The State Bank of Viet Nam Governor Nguyen Van Binh has asked borrowers to report any instance of banks overcharging them for early loan repayments. — Photo doanhnghiepvn

HA NOI (Biz Hub) — The State Bank of Viet Nam Governor Nguyen Van Binh has asked borrowers to report any instance of banks overcharging them for early loan repayments.

The local press had reported that a penalty amounting to 8 to 9 per cent of the principal of the loans, that had not been clearly stated in the loan contract or even verbally conveyed by the credit officials, were being charged.

Pursuant to Decision No 1627/2001/QD-NHNN dated on 31 December 2011, and Circular No 05/2011/TT-NHNN of March 10, 2011, creditors and borrowers are allowed to negotiate the penalty if the borrowers repay the loans before the due date. The penalty in practice is normally about 2 to 3 per cent.

However, Governor Binh just received a document from a voter in An Giang Province asking the central bank to cut the 5 per cent penalty to 2-3 per cent.

In a press release, Binh said that the regulation was legally right but currently, the banking system was assisting enterprises and sharing their financial constraints. The central bank has already told the credit institutions to apply reasonable fees on borrowers and to cut all fees that are irrelevant to the loans.

"Thus, the application of high penalty on early repayments is not in line with directions of the government and the State Bank of Viet Nam that help solve difficulties. The central bank would like to ask the people to report to the central bank's branches if this happens," said Binh. — VNS