Upon developing the government’s policy on subsidising interest rates, many banks have built capital disbursement plans with a total capital of hundreds of trillions of dongs. After nearly three weeks from the introduction of the government policy, the number of applicants for interest rate subsidisation has strongly increased in a bid to snap up good opportunities to borrow low-cost loans. Meanwhile, banks have asked their credit officers to closely watch eligibilities for the government’s 4% interest rate subsidisation programme.
According to Vietnam Export and Import Commercial Joint Stock Bank (Eximbank), after over two weeks of implementing the government’s policy, the bank has received over 1,000 applications for interest-rate-subsidised loans from clients. Eximbank agreed to lend 2.030 trillion dong and by February 18 disbursed 978 billion dong.
However, vice general director of a bank said that while lending, under the government’s subsidising interest rates, the bank has faced various problems, mostly because clients want to know whether they are eligible to the 4%-subsidised-interest-rate loans. Banks have widely publicised regulations on eligibility and ineligibility of the borrowers for availing subsidised-interest-rate loans under Circular 02. However, this official said that banks themselves have various questions before deciding eligible borrowers. Thus, many questions still need to be answered by the State Bank of Vietnam.
Therefore, although the number of subsidised-interest-rate credit applications sharply increased in the first weeks of realising the government’s subsidising interest rate policy, only a few credit contracts were signed. Additionally, credit disbursement is also very slow and banks’ credit growth remains modest. For example, in Asia Commercial Bank (ACB), in the first two weeks of February, the registered credit amount totalled 1.5 trillion dong. However, the bank agreed to lend businesses over one trillion dong and the amount of disbursed capital to businesses reached only several hundreds of billions of dongs. According to ACB, when the market is going through difficult times, the commodities consumption channel remains stuck because consumers further tighten their spending, however low lending interest rates are, businesses remain afraid of borrowing loans. On the other hands, amidst the current market conditions, banks cannot relax their credit conditions. On the contrary, banks more closely watch borrowers in order to avoid possible risks.
Viet A Bank’s general director Pham Duy Hung said that the bank has received a relatively large number of applications for borrowing subsidised-interest-rate loans in the first three months of February. Still, by February 19, the disbursed amount at Viet A was modest. That was because many businesses remain indifferent to bank loans. Meanwhile, those who want to access low-interest-rate loans fail to meet the bank’s requirements under Circular 02.
In a bid to minimise risks and assist clients to access low-cost capital, some banks have signed contracts with Vietnam Development Bank (VDB) to guarantee businesses’ borrowing loans. The guaranteed borrowers are businesses from different economic sectors having a maximum chartered capital of 20 billion dong and employing 500 people. The maximum guaranteed amount is 100% of principals and interest under credit contracts signed between the guaranteed side and VDB.
Nguyen Quang Dung, VDB’s general director, said that VDB in cooperation with the commercial banks will supervise businesses’ capital usage. In case of any misuse of loans, VDB will deny loan guarantee.
Ho Huu Hanh, director of the central bank’s HCM City arm, said that HCM City-based banks have seen positive credit growth since Circular2was issued. However, Hanh admitted that with the current market situation, capital disbursement has not increased sharply yet. “Banks should more closely watch credit conditions otherwise banks themselves will have to suffer from bad consequences,” emphasized Hanh.