A long-awaited policy on scaling down the provision of foreign currency loans to resident entities, especially those intended to take advantage of an advantageous VND-USD interest rate disparity to seek profits from these loans, was officially promulgated under State Bank Decision No. 09/2008/QD-NHNN of April 10.
A long-awaited policy on scaling down the provision of foreign currency loans to resident entities, especially those intended to take advantage of an advantageous VND-USD interest rate disparity to seek profits from these loans, was officially promulgated under State Bank Decision No. 09/2008/QD-NHNN of April 10.
Compared to Decision No. 966/2003/QD-NHNN issued by the State Bank in 2003, this new decision encourages resident entities to borrow foreign currency for direct overseas investment and limits uncessary loans for implementation of investment projects or plans on export goods production or overseas service provision or those with foreign currency revenues in the Vietnamese territory or to those decided by the Prime Minister as needed for Vietnamese guest workers, short-term capital needs for production and business activities of entities that have no foreign currency revenues or for contracts for term purchase of foreign currencies for repayment of loans, or other capital needs not specified by Decision No. 966 but approved by the State Bank Governor.
This decision serves as a legal basis for banks and credit institutions, which faced a tense foreign currency supply-demand balance in the first three months of the year but still had to provide foreign currency loans due to their customer policies, to reconsider and refuse customers that borrow foreign currency for purposes other than payment for imported goods or services but for their domestic production or business, repayment of foreign loans for investment in production of export goods, or direct overseas investment under the investment law and the State Bank’s guidance.
(Source: VNLaws)
