End of preferential loan package of 30,000 billion VND: Consequences for people and businesses

(Baonghean) - According to information from the State Bank of Vietnam, Nghe An province branch, by the end of April 2016, the total outstanding loan balance of the 30,000 billion VND credit package in the whole province reached 352 billion VND for 974 individual customers to borrow to buy apartments and build houses.

The total amount of committed loans is 463 billion VND, with the number of customers committed to lending to 1,014 subjects. However, stopping preferential loans makes it difficult for both people and businesses.

Customers apply for a loan of 30,000 billion VND at SHB Bank Branch.

According to the Resolution of the regular Government meeting in March 2016, the State Bank of Vietnam was assigned to continue implementing the VND30,000 billion credit package to support social housing with a preferential interest rate of 5%/year until the disbursement reaches the end of the contract according to the progress and disbursement conditions specified in the credit contract, instead of ending on June 1, 2016 in the spirit of Circular 11/2013 and the urgent dispatch sent to commercial banks on March 28 of the State Bank of Vietnam.

Unfortunately, the State Bank, as the organizer and leader of this preferential loan program, although listening to the people's wishes and market signals, supporting the policy and complying with the Government's direction, has not yet issued specific guidance documents to implement Resolution 23/NQ-CP dated March 30, 2016 of the Government, causing confusion in operations for commercial banks and unnecessary anxiety for related borrowers.

The legal gap caused by the delay in issuing this guidance document may create pressure forcing borrowers to pay commercial interest rates, such as increasing costs for borrowers or accepting fraudulent signing and facing many legal risks during the disbursement process, signing house handover minutes that deviate from the actual project progress...

It must be affirmed that the possibility of increasing interest rates for the signed loan contract disbursed after June 1, 2016 is impossible, but the request to soon issue a document guiding implementation is necessary and a requirement of life, as well as to ensure the continuity and timeliness of legal regulations related to the 30,000 billion VND credit package in particular, and in the construction and implementation of State management policies in general.

Furthermore, the policy of supporting the poor to buy low-cost housing or social housing has been officially included in the Housing Law and Decree 100 on social housing development. The subjects eligible for preferential loans to buy or rent social housing are cadres, civil servants, public employees, officers, professional soldiers of the People's Armed Forces; workers working in economic zones, industrial zones, export processing zones, high-tech zones and other subjects as prescribed by the Government.

To be eligible to buy social housing, this group of people must meet a number of conditions such as not having a house or having one but the average area of ​​the household is less than 5 m2 of floor space per person; having a house but it is temporary, damaged or dilapidated. In addition, the above groups of people who want to borrow must have 20% of the value of the apartment purchase contract and meet the ability to repay the debt; and be able to use the apartment they buy as collateral.

Tecco Tower Apartment - one of the projects where many customers borrowed the 30,000 billion package to buy apartments.

Therefore, policy continuity also requires the State Bank and relevant agencies to soon have policies guiding credit support for social housing subjects after the above 30,000 billion VND credit package ends. In fact, the State Bank has just issued Document No. 1425/NHNN-TD to a number of commercial banks on the implementation of the housing support loan program according to Resolution 02/NQ-CP. Accordingly, the State Bank has assigned 4 State-owned commercial banks including Agribank, Vietcombank, VietinBank and BIDV in which the State holds controlling shares to reserve at least 3% of outstanding loans to lend for low-cost housing with low interest rates of up to 50% of the market interest rate...

At the same time, the Social Policy Bank will implement loans for poor households to buy social housing with 50% of the loan capital coming from the budget and 50% from mobilized sources. This regulation will be transferred immediately after the disbursement period of the 30,000 billion VND credit package ends on June 1, 2016. Thus, with the total outstanding debt of 5 commercial banks in which the State Bank is holding controlling shares reaching more than 1 million billion VND, it is hoped that there will always be a larger amount of more than 30,000 billion VND for low-income people to borrow to buy social housing at an interest rate of only approximately 5 - 6%/year...

In reality, ensuring seamlessness and continuity of appropriate credit policies to successfully conclude the 30,000 billion VND preferential credit package and continue to support social housing beneficiaries has, is, and will contribute to strengthening trust and affirming the good nature of the socialist state institution by the people and for the people in Vietnam.

Minh Phong