Concerned about additional 'barriers' to borrowing, HoREA proposes to amend the circular

Fear of difficulty in borrowing capital

The Ho Chi Minh City Real Estate Association (HoREA) has just sent an official dispatch to the Prime Minister and the State Bank requesting consideration of amending Circular 06/2023/TT-NHNN, Circular 03/2023/TT-NHNN and Circular 08/2020/TT-NHNN to implement Resolution 97/NQ-CP dated July 8, 2023 of the Government.

According to HoREA, in the current difficult real estate market situation due to weak purchasing power, businesses continue to suffer from cash flow shortages, liquidity declines, and even loss of liquidity.

Not only that, the current difficulty of businesses is the "blockage" of other capital sources such as: corporate bond capital, capital mobilized from customers... Therefore, access to credit capital is a "lifebuoy" for real estate businesses.

Concerns that businesses will have difficulty borrowing capital when Circular 06 takes effect. (Photo: Hoang Ha)

The decline in real estate consumer credit in the first 6 months of 2023 compared to the same period last year has shown that home buyers and real estate investors have difficulty accessing credit or have reduced demand for credit related to the psychology of reduced market confidence.

However, if there is a credit support mechanism, it will help increase purchasing power and increase total demand for the real estate market.

Circular No. 06 will take effect from September 1, which, according to HoREA, contains "concerning" content, adding 4 cases where customers "in need of capital are not allowed to borrow credit".

“The Circular has added “barriers”, making access to credit more difficult than before, because it has increased from 6 to 10 cases in which credit institutions are not allowed to lend.

In particular, clauses 8, 9 and 10 will lead to a situation where some businesses in economic sectors that need to borrow capital, including real estate businesses, home buyers and real estate investors, will find it very difficult to access credit," HoREA is concerned.

In addition, the Association also said that Circular 06 of the State Bank was issued before Resolution 97, so it needs to be considered for amendment so that the State Bank can implement solutions to operate monetary policy proactively, flexibly, and in harmony with a reasonable expansionary fiscal policy...

Proposed amendment

HoREA proposed to amend and supplement a number of regulations. Specifically, Clause 2, Article 1 supplements Clause 8, Article 8 of Circular No. 39/2016/TT-NHNN stipulating that credit institutions are not allowed to lend “to pay for capital contributions, purchase, or receive transfers of capital contributions of limited liability companies or partnerships; contribute capital, purchase, or receive transfers of shares of joint stock companies that are not listed on the stock market or have not registered for trading on the Upcom trading system”.

According to HoREA, this is incorrect, not suitable for reality, and does not ensure consistency and consistency with Clause 2, Article 5 of Decree No. 153/2020/ND-CP.

Clause 2, Article 1 of this Circular stipulates that credit institutions are not allowed to lend “to pay for capital contributions under capital contribution contracts, investment cooperation contracts or business cooperation contracts to implement investment projects that do not meet the conditions for putting into business according to the provisions of law at the time the credit institution decides to lend”.

According to HoREA, this is not consistent and consistent with Clause 2, Article 21 and Article 24 of the Investment Law 2020, which stipulates "investment in the form of capital contribution, share purchase, and capital contribution purchase", while "investment in the form of capital contribution" is a form of "cooperation contract" according to the provisions of the Civil Code 2015.

Clause 9, Article 8 of Circular 39 (amended and supplemented in Clause 2, Article 1 of Circular 06) is also not consistent with Article 55 and Article 57 of the 2014 Law on Real Estate Business, which stipulates that future real estate must meet the conditions for being put into business before being traded and paid for in the purchase, sale, and lease-purchase of future real estate...

In addition, the inadequacy of Clause 2, Article 1 of Circular 06 supplements Clause 10, Article 8 of Circular 39 on the regulation of costs incurred for less than 12 months.

Therefore, the Association proposes to consider extending by 12 months the regulation that credit institutions must comply with the maximum ratio of short-term capital used for medium- and long-term lending until October 1, 2024, instead of the deadline of October 1, 2023, to facilitate credit institutions to implement Resolution 97.

HoREA warns that the 120,000 billion VND package is at risk of being unsold due to high interest rates . It is feared that buyers and renters of social housing will not choose to borrow from the 120,000 billion VND package because the interest rate of up to 8.2%/year is too high, not suitable for the tolerance of low-income people.

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