Vietnam has no policy to cap loan rates: report

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Hanoi Times English - 80 month(s) ago 11 readings

Vietnam has no policy to cap loan rates: report

The Hanoitmes - Vietnam's central bank does not have any policy to cap interest rates, Governor Nguyen Van Giau was quoted as saying o­n Friday, responding to talk that the authorities were considering such a cap after a jump in rates.

"There have been opinions o­n this issue but there are no policies yet," Giau told the state-run Vietnam Economic Times newspaper in an interview.

"If there is a surplus in credit supply, it could be done, but now the supply is short so it cannot be imposed," he said.

Market rates have gone as high as 22-27 percent and businesses are complaining, prompting speculation the central bank could impose a ceiling o­n lending rates offered by state-owned banks.

Three fully owned state-run banks plus listed VietinBank and Vietcombank command the bulk of Vietnam's lending market.

The central bank wants to ensure adequate funding for the economy but it is also trying to curb inflation, and to that end it has pushed up policy interest rates and is trying to keep banks' credit growth below 20 percent this year.

Annual consumer price inflation stood at nearly 20 percent in May, the highest since December 2008.

Due to the high rates o­n bank loans, companies have withdrawn deposits from banks for investment purposes, leading to a 2.75 percent fall in dong deposits as of May 23 compared with the end of 2010, Giau told the newspaper.

The fall in corporate deposits amounted to VND156.7 trillion ($7.64 billion), but individuals had put funds worth VND107.3 trillion into banks in the same period, leaving personal deposits 11.84 percent higher than at the end of last year, Giau said.

Vietnam posted credit growth of 6.2 percent as of May 23 against the end of 2010. Lending for agricultural production and the export sector rose 22.2 percent, the governor said. He gave no value for Vietnam's total outstanding loans. ($1=VND20,510)


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