New circular on loan with negotiated lending rate
On April 14, 2010, the State Bank of Vietnam issued Circular No. 12/2010/TT-NHNN providing guidance on VND denominated loans with negotiated lending rate. Accordingly the negotiated mechanism will extend to short-term loans, in addition to medium and long term loans. The credit institutions providing loans in VND have to publish the lending interest rate at a reasonable level based on the principle of supply and demand of the capital market, capital demand, and customers' credit; save operation cost and enable the customers to access loans for production and business development, especially in agricultural and rural areas, exporters, small and medium enterprises.
The application of the negotiated interest rate for the short-term loans of the Sate Bank will benefit the borrowers in terms of competitive interest rate and make the market more just and transparent. The parties may negotiate on interest for each disbursement and for the term as well.
Circular 12 took effect from April 14, 2010 and replaces Circular No. 07/2010/TT-NHNN dated February 26, 2010 stipulating VND loans with negotiated lending rate and its implementing documents.
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