The State Bank of Vietnam has issued Circular 37 regulating special lending. Accordingly, the State Bank lends from the source of money from performing the central bank’s function of issuing money in cases of lending to pay deposits to depositors in the event of a run on commercial banks, cooperative banks, people’s credit funds, and microfinance institutions (collectively referred to as credit institutions). For specifically controlled credit institutions, special lending is used to implement the approved recovery plan. For specifically controlled commercial banks, special lending is used to implement the approved mandatory transfer plan.
The State Bank lends specially to credit institutions in the event of a run. |
The Vietnam Cooperative Bank lends specially to people’s credit funds in cases of paying deposits to depositors when there is a run on people’s credit funds; with specifically controlled people’s credit funds from the fund for ensuring the safety of the people’s credit fund system at an interest rate of 0% per year to implement the approved recovery plan.
For special lending in the event of a run on credit institutions, the special borrower shall use the special loan from the State Bank to pay deposits in VND to individual depositors only. The use of special loans to pay deposits of other subjects shall be decided by the Governor of the State Bank in each specific case of a credit institution.
The interest rate for special lending and special lending extension is the refinancing interest rate in the form of secured lending by pledging securities on the disbursement date and the special lending extension date. The overdue interest rate is 130% of the latest in-term special lending interest rate for the special loan. The interest rate is not applicable to overdue interest payments.
Ngoc Mai
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