Foreign currency lending will be more 'open'

The State Bank has just announced a draft amendment to Circular 24/2015 regulating foreign currency lending with more open regulations than before.

Under the old regulations, banks were allowed to consider lending in foreign currency if customers wanted to pay abroad for imported goods and services and had enough foreign currency from production and business revenue to repay the loan. And this lending ended from December 31, 2018.

However, according to the new draft, this loan is detailed according to the purpose of capital use and the time is also extended for import enterprises, but there is no limit for export.

Accordingly, businesses providing short-term loans to pay abroad for imported goods and services to implement production and business plans to serve domestic needs will be implemented until March 31, 2019.For medium-term loans, businesses can apply until September 30, 2019.

With short-term loans to pay abroad for imported goods and services to implement production plans,export businessbe doneno time limit.

For all of the above loan needs, borrowers must have enough foreign currency from production and business revenue to repay the loan.

The State Bank explains the removal of regulations on time limits for foreign currency loan needs to implement production plans.export businessThis is aimed at continuing to support businesses and the economy in reducing borrowing costs, thereby supporting increased competitiveness in international trade, especially in the context of adverse impacts from the increasing trend of global trade protectionism, especially the US-China trade conflict.

Besides, the lending policy for this need is not contrary to the policy of limiting dollarization of the Government and the State Bank because the structure and method of lending for this need does not create any dollarization phenomenon for the economy.The reason is that foreign currency is not put into circulation but goes straight back into the banking system.

Another new point is that borrowers who need to buy foreign currency to repay loans can negotiate to buy foreign currency at the lending bank or another bank.For lending banks, the State Bank is bound to be responsible for selling foreign currency to customers so that customers can repay loans at that bank.