In an effort to implement the Government monetary policies to restrict lending and tighten monetary policies, on 24 March 2011, the State Bank of Vietnam (SBV) issued Circular No. 07/2011/TT-NHNN (Circular 07) which restricts banks from lending in foreign currency in Vietnam.
Banks include foreign bank branches.
Cases where banks may lend in foreign currency
Circular 07 allows banks to lend in foreign currency only in the following cases:
In the above cases, borrowers must demonstrate they will have sufficient foreign currency to repay such loans for their business. This is a new requirement that many borrowers will be unable to meet. It is also the first time exporters are targeted.
Outside of the above purposes, approval from the SBV is required.
For inquiries related to this Legal Update, please contact:
Dao Nguyen ( )
Jim Dao ( )
Thinh Dan ( )
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