HA NOI — The State Bank of Viet Nam might remove a cap being put on the deposit interest rate during June or July this year if commercial bank liquidity improved, a forum heard.
At the event, held by the Ministry of Planning and Investment in the capital on Monday, participants were told that the ceiling interest rate was considered an instrument to help the central bank control monetary policies.
Last Wednesday, the central bank decided to lower the deposit interest rate from 13 per cent to 12 per cent per year in a move to help businesses access credit more easily.
According to the State Bank's earlier announcement, it would continue lowering the deposit interest rate by one percentage point every quarter with the aim of bringing the rate to 10 per cent by the year-end.
However, participants said the State Bank should put a cap on all commercial bank lending interest rates instead of the existing cap on the deposit interest rate.
Attendants said current State Bank policies were administrative and temporary only, including forex market stabilisation, the lending interest rate reduction and credit growth rate allocation.
Senior economist Vu Dinh Anh said the State Bank should continue maintaining a cap on the deposit interest rate until the market became more stable.
Meanwhile, Truong Dinh Tuyen, former Minister of Trade, said the State Bank should put the cap on both deposit and lending interest rates if the central bank still wanted to use such policies.
However, Trinh Quang Anh, a representative from Maritime Bank, said that a cap on lending interest rates might cause the situation more complications as the central bank was unable to force banks to offer loans with low interest rates.
Experts said the existing challenges domestic banks facing related to low liquidity caused by bad debts and loans made to the real estate sector.
The slump in the property market was blamed for the bad debts, which in turn, led to borrower inability to pay back loans.
Unable to collect loans from the real estate sector, alongside the central bank's tightened monetary policies to curb inflation, banks were hesitant to offer loans with low interest rates.
Stagnation in the domestic real estate market was forecast to last for the next two to three years, the forum was told.
In the past months, many businesses, especially small- and medium-sized enterprises, complained about their inability to access bank loans.
According to the SBV, bad debts worth about 6 per cent of total outstanding loans belong to the nine weakest banks.
At the monthly Government meeting in Ha Noi last month, State Bank Governor Nguyen Van Binh said Viet Nam now had nine poorly performing credit institutions and banks that accounted for 10 per cent of market shares. These banks were now being supervised for purposes of restructuring. — VNS
More banks cut lending interest rates
Ha Noi — Maritime Bank will reserve about VND2 trillion (US$95.3 million) at preferential lending interest rates ranging from 16 to 18 per cent per year for small- and medium-sized enterprises (SMEs) until the end of May.
Such firms will include those involved in seafood processing, fertilisers, chemicals, pharmaceuticals, heath care equipment, rubber and plastic trading and production.
In particular, the agricultural sector will enjoy VND5 trillion ($238 million) at a lending interest rate of only 15 per cent per year.
Meanwhile, Sai Gon-Ha Noi Bank (SHB) will lend VND5 trillion for SMEs at a rate of 15 per cent per year to help SMEs overcome difficulties due to the shortage of loans.
Sacombank will offer VND1 trillion ($47.6 million) at a 12 per cent per year over twelve months to households and family-run businesses operating in the agricultural, forestry and fishery industries. — VNS