The State Bank of Viet Nam (SBV) issued a decree allowing special loans at zero per cent interest rates for credit institutions which were placed under the SBV’s special control.

According to the decree which came into force early this week, SBV, Deposit Insurance of Viet Nam, Co-operative Bank of Viet Nam and other credit institutions could provide zero-rate loans to institutions under special control.

The special loans are aimed at providing liquidity support for credit institutions when they are in danger of losing solvency or of going into insolvency and posing a threat to the system stability during the time they were placed under the SBV’s special control.

The central bank could provide special lending to support banks which were transferred compulsorily (including three banks that SBV bought at zero dong a few years ago).

The provision of special lending by SBV at a zero interest rate would be decided by the Prime Minister.

The special loans would only be used to pay deposits of individual depositors at credit institutions. Other purposes must be agreed upon by the governor of the central bank.

The maximum term for special loans is two years.

The decree also allows SBV to transfer refinancing loans to special loans in certain cases. — VNS