The State Bank of Viet Nam (SBV) is drafting a new circular on foreign currency lending. — Photo enternews.vn

HA NOI – The State Bank of Viet Nam (SBV) is drafting a new circular on foreign currency lending.

Under the draft circular, credit institutions and foreign bank branches will be allowed to continue giving loans in foreign currencies to some borrowers till the end of 2017 instead of early 2017.

The draft circular will replace the existing Circular 07/2016/TT-NHNN that was issued early last year.

According to Circular 07/2016/TT-NHNN, credit institutions and foreign bank branches were allowed to consider the provision of short-term foreign currency loans to meet short-term capital needs for production or business plans for the export of goods via Vietnamese border gates until January 1, 2017. The borrowers were required to have sufficient foreign currency revenue from exports to repay the loan.

Previously, the regulation had been extended several times to support local exporters. With these loans, borrowers had a chance to borrow foreign currency at low interest rates.  The lending interest rates for foreign currency loans are much lower than that of Vietnamese dong loans.

According to the new draft circular, the lenders are also allowed to consider the provision of long-term, medium-term and short-term foreign currency loans for offshore payment for the import of goods and services. In this case, the borrowers must have sufficient foreign currency revenue from production or business to repay the loans.

Short-term foreign currency loans are also allowed for leading petroleum import enterprises that are allocated annual petroleum import quotas by the Ministry of Industry and Trade to make offshore payment for imports.

Besides the above mentioned cases, the lenders may consider providing loans for overseas investment in key national projects and programmes that the National Assembly, the Government or the Prime Minister have approved and the Ministry of Planning and Investment has granted overseas investment certificates, as well as for priority sectors or encouraged sectors under Government regulations after obtaining SBV’s written approval. - VNS