Many businesses have recently scrambled to borrow bank loans in US dollars as there are only around 40 days left until a new regulation on restricting lending in foreign currencies comes into effect.

Commercial banks are only allowed to offer loans in US dollars to borrowers who can prove that they have an adequate source of revenue in foreign currency from their business and manufacturing operations to clear the loans, according to the State Bank of Vietnam’s Circular No 3, set to take effect on May 2.

Businesses failing to meet the requirement can only access bank loans if they have the particular approval from the central bank, the rule stipulates.

The regulation has ignited a furor as businesses have rushed to borrow the greenback over the last few days, Phap Luat Thanh Pho reported.

Dang Quoc Tien, deputy CEO of the Military Bank, confirmed the phenomenon, but added that borrowers of this kind only account for 5 percent of the bank’s total offered loans.

“Since terms for US dollar loans are only around six to nine months, those with long-term business plans have to consider another solution,” he said.

An executive of a bank said another reason is that the interest lending rate for loans in US dollars is only 5 to 7 percent a year, while the figures are as high as 18 percent with the dong.

Meanwhile, Doctor Nguyen Duc Thanh of the Hanoi-based National University of Vietnam said the tightened policy on foreign currency loans can drive businesses without access to bank loans to borrow from those who have large sources of the greenback.

“Borrowing loans from lenders other than credit institutions is risky,” he warned.

“Moreover, it can create an unofficial lending market outside the banks.”

However, Tien of Military Bank stated that a business is unlikely to lend US dollars to others, since this is against the law, and subject to strict penalty.

In his opinion, however, Nguyen Hoang Minh, deputy director of the central bank’s branch in HCMC, said things will not get complicated.

“Those failing to meet requirements for bank loans can still buy the greenback,” he said.