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Vietnam: Customers whose bad debt ratio below 3% shall be extended credit to invest in corporate bonds

Lê Hải

08:05, 08/01/2021

Recently, the State Bank of Vietnam issued the Circular No. 23/2020/TT-NHNN regulating prudential limits and ratios of non-bank credit institutions.

According to the Circular No. 23/2020/TT-NHNN of the State Bank of Vietnam (SBV), a financial company may extend credit with terms of up to 01 (one) year for customers to invest in corporate bonds if the following conditions are met:

- The credit extension comply with the prudential limits and ratios prescribed by law;

- Bad debt ratio must be below 3%;

- Risks are properly managed in accordance with regulations of SBV on internal control systems of non-bank credit institutions, regulations on classification of assets, rates of funds set aside for and use of provisions for losses for risk management by credit institutions and foreign bank branches.

Besides, the State Bank of Vietnam also stipulates 08 specific cases in which financial companies must not extend credit for customers to invest in corporate bonds in Clause 2 Article 11 of the Circular No. 23/2020/TT-NHNN.

More details at the Circular No. 23/2020/TT-NHNN of the State Bank of Vietnam, effective from February 14, 2021.

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