They complained about the undervaluation of real estate assets mortgaged for loans, which has hindered them from getting big loans.

Meanwhile, banks do not accepts shares, machines and equipment or property rights as collateral for loans. Also, commercial banks block deposits when receiving projects that have been transferred.

Chair of the HCM City Real Estate Association (HOREA) Le Hoang Chau said that the barriers need to be removed as soon as possible.

He pointed out several problems in the State Bank of Vietnam’s (SBV) newly released Circular 06/2023 amending and supplementing some articles of Circular 39/2016 which took effect in early September.

Recently, commercial banks have refused to provide loans to businesses for capital contribution and investment cooperation. In other cases, banks provide loans, but freeze loans at credit institutions and borrowers cannot use the money.

SBV, in Circular 06 and Dispatch 8631 released on November 8, 2023 which explains provisions in Circular 06 related to lending, requests commercial banks to freeze loans at banks.

According to experts, providing loans to make capital contribution to businesses and projects is a common economic activity. Particularly, in the real estate sector, this is considered a "lifesaver" for investors if the projects are still under construction and they cannot meet requirements to mobilize capital from clients (real estate buyers) in accordance with the Law on Real Estate Business.

In this case, receiving capital from partners to develop projects among involved parties is a good solution, provided that the capital receivers use the capital in accordance with  regulations and commit to use the capital for appropriate purposes.

Lawyer Truong Thanh Duc, director of ANVI Law firm, said that the regulations in the circular are ‘unclear’. It is illogical that businesses can sign credit contracts with banks, but cannot use credit.

“How can investors implement projects and fulfill the obligations with capital contributors if they cannot access that money?” Duc said, warning that the regulation may affect business transactions and cause a domino effect to other business and civil relations.

Chau noted that the regulation on blocking loans stipulated in Circular 06 is in line with the Civil Law and Law on Real Estate Business.

Luong Bang