New credit policy to encourage social housing, industrial park development

View of a social housing project in Hà Nội. The credit risk-weighted (CRW) indicator for loans to buy social houses and houses under Government’s support programmes and projects will be reduced by a half to a maximum of 50 per cent. Photo vneconomy.vn

HÀ NỘI — The State Bank of Vietnam (SBV) will adjust down credit risk-weighted (CRW) indicators for loans for social housing and industrial park projects to encourage the development of realty segments.

The new policy under Circular No. 22/2023/TT-NHNN that amends and supplements a number of articles of Circular 41/2016/TT-NHNN regulating capital adequacy ratios for banks and foreign bank branches, will be effective from July 1, 2024.

According to the newly-issued circular, the CRW for loans to buy social houses and houses under the Government’s support programmes and projects will be reduced by half to a maximum of 50 per cent.

The circular also regulates the loan-to-value (LTV) ratio will be also adjusted to 100 per cent or more and the debt-service coverage ratio (DSCR) will be above 35 per cent.

The new circular adjusts down the CRW for loans to finance industrial park projects from 200 per cent to 160 per cent.

For loans serving agricultural and rural development according to Government regulations, the new circular adds a CRW of 50 per cent.

Credit institutions, which are mandatory transferees of other poor-performed credit institutions according to the Government’s approved mandatory transfer plans, will be allowed to apply a CRW of zero per cent for loans, guarantees and deposits at the mandatorily transferred credit institutions.

The amendments and supplements in the new circular are expected to encourage credit institutions to promote the development of loans for social housing and housing projects under the Government's support programmes and projects. At the same time, it contributes to solving difficulties and promoting the real estate market to develop safely, healthily and sustainably.

According to experts, the support policy will positively affect credit institutions' lending to individual customers who buy social housing and housing for low-income people in the near future.