Banks Okayed to Mortgage Valuable Papers in Foreign Currencies
The State Bank of Vietnam (SBV) has allowed commercial bank to mortgage valuable papers in both Vietnamese dong and foreign currencies, according to the Circular No. 11/2009/TT-NHNN issued May 27.
The move is expected to give greater flexibility to the SBV’s lending in the context of the global economic downturn.
The mortgaged valuable papers must be valid at least until the loans reach maturity. Valuable papers must be legally owned by the borrowing bank and transferable.
“The new rule would create a new mechanism for the central bank to intervene to solve the dollar shortage problem, but given the amount of domestic dollar bonds, it will not be enough,” a banker in Ho Chi Minh City said.
The SBV has also issued another circular guiding domestic commercial banks and foreign banks and their branches operating in Vietnam in lending capital to businesses under the Vietnam Development Bank’s guarantee.
The circular stipulated that eligible businesses, including cooperatives, must have registered capital of under VND20 billion and no more than 1,000 workers.
These businesses must not involve in securities business, real estate, and consultation, excluding construction projects for low-income earners, workers and students. (SBV)
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