Lending interest rates have not decreased as declared
Businesses complain that the actual lending interest rates they have to pay are not as low as announced by commercial banks. In fact, the interest rates of 17-19 percent quoted by banks are being applied only to a few clients.
After the State Bank of Vietnam showed its determination to ease the interest rates, a lot of commercial banks have announced that the interest rates applied to production enterprises have reduced to 17-19 percent. Especially, banks have promised to apply the interest rates of 16-18 percent to the enterprises in rural areas and agricultural production, and the enterprises that make products for export.
However, Vu Manh Hung, Chair of the Binh Phuoc provincial Young Entrepreneurs’ Association, Deputy Chair of the Vietnam Livestock Association, has affirmed that local livestock enterprises in the province, which are subject to the banks’ preferential lending programs, still have to borrow money at the interest rate of 19.5 percent.
“Especially, the number of enterprises that can get bank loans can be counted on one’s fingers,” he said.
Also according to Hung, 8 out of every 10 farms have to halt their operation because they cannot afford the overly high lending interest rates. In general, a livestock project needs 30 billion dong in loans and earns some 600 million dong a year. In the past, farmers only had to pay 300 million dong a year for the loans’ interests, which allowed them to make a little profit. However, nowadays, the loan interests alone gobble up the sum of 600 million dong.
Hung went on to say that livestock enterprises can live on the career only if the lending interest rate goes down to 15 percent per annum. “However, we understand that 15 percent is just a dream,” Hung said.
Ho Hoang Bao Quoc, Director of the HCM City-based Hanh Tinh Vang Company, has also confirmed that he has to borrow money at the interest rate of 20.5 percent per annum, and that he has not heard any information from commercial banks about the interest rate reductions.
Other enterprises in HCM City have said that no change with the interest rates has been made so far and that they still have to pay 20-22 percent for loans’ interest rates.
Pham Duy Hung, General Director of the Viet A Bank, has admitted that the 17-19 percent per annum interest rates are being applied only to some cases, where the borrowers are good and loyal clients, while the interest rates still cannot be applied to all clients.
Hung said that his bank once had to mobilize capital from the public at relatively high costs, therefore, it still cannot lend at 17-19 percent right now.
“We are setting up different lending interest rates after considering the input capital costs, the profiles of clients, the risks of the loans,” Hung said.
A manager of a HCM City-based bank has admitted that though his bank quotes the interest rates of 17-19 percent per annum, the bank only can offer the interest rates to several selected clients, or to the export companies which promise to sell foreign currencies to the bank at the exchange rate to be set by the bank.
Believing that it is absolutely feasible to slash the interest rates to 17-19 percent; Trinh Van Tuan, General Director of OCB Bank, has also admitted that the interest rate of 19 percent now just can be applied to the best clients, and that the interest rate of 17 percent or less would become realistic after some more months.
General Director of Maritime Bank, Nguyen Hoang Linh, has said that in the current conditions, banks would bear a hard pressure if easing the interest rates to 17-19 percent.
Linh went on to say that everything remains unpredictable; therefore, the bank still cannot ease the interest rates significantly.
BIDV, the first bank that announced the interest rate reductions, has also admitted that the quoted preferential interest rates are being applied to the enterprises with high credit ratings.
Source: VnExpress
Tags: Vietnam banking industry, Vietnam finance, Vietnam financial, Vietnam interest rates