RETAIL BANKING | Cesar Tordesillas, Vietnam

Vietnam ease lending rules on property

The State Bank of Viet Nam eased restrictions on lending to the real-estate and some other non-production sectors.

A recent central bank decision requires lenders to ensure credit at reasonable interest rates to secure social welfare and stabilise the economy.

It lifts a virtual ban on lending to property and housing projects that the SBV had imposed last March by mandating that commercial banks' outstanding loans to non-production sectors should not exceed 16 per cent of total loans by year-end.

But the figure remained stubbornly stuck at above 16 per cent since property developers were unable to repay their loans due to the market slump.

The new decision removes the bulk of the property sector from the list of non-production sectors.

Banks can again freely lend to developers building apartments for low-income people and workers in industrial, economic and processing zones.

Another category they can lend to is housing projects that will be completed before 2012. Besides, individuals can obtain mortgages based on their wages to buy or upgrade houses.

Analysts say this is mainly aimed at enabling banks to achieve the 16 per cent ratio.

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