency coming from their production or business with respect to repayment.

The circular even introduced the utilization of short-term loans to cover payments overseas for petrol, after receiving approval from the State Bank itself.

The same approval can be issued to those investments located in prioritized areas picked by the government, and to those borrowers able to certify their ability to pay back on time both the principal and the interests.

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