Vietnam central bank mulls tightening real estate credit: report

Thanh Nien News

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With the property sector seeing robust growth in the past year, the central bank is seeking to tighten credit to it, news website VnExpress reported Friday, quoting a securities company.
A proposed amendment to a circular on lending activities will prohibit banks from using more than 40 percent of short-term deposits for medium and long terms, Ho Chi Minh City Securities Company was quoted as saying. The current rate is 60 percent.
For finance companies, the ratio will be reduced to 80 percent from 200 percent now.
Another major amendment would raise the risk weight of loans to real estate businesses from 150 to 250 percent, HSC said. If approved, it will be the first time the central bank brings the risk weight back to 250 percent after reducing it to 150 percent in January last year.
While the proposed amendments are awaiting feedback and it is unclear when they will take effect, the central bank is clearly concerned the real estate sector could overheat, according to the brokerage. Lending to the property sector grew by 15.59 percent year-on-year in the first nine months of last year, compared to the banking sector's overall growth of 2.5 percent, it said.
The new rules, if applied, would have a negative impact on developers such as Novaland, Vingroup, Dat Xanh, and Nam Long as well as their customers, it said.
Lenders that are major players in the mortgage market, like ACB, Sacombank and Techcombank, would also be affected, it said.

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