Rate cut does not mean easy money for firms
Addressing a recent meeting, Binh said lenders would offer borrowers better rates as of July 15. Therefore, bankers this week needs to identify new rates and immediately inform their networks to begin implementing the adjusted rates.
“We must be responsible for protecting our prestige as maintaining high lending rates is offensive to society,” Binh said.
Binh noted that both deposit and lending interest rates fell sharply in the first six months of the year, but these rates were only applicable to new loans. In the meantime, businesses still suffered from high rates on old loans, and many were facing insolvency unless they saw some relief.
According to the central bank, bad debts in Vietnam had US$5.18 billion by April, or 4.14 percent of total outstanding loans, up from 3.06 percent in 2011.
Binh said interest rates on outstanding loans should be reduced to no more than 15 percent and should gradually to match new, prevailing interest rates.
In May, the State Bank lowered the ceiling on deposit interest rates from 15 to 14 percent per year. Key lending rates were also lowered, while the refinancing rate dropped from 13 to 12 percent, the discount rate from 11 to 10 percent, and the inter-bank rate from 14 to 13 percent.
Many bankers expressed concern about the slow rate of credit growth in the first six months of the year. With regard to the annual growth of the credit market at 15-17 percent, they said, the more realistic figure would be below 10 percent.
Vietnam International Bank (VIB) president Han Ngo Vu attributed the low credit growth to the economic recession which has led to low consumer demand and a cut in production and business.
According to the State Bank’s Hanoi Branch, credit growth in Hanoi reached just 2.36 percent in the first half of the year, a record low in a decade.