Early 11 April, the State Bank of Vietnam held a press conference on policy amendment with concentration on interest rate and new credit scheme.
Notably, many groups of borrowers could be removed from subjects that are currently discouraged due to the maximum proportion of credit to non-production (16pct of the total outstanding loans).
Some 50pct of real estate loans and 100pct consumption loans except overseas consumption loans may enjoy such exemption, forecast Governor Nguyen Van Binh.
However, securities loans would still be discouraged upon the government’s and state bank’s general guideline since the bank loans are normally short-term whereas stock market would require mid and long-term capital. Also, the Governor forecast the stock market to blossom once after existing economic problems have been tackled, which would therefore not necessarily call for banks’ funds.
Regarding property credit, while the aforementioned 50 percent could enjoy more relaxing loan conditions, other borrowers could be more likely to be funded since the current room of 16pct would see fewer borrowers. For instance, besides home purchase loans, people could be funded to buy houses for speculation, investment, sale and rent.
The relaxation has been taken into serious consideration so as to ensure inflation rate of below 10pct, macroeconomic stability, assistance for businesses and GDP growth, said Binh.
Outstanding credit to property sector currently account for 10pct and below which has remained almost unchanged over recent years. Yet, outstanding loans that are mortgaged by real estate items make up as much as 60pct of the total number.
“Inflation could be tamed and primary targets could be realised, therefore gradual loosening would be conducted. Substantial outstanding credit to real estate would call for immediate solutions, of which the most important task could be housing-related issues given the current huge demand”, he said.
The easing is aimed at boost up the release of property inventories as well as to meet soaring demand and facilitate capital circulation. Moreover, other property-related industries such as cement and steel would then witness more bustling business.
Regarding banking system, property-related bad debts could drop thanks to the policy loosening. “Bad debts reportedly accounted 3.2pct in the beginning of the year and are currently making up some 3.6pct of the total outstanding debts for the time being.
Commercial banks would take initiative in restructuring enterprises’ debts as domestic enterprises have face up to a great deal of obstacles over the recent time due to global market difficulties and large inventories”, said Nguyen Van Binh.
Proportion of credit to discouraged sectors has recently seen a sharp decline, according to the Governor. The percentage as of December 2011 was 11pct and fell to 10pct by 31 March 2012 probably thanks to credit institutions’ further concentration on other manufacturing sectors.