New policy stipulates special lending cases for credit institutions

View of a SCB's transaction office. The central bank will provide special loans to credit institutions that are suffering mass withdrawals. — Photo cafef.vn

According to a circular, this special lending does not include loans with an interest rate of zero per cent per year or loans without collateral, as prescribed by the Law on Credit institutions.

The regulation, under the SBV’s Circular 37/2024/TT-NHNN, stipulates SBV’s special lending cases for credit institutions.

For the SBV, the source of money for the special lending is taken from performing the function of the central bank in issuing money. The SBV will provide special loans to credit institutions in the four following cases:

First, the special lending is given to credit institutions, including commercial banks, cooperative banks, people's credit funds and microfinance institutions, which suffer mass withdrawals for the purpose of paying out to depositors

Second, the special loan is given to credit institutions, which are under the SBV’s special control to implement the Government’s approved recovery plans.

Thirdly, special lending is given to specially controlled commercial banks, which must implement the approved compulsory transfer plans according to the Law on Credit Institutions.

Finally, the special lending is provided to specially controlled commercial banks to support recovery under the approved compulsory transfer plans according to the Law on Credit Institutions.

With the Vietnam Cooperative Bank, special loans will be made as people's credit funds suffer a mass withdrawn to pay depositors or People's credit funds are under special control to implement the Government’s approved recovery plans.

Special loans from other credit institutions, except the Vietnam Cooperative Bank, will be used to lend to credit institutions that face a mass withdrawals to pay depositors or to lend to credit institutions that are under special controls, to implement approved recovery plans or approved compulsory transfer plans.

For all special loans, the SBV will consider and decide on the loan amount, along with the loan term, based on the solvency of the credit institution requesting the loan. A loan term must be less than 12 months, but the SBV can consider extending the term with each time, for less than a further 12 months, based on the solvency of the special borrower or the plan to handle the special loan in the restructuring plan submitted to the SBV.

The interest rate for the special loan is equal to the refinancing interest rate at the date of disbursement of the special loan. Meanwhile, the overdue interest rate is equal to 130 per cent of the special loan interest rate.