Though bank interest rates have trended downward parallel to the central bank’s recent move to cap lending at 15 per cent, per year to some priority areas, some banks have squeezed credit growth in the first four months of 2012 fearing bad debts.
Senior economist Dr. Le Xuan Nghia said banks recently extending debt maturity to firms under State Bank guidance were good for firms to repay debts.
“It is now crucial to tackle bad debts and help firms achieve healthy finance to promote lending,’ Nghia asserted, adding that frozen credit could place the economy in big trouble.
Nghia suggested issuing government bonds to tackle bad debts. “With finite capital sources and human resources it is almost impossible to tackle bad debts through using the Debt and Asset Trading Company (DATC) only,” said Nghia.
Economic expert Vo Tri Thanh proposed the State Bank grab bad debts then resell these toxic assets at an appropriate time later as it did in 2001-2002.
Industry experts assumed expanding the scope of firms benefiting from 15 per cent, per year lending rate cap was not unnecessary since four set priority areas (agricultural and rural areas, supporting industries, export production and small- and medium-sized enterprises) cover most firms except those operating in non-priority areas.
Some banks are offering lending rates even below the lending rate cap to good customers such as Eximbank with 14 per cent, per year, but according to its executives finding good customers was hard.
National Financial and Monetary Policy Council member Tran Du Lich said the government needed to create more supportive measures to help firms tide over difficulties parallel to easing lending rates.
“Better credit growth will come once bad debts are treated. If not, the proposed credit growth target of 17 per cent for 2012 is not achievable,” said Lich.
According to State Bank figures, the banking system’s bad debt rate was about 3.3 per cent by the end of 2011 from only 2.14 per cent one year earlier. It slighted inched up to 3.6 per cent by mid-April 2012.