State Bank of VN reaffirms 3% lending limit for loans with securities collateral

VNS. 07 Nov 07. The State Bank’s new Directive No 3 therefore reconfirms that loans made for investing in securities against securities collateral may not exceed 3 per cent of a commercial bank’s total outstanding loans by the end of this year.

The restatement of policy follows the Prime Minister’s Directive No23/2007/CT-TTg issued on October 31, a pronouncement given a large share of blame by many stock market analysts for the stock market doldrums.

The policy, while well-designed to limit risky lending practices by banks, dries up a significant source of ready capital for stock market investors and is seen as having a chilling effect on stock prices.

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