Domestic banks tighten consumer credit, foreign welcome borrowers

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VietStock FI English - 29 month(s) ago 2 readings

Nowadays, when domestic banks tighten consumer credit and say “no” to the individual who borrow money to buy cars or houses, foreign banks have jumped on the bandwagon by offering attractive credit services.

Planning to borrow money to buy a car, Chung came to the Kim Lien branch of Sacombank on Xa Dan Street in Hanoi to ask for a loan. However, she was refused to serve.

An officer of the bank said that the branches of the bank are checking books and they have stopped lending for the last several weeks. The officer also said that she is not sure when the bank would resume the consumer credit.

Chung, who then talked with a friend, whose husband is working for a bank, has realized that Vietnamese banks have to tighten credit to restrict the credit growth rate. Therefore, they have decided to cut consumer loans.

Ngoc Anh and her husband needed a big some of money to buy a land plot. Since she did not have the “red book” (the land use right certificate), she had to ask for a consumer loan with the monthly salaries being the collaterals. However, the banks she contacted did not turn the green light on.

An officer of a bank said that with her current income, she would be able to borrow the sum of money which is triple the monthly income at maximum. As the promised loan is too small, Ngoc Anh has given up the intention to borrow money from banks.

A lot of joint stock banks, which were once pushed up consumer credit, nowadays also dare not to provide loans. Other banks still keep providing loans, but disbursements are all much lower than previously.

As banks now nearly keep the doors closed to clients, people now have to seek other solutions for capital.

Hung also failed to ask for a loan from An Binh Bank, but he still has found a solution for him. After the officer of An Binh bank explained to him that at this moment, the bank only prioritizes to provide loans to support the production and business of enterprises, Hung decided to ask the brother, who is the owner of a business, to come forward and borrow money.

However, Hung could not have to take a “roundabout” to seek capital.

He unexpectedly received an email from the Hong Kong and Shanghai Banking Corporation HSBC which invites him to borrow money with attractive preferences.

The invitation letter says clearly that in the context of the high inflation, Vietnamese banks are tightening credit, because keeping cash is considered a way to help curb the inflation. However, as HSBC uses foreign capital, it still continues providing credit.

The foreign bank has promised to provide all the service packages relating to personal banking.

Not only HSBC, but a lot of other foreign banks have also invited individual clients to borrow money. At ANZ, clients would be able to borrow the sums of money which are equal to 100 percent of the values of the real estate they intend to buy.

Bui Kien Thanh, a well known finance expert, said that he does not think that foreign banks still have profuse capital to lend because they use foreign capital. The banks open branches in Vietnam to mobilize capital in Vietnam, not to use the capital brought from foreign countries. However, they still have capital to lend, because they follow long term strategies on credit development.

Thanh said that unlike domestic banks, they have not disbursed too much money on the real estate market and the stock market; therefore, it is understandable why foreign banks still keep their credit activities in the normal track.

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