Circular 06/2023/TT-NHNN of the Governor of the State Bank of Vietnam stipulating lending activities of credit institutions, foreign bank branches to customers (hereinafter referred to as Circular 06) effective from 1/9. This Circular amends and supplements the provisions of Circular No. 39/2016/TT-NHNN dated December 30, 2016. Especially, Circular 06 also has new regulations restricting real estate lending.
Non-borrowed capital needs
The authority prohibit credit institutions from lending in the cases enumerated in Clause 2 of Article 1 of Circular 06. There are 3 situations that real estate businesses believe will have a great impact on the real estate market.
1. Do not borrow money to contribute capital, purchase or receive transfer of contributed capital or shares of limited liability companies or HDVs. Furthermore, some JSCs have not listed on the stock market or registered to trade on UPCoM.
2. Do not lend money to pay for capital contribution under capital contribution contracts, investment cooperation contracts or business cooperation contracts for the implementation of investment projects that are not eligible to be put into business as prescribed by law. the law at the time the credit institution decides to lend.
3. Not allowed to lend to offset finance. Except for cases where the loan fully meets the conditions specified in this circular.
According to the State Bank of Vietnam, Circular 06 aims to control the proper use of capital. Besides, it also reduces the risk of handling collateral assets. The contribution of capital by buying shares or pouring into projects that do not meet legal requirements is a capital need that is difficult to control the use of the loan, there is no basis for regular assessment of the financial situation, activities and debt repayment capacity of the party receiving the contributed capital.
Harley Miller Law Firm “HMLF”
Head office: 14th floor, HM Town building, 412 Nguyen Thi Minh Khai, Ward 05, District 3, Ho Chi Minh City.
Phone number: +84 937215585
Website: hmlf.vn Email: miller@hmlf.vn
