From September 1, lending to pay off old loans at other banks in advance is no longer limited to "business purposes" but is also allowed for customers with outstanding loans for buying houses or cars.
The State Bank has just issued Circular 06 amending and supplementing a number of articles of Circular 39/2016 regulating lending activities, with many conditions for easier access to capital. This Circular will take effect from September 1.
In particular, according to Article 8 of the old Circular, borrowing capital to repay loans at other credit institutions will not be allowed, except in cases of early repayment of loans for business activities, with a loan term shorter than the remaining loan term of the old debt and not yet restructured.
However, in the newly issued Circular 06, the limitation of "serving business activities" is no longer mentioned, the remaining two conditions of time limit and not yet implemented structure are kept the same.
Accordingly, banks can lend to customers to repay loans at other banks early for purposes other than business activities, such as home loans and car loans.
With the new regulation, flexibility in choosing a bank will be easier than before. Customers can choose a bank with lower interest rates or more support programs to borrow to optimize cash flow. Previously, if customers wanted to transfer debt between banks, they had to use another asset as collateral to borrow from this bank, before repaying the debt and withdrawing the collateral in the old loan.
In addition to helping customers be more flexible in handling old loans, the new Circular also adds a number of cases where loans are not allowed.
In particular, borrowing money from banks to deposit money will be prohibited. Banks are also not allowed to lend to customers 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 or have not registered for trading on UPCoM.
Borrowing money from a bank to pay for capital contributions under a capital contribution contract, investment cooperation contract or business cooperation contract with a project that does not meet business conditions is also subject to restrictions.
In addition to this content, some other loan conditions are also made simpler.
In lending activities by electronic means, credit institutions are entitled to verify customer information by electronic means (eKYC), national population database, and citizen identification database.
Accordingly, banks are entitled to conclude loan agreements in the form of electronic contracts (previously only paper contracts were accepted) and approve loans by electronic means.
For loans to serve consumer needs, such as loans to buy cars, to buy consumer equipment... customers do not need to have a plan or project. The loan request only requires information on the total capital needed, the purpose of the capital, the time and source of repayment. Particularly for loans to buy houses, build, renovate, receive land use rights transfer, customers still have to supplement the plan and project according to regulations.
Minh Son
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