Important contents related to mortgage lending in Vietnam

Important contents related to mortgage lending in Vietnam (Internet image)

Circular 17/2011/TT-NHNN stipulates the form of mortgage lending in Vietnam as follows:

1. Subjects entitled to mortgage loan from the State Bank of Vietnam 

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. Purpose of mortgage lending

State Bank of Vietnam provides mortgage loans to credit institutions for the purpose of supplying short term capital and means of payment to credit institutions.

3. Principles of mortgage lending

The mortgage lending by the State Bank to credit institutions shall be implemented under following principles:

- The mortgage loan shall be secured by valuable paper which is qualified in line with provisions in Article 8 of this Circular;

- Credit institutions which are entitled to mortgage loans shall be required to use loan funds for the right purpose, make full payment of loan principal and loan interest to the State Bank at the due time.

4. Mode of mortgage lending

- Direct mode: Credit Institutions shall directly transact with the State Bank.

- Indirect mode: credit institutions shall transact via monetary operation network system under the guidance of the State Bank.

5. Grant of code, password and electronic signature

The State Bank shall grant code, password and electronic signature to representatives of credit institution for transaction via monetary operation network system of the State Bank in activities of mortgage lending in order to secure security and confidentiality.

6. Valuable papers to be mortgaged

- 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.

- 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.

7. Value of the valuable papers used as security asset for the mortgage loan

- Value of the valuable paper used as security asset for the mortgage loan shall be the total issued value of the valuable paper which is calculated under the face value.

- The security rate of the value of the valuable paper over the amount of the mortgage loan shall be provided for by the Governor of the State Bank from time to time.

Circular 17/2011/TT-NHNN, which comes into force from October 1, 2011.

Thuy Tram

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE