New rule requires savings accounts for budget-home loans

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New rule requires savings accounts for budget-home loans

Saigon Times - 8/16/2016 8:36:04 AM

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The Vietnam Bank for Social Policies (VSPB) has instituted a controversial rule requiring those taking out low-interest loans to buy budget housing to maintain savings accounts with a tenor of at least one year at the bank.

Borrowers will have to place monthly deposits equaling to their monthly loan repayment over a minimum period of 12 months, if they want to be eligible for social housing loans. The deposit and lending rates are the same, at 4.8% a year.

The fresh move of the State-run bank has unnerved many clients as the rule forces them to deposit money and pay debt at the same time. If this is the case, a majority of social housing buyers cannot meet such a requirement given their low incomes.

However, a representative of VSPB, speaking at a press conference on banking operations last Thursday, explained borrowers are actually not required to make monthly payments of both interest and principle and at the same time, place deposits at the bank.

The bank said borrowers would pay interest in the first 12 months and that after that, when they begin repaying principle, they could decide whether or not to continue depositing money at the bank.

VSPB can raise capital from those in need of buying and renting budget homes and offer them preferential interest rates and long loan terms, as long as they have deposited cash at the bank for a certain period of time. This is because the bank wants to have funds available to participate in this social housing program in a sustainable way.

After the VND30-trillion home loan program ended, the Prime Minister permitted VSPB to offer an annual lending rate of 4.8% on August 15. However, the problem is relevant authorities have not been able to determine where funding for the low-interest loan provision program is sourced.

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