How is lending secured by the mortgage of valuable papers of credit institutions in Vietnam carried out?

How is lending secured by the mortgage of valuable papers of credit institutions in Vietnam carried out? (Internet image) 

Circular 17/2011/TT-NHNN stipulates lending secured by the mortgage of valuable papers of credit institutions in Vietnam as follows:

1. Period of mortgage lending

• The period of mortgage lending is less than 12 months and not in excess of the remaining period of mortgaged valuable papers. The period of mortgage lending shall include non- business days, public holidays. Where the payment date falls on a non-business day, public holiday, the lending period shall be extended to the following working day.

• Based on borrowing purposes of credit institutions, the State Bank shall decide the lending period, term of debt collection in specific cases.

• In special cases, the State Bank may consider rescheduling the mortgage loan providing that credit institutions’ request and reasons for loan rescheduling are in line with orientation of monetary policy management of the State Bank.

Note: Where there is a demand for rescheduling the mortgage loan at the State Bank, credit institution shall send 01 written request for rescheduling the mortgage loan (which clearly states the reason for rescheduling request) directly or by post to the State Bank. Within a maximum period of 2 working days since the receipt of the written request for the mortgage loan rescheduling, the State Bank shall give a written notice to the requesting credit institution of its approval or refusal of the mortgage loan rescheduling and send the notice to concerned units.

2. Interest rate of mortgage loan

• Interest rate of mortgage loan to credit institutions shall be refinancing interest rate applied by the State Bank in providing mortgage loans to credit institutions at the disbursement time of loans and remain in full force during the lending period.

• Where the outstanding of the mortgage loan is classified as overdue debt, the credit institution shall be subject to overdue interest rate, which is equivalent to 150% of the lending interest rate stated in the credit contract.

3. Limit of mortgage lending

• Based on the targets of monetary policy from time to time, demand for loan fund, value of the valuable paper used as security asset and other loans outstanding of a credit institution at the State Bank, the State Bank shall determine the limit of mortgage lending to the borrowing credit institution.

• The maximum lending limit shall not exceed the value of the valuable paper used as security to be converted in accordance with applicable provisions of the State Bank.

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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