Customers still wary about interest rate support package

August 29, 2022 - 08:09
Three months have passed since the Government introduced a special programme providing interest rate support in loans for businesses, but not many are interested in the programme which is contrary to the market expectation that it would help ease the enterprises’ thirst for capital.
TPBank's employee supporting a customer at its transaction office. Photo

Compiled by Mai Hương

Three months have passed since the Government introduced a special programme providing interest rate support in loans for businesses, but not many are interested in the programme. This is contrary to the market expectations that it would help ease enterprises’ thirst for capital.

According to preliminary reports from commercial banks in a conference with the State Bank of Việt Nam (SBV) on Friday, only 550 clients have accessed the programme with total loans amounting to VNĐ4.4 trillion (US$190 million), a very modest number compared to the total support size of VNĐ40 trillion.

The interest support amount reached only VNĐ13.5 billion by the end of August.

On May 20, the Government issued Decree 31/2022/NĐ-CP on interest rate support from the State budget for loans of enterprises, co-operatives and business households. The decree provides a 2-per-cent interest rate support for loans in Vietnamese đồng arising during the period from the effective date of this decree to December 31 next year.

Prior to the decree's introduction, many businesses had reported they lacked capital for production and expansion and were looking forward to the interest rate support package.

However, representatives of commercial banks said the fear of being inspected and audited after borrowing made most customers lose interest in the programme.

General director of TPBank Nguyễn Hưng said only 30 out of 500 eligible clients approached by banks have shown interest but to date, the bank has lent to just three customers with interest rate support.

“Many customers worry that the amount of interest support is not high but the loan settlement and audit later will be difficult,” Hưng said.

TPBank was allocated the support target of VNĐ700 billion but Hưng worried that under the current situation, the bank could not disburse it all.

A representative of Military Bank also reported only one customer with a total outstanding loan of VNĐ400 billion requested the support, equivalent to an interest support amount of VNĐ2.5 billion.

Besides, Nguyễn Trần Mạnh Trung, Vietinbank’s deputy general director, said many customers are multi-industry businesses, complicating the bank’s work in separating costs, especially fixed costs and determining the loan levels. Also, the current regulations do not have specific instructions on determining the resilience of customers (ability to recover) in the long support period, which easily leads to different applications among banks.

"The criteria for determining the enterprise’s resilience set by commercial banks are not consistent which easily leads to disagreement from the inspectors, affecting the ability to settle the support cost later," Trung said.

Meanwhile, Agribank said 96 per cent of the bank's customers are individuals in rural areas. So, in order to facilitate and simplify procedures for individual customers to borrow money, Agribank has a small-scale lending mechanism with a limit of no more than VNĐ300 million for each client with a term of no longer than three years.

Therefore, many credit contracts signed before January 1, 2022 are not eligible for the interest rate support due to the requirements that business households without business registration certificates and individual customers with loans of less than VNĐ300 million are not eligible for the support.


Banks have suggested that market regulators consider expanding the beneficiaries of the programme, including business households without business registration certificates as they are large and in dire need of capital.

They also asked the inspection, audit and state management agencies to provide detailed guidelines on regulations involving invoices and documents stating the purpose of capital usage for customers.

For the lending contracts signed since January 1, 2022 and in the process of completing the application, banks suggested SBV consider allowing credit institutions to make additional statistics and accounting for interest rate support for these customers.

From the management agencies, a representative of the Ministry of Planning and Investment said the law requires a business household must have a business registration certificate, otherwise it will not be supported to ensure fairness and transparency with other households.

Meanwhile, Governor of the State Bank of Việt Nam Nguyễn Thị Hồng requested commercial banks coordinate with customers to review contracted loans and disbursed from January 1, 2022 which are eligible for the support, proactively identify difficulties and quick resolutions.

Hồng also said this week, the State Bank will announce the credit growth for the rest of this year and it will propose the Government to report to the National Assembly on difficulties and problems arising during the implementation process, as well as propose solutions to speed up the programme.

Bond coupon rate accelerates

The cost of raising capital for enterprises in the bond market is gradually rising in line with savings interest rate to attract investors.

According to the weekly bond market report of the Vietnam Bond Market Association (VBMA), as of August 12, there were about six bond issuances in the month with a total value of about VNĐ2.2 trillion, mainly from the banking group.

Notably, Vietcombank issued 8-year bonds worth VNĐ1.5 trillion with floating interest rates, calculated based on the average 12-month personal savings interest rates of four state-owned banks plus a margin of approximately 0.9 per cent per year, and after the next 3 years with a margin of about 2.57 per cent per year.

With the current savings interest rate of about 5.6 per cent per annum, Vietcombank has to mobilise long-term capital around 6.5 per cent per year, and more than 8.1 per cent later.

Currently, Viet Capital Bank is offering 7-year bonds of more than VNĐ980 billion with a an interest rate of 8.6 per cent per year, paying interest every 12 months.

Masan Group has also approved the plan to issue bonds worth VNĐ700 billion with a maximum term of five years and interest rate of 9.5 per cent per year for the first two periods and floating interest in later periods.

In the past two months, the corporate bond market has been the playground of financial institutions. According to VBMA, there were about 22 bond issuances in July with a value of VNĐ18.7 trillion, led by commercial banks with an average interest rate of 5.91 per cent per year.

According to FiinGroup's corporate bond market update early this month, bond coupon rates issued by credit institutions in July fluctuated around 4.3-7.6 per cent, a remarkably increase compared to the average interest rate of 4.35 per cent in the first half.

Besides, issuers are also gradually increasing the bond term. In July, banks issued bonds with the average term of about five years, significantly longer than the average of 3.4 years in the first half of this year. — VNS