Conditions for credit institutions to be eligible for mortgage lending in Vietnam

Conditions for credit institutions to be eligible for mortgage lending in Vietnam (Internet image)

Article 10 of Circular 17/2011/TT-NHNN stipulates the conditions for lending secured by the mortgage of valuable papers by the State Bank of Vietnam to credit institutions as follows:

On the basis of orienting management of monetary policy and money supply from time to time, the State Bank of Vietnam shall decide on provision of mortgage loan to credit institutions when they fully satisfy following conditions:

1. They are credit institutions as stated in Article 3 of Circular 17/2011/TT-NHNN and are not put in the special control;

Credit Institutions, which are established and operate in accordance with provisions of the Law on Credit Institutions, including banks, non-banking credit institutions, central People’s Credit Funds and foreign banks’ branches (hereinafter referred to as credit institutions).

2. They have valuable papers qualified and subject to the list of those which are permitted to use as a mortgage for loan at the State Bank in accordance with provisions in Article 8 of Circular 17/2011/TT-NHNN;

Criteria of valuable paper to be mortgaged:

• To be entitled to transfer;

• To be subject to legal ownership of credit institutions requesting for loan

• Its remaining period is at least equal to the borrowing period;

• It is not the valuable paper issued by the credit institution which applies for loan.

3. List, order of priority of valuable papers which are used as the mortgage for loan and the proportion between value of the valuable paper and amount of the mortgage loan at the State Bank shall be determined by the Governor of the State Bank from time to time.

4. Their borrowing purposes are in compliance with objectives of monetary policy management of the State Bank from time to time;

5. Availability of an application file for mortgage loan from the State Bank in compliance with provisions in Article 15 of this Circular;

6. They have no overdue debt at the State Bank at the time of borrowing request;

7. They have made a commitment on using the mortgage loan for the due purpose and repayment of loan principal and interest to the State Bank at the due time.

More details can be found in Circular 17/2011/TT-NHNN, which comes into force from October 1, 2011.

Thuy Tram

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