The State Bank of Viet Nam (SBV)'s new policy to ban banks from lending money to their own securities companies will not impact badly the securities market, according to sector insiders.
Recently, the SBV issued a decree that includes new regulations relating to banks' lending for securities trading activities, one of which requires commercial banks not to lend their own securities companies.
The decree also says that commercial banks will also not be allowed to provide unsecured loans for individuals and organisations for securities trading purposes.
SBV's new policy is aimed to limit banks'loans for securities and encourage the banks to shift their investments into production and trading activities, thus reducing risks for both banks and stock exchange markets, according to experts.
Representatives of many local securities companies said despite the central bank's new policy taking effect in four months, several commercial banks had already stopped providing loans for their own securities companies.
Major commercial joint stock banks such as Asia Commercial Joint Stock Bank (ACB), Export and Import Commercial Joint Stock Bank (Eximbank) and Sai Gon Commercial Joint Stock Bank (Sacombank) said they were cautious about loaning for securities trading.
ACB Deputy Director Bui Tan Tai also said his bank did not intend to promote lending services for securities trading activities though the money limit for this kind of service was still available.
Securities companies, however, said they weren't concerned about the change as it wouldn't have much effect on the stock exchange market.
"This is because mutual lending is well established as a way for commercial banks to provide capital for their securities companies, when they have reached their limit of 20 per cent of their prescribed capital, as set by the central bank," a bank representative said.
Mutual lending would still be permitted under the new regulations, he said.
Commercial banks had also got around the regulations by depositing money at other banks to borrow back for their securities company, he said.