Vietnam: Decrease refinancing interest rate from March 4, 2023? What are the conditions to be refinanced by the State Bank of Vietnam?
What are the conditions to be refinanced by the State Bank of Vietnam?
The State Bank of Vietnam shall consider and decide to refinance loans in the form of on-lending to credit institutions that fully satisfy the following conditions:
(1) Refinancing for liquidity support purposes:
According to Article 12 of Circular No. 24/2019/TT-NHNN on refinancing conditions for liquidity support purposes:
SBV shall consider issuing its decision on refinancing and extension of refinancing in the form of on-lending on credit-related documents to credit institutions fully meeting the following conditions:
- They are facing solvency difficulty and are not going into special administration.
- They have undertaken that they do not have or have already used up valuable papers mentioned in the list of valuable papers accepted for use in SBV's transactions as of the date of submission of their application forms for refinancing or refinancing extension, and that loans mentioned in checklists of credit-related documents (i.e. checklists of loans referred to in Appendix No.03 to Circular No. 24/2019/TT-NHNN) for refinancing or refinancing extension purposes meet standards stipulated in Article 13 in Circular No. 24/2019/TT-NHNN in full.
(2) Refinancing for the purpose of loan support for promoted sectors or industries:
According to the provisions of Article 16 of Circular No. 24/2019/TT-NHNN on refinancing conditions for the purpose of loan support for promoted sectors or industries:
SBV shall consider issuing its decision on refinancing in the form of on-lending on credit-related documents to credit institutions fully meeting the following conditions:
- They are not going into special administration or subject to early intervention regimes or measures against violations as prescribed in Article 11 of Circular No. 24/2019/TT-NHNN.
- They comply with prudential ratios prescribed in clause 1 Article 130 of Circular No. 24/2019/TT-NHNN in the (amended and supplemented) Law on Credit Institutions, and follow SBV’s instructions, within 12 consecutive months before the date of submission of their Applications for refinanced loans.
- They have undertaken that they do not have or have already used up valuable papers mentioned in the list of valuable papers accepted for use in SBV's transactions as of the date of submission of their application forms for refinancing, and that loans mentioned in checklists of credit-related documents required for refinancing meet standards stipulated in Article 18 of Circular No. 24/2019/TT-NHNN in full.
Vietnam: Decrease refinancing interest rate from March 4, 2023? What are the conditions to be refinanced by the State Bank of Vietnam?
Decrease refinancing interest rate from March 4, 2023?
On March 15, 2023, the State Bank of Vietnam issued Decision No. 313/QD-NHNN in 2023 regulating the refinancing interest rate as follows:
The refinancing interest rate remains unchanged at 6%/year as prescribed in Decision No. 1809/QD-NHNN in 2022, specifically:
Regulations on SBV’s interest rates, including:
1. Refinancing interest rate: 6.0%/year.
However, on March 31, 2023, the State Bank of Vietnam issued Decision No. 574/QD-NHNN in 2023 adjusting the refinancing interest rate as follows:
The following interest rates are adopted by the State Bank of Vietnam, including:
1. Refinancing interest rate: 5.5%/year.
Thus, the new refinancing interest rate decreased by 0.5%/year compared to the previous refinancing interest rate.
What is the time limit for refinancing?
Pursuant to Clause 1, Article 7 of Circular No. 24/2019/TT-NHNN stipulating the time limits for refinancing and refinancing extension as follows:
Time limit for refinancing and refinancing extension
1. Period of refinancing in the form of on-lending on credit-related documents shall be considered, decided by SBV, and shall be less than 12 months.
2. Grace period of each refinance shall not exceed the time limit for each refinanced loan; the period of refinance and the grace period of refinance shall not be over 12 months in total.
Thus, the period of refinancing in the form of on-lending on credit-related documents shall be considered, decided by SBV, and shall be less than 12 months.
In case the subjects are lent by the State Bank of Vietnam in the form of refinancing according to the provisions of Clause 2, Article 1 of Circular No. 24/2019/TT-NHNN, when they meet the conditions for extension of refinancing specified in Clause 2 Article 12 of Circular No. 24/2019/TT-NHNN is allowed to extend the refinancing period, however, the total time for refinancing and extending the refinancing is 12 months maximum.
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