The Ho Chi Minh City Real Estate Association (HoREA) has just sent a document to the Prime Minister and the State Bank of Vietnam (SBV), requesting the SBV to urgently consider amending and supplementing Circular 08/2020/TT-NHNN, extending by 12 months the time of application of the regulation that credit institutions use a maximum of 30% of short-term mobilized capital for medium- and long-term loans.
According to Circular 08, October 1 is the date to apply the regulation that credit institutions can use up to 30% of short-term mobilized capital for medium- and long-term lending.
To gradually limit credit in potentially risky areas such as securities and real estate, the State Bank has set out a roadmap to reduce the rate of using short-term mobilized capital for medium- and long-term lending.
Specifically, the rate has been gradually reduced from 60% from February 1, 2015 to 45% from January 1, 2018, to 40% from January 1, 2020, to 37% from October 1, 2020 and to 34% from October 1, 2021.
Reducing the ratio of short-term mobilized capital for medium and long-term loans to 30%, effective from October 1, 2023, is the final stage to complete the roadmap set by the State Bank.
However, according to HoREA, the current context of our country's economy has changed very differently from the context when Circular 08 was issued in 2020 and is facing huge challenges, from the impact of "headwinds" that have adverse impacts on our country's socio-economy.
Including the real estate sector due to objective, unexpected and unpredictable factors at the time of issuance of Circular 08.
Currently, the economy and real estate market are still facing many difficulties due to the impact of "headwinds". Many businesses in many economic sectors have reduced production and business, so they have reduced or even no need for credit loans.
Real estate businesses still have a need for credit but have difficulty accessing credit, mainly because real estate and commercial housing projects are "entangled in legal issues".
The Association found that if commercial banks just consider “loosening up” a little bit to allow businesses to borrow credit “to compensate for the financial” of investment projects that ensure feasibility or have collateral such as land use rights of transferred land plots in the project… then it will help businesses overcome difficulties.
At the same time, it contributes to achieving the credit growth target of about 14% in 2023. As of September 15, the State Bank of Vietnam said that the new credit growth result reached nearly 12.6 million billion VND, an increase of only 5.56% compared to the end of 2022, and nearly 1 million billion VND can be pumped into the economy until the end of the year.
Therefore, HoREA proposed that the State Bank of Vietnam soon consider amending and supplementing Circular 08 in the direction of extending by 12 months the time of application of the regulation that "credit institutions use a maximum of 30% of short-term mobilized capital for medium- and long-term lending".
This means that the effective date should be October 1, 2024 instead of October 1, 2023.
The Association believes that this will create conditions for credit institutions to reasonably use short-term mobilized capital for medium- and long-term lending and improve access to credit for businesses and people, without causing "risks" to the safety of the credit system.
At the same time, the extension is also in line with the Government's plan to remove obstacles and promote the safe, healthy and sustainable development of the real estate market.
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