HCMC - The HCMC Real Estate Association (HoREA) has proposed the prime minister delay the enforcement of the State Bank of Vietnam's new circular that lowers the percentage of short-term capital used by commercial banks to make medium and long-term loans.

Circular 08/2020, which was issued by the State Bank of Vietnam (SBV) to amend Circular 22/2019, regulates that the proportion of short-term capital used for medium and long-term loans falls to 30% from the previous 34%, with effect from October 1, 2023. But HoREA has proposed reinstating the 34% ratio for a period of 12 months, from October 1, 2023 to October 1, 2024. HoREA argued that the new restrictive regulation of the central bank would significantly affect the dormant real estate sector as the sector will find it more difficult to obtain bank loans for recovery. The SBV said lowering the proportion of short-term capital used to make medium and long-term loans would ensure the safety of the banking system in line with international standards. In the past, the ratio was even higher, at 40% until September 30, 2021, but it fell to 37% from October 1, 2021 to September 30, 2022, and 34% from October 1, 2022 to September 30, 2023. The reduction to 30% is in the final stage of a roadmap established by the central bank.