Vietnam banks race to keep dollar borrowers as tightened lending conditions near
Starting April 1, commercial banks in Vietnam are banned from offering corporate loans in currencies other than the dong, according to Circular No.24 the State Bank of Vietnam (SBV) announced in December last year.
The ban targets businesses that exchange foreign currency loans into dong to pay for equipment and machinery, according to Bui Quoc Dung, head of monetary policy at the SBV.
“Those businesses in need of foreign currencies for goods and service payments and fuel imports are still allowed to borrow the money,” Dung told Tuoi Tre (Youth) newspaper.
Even so, many credit institutions say the tightened conditions would drive a lot of their customers away, prompting them to find new ways to keep borrowers.
Some banks have allowed their customers to ‘register’ loans in foreign currencies they want to borrow by the end of this month to dodge the new policy.
This means banks have guaranteed to lend foreign currencies to businesses before the Circular No.24 takes effect, so they will not violate the rule, according to analysts.
“Another solution is to offer loans in VND at very low interest rates, even at a loss,” the director of a bank said on condition of anonymity.
Banks try to keep borrowers in the hope that these customers will use their other services to make up for the loss caused by the cheap interest rates, according to the banker.
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