Vietnam central bank support bank liquidity through conditional loans

Small banks would gain access to refinancing loans from the State Bank of Vietnam, provided that they committed to reduce their outstanding credits and promptly collect loans that are suspected to be bad debts.

In case commercial banks fail to keep their commitments, they will have to sell assets or shares to pay off loans from the central bank. As a result, local lenders not only limited offering loans but also focusing on debt collections to reduce the outstanding loans, especially in non-production sectors.

Many enterprises decided to retain profits and persuade shareholders to reinvest dividends to overcome current difficulties. Many are reported to “shake hands” with commercial banks in finding partners to sell the projects in an attempt to repay due debts.

The central bank previously offered refinancing loans to support liquidity for small lenders with VND1-3 trillion each when the interbank interest rates climbed to 30-40% p.a., the online newspaper Saigon Dau Tu Tai Chinh said.

Source StoxPlus

Tags: Vietnam banking industry, Vietnam finance, Vietnam financial

Posted by VBN on Nov 4 2011. Filed under Banking-Finance. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry