Establishing a new interest rate level: Reducing pressure on businesses
(Baonghean) - After a long period of tension over sky-high interest rates causing difficulties and stagnation for businesses and the entire economy, in the first months of 2012, good news has come to businesses and people when major banks have announced a reduction in lending interest rates...
(Baonghean) - After a long period of tension over sky-high interest rates causing difficulties and stagnation for businesses and the entire economy, in the first months of 2012, good news has come to businesses and people when major banks have announced a reduction in lending interest rates...
DayOn February 20, 2012, the Joint Stock Commercial Bank for Foreign Trade of Vietnam, Vinh Branch, issued Decision No. 106 on adjusting VND lending interest rates. Accordingly, the interest rate for short-term loans is 17%/year, medium and long-term loans is 18.5%/year. The preferential short-term lending interest rate for rural agriculture (including families): 15.5%, export loans: 15.5%/year; for export with payment conditions through the Bank for Foreign Trade: 14.5%/year. Medium and long-term loans: 17.6%/year. Interest rate for loans for capital needs for living: 17%/year...
Businesses expect bank interest rates to continue to fall further.
Ms. Le Thi Hue Anh - Deputy Director of Joint Stock Commercial Bank for Foreign Trade of Vietnam - Vinh Branch said: Currently, the total outstanding debt of the branch is over 2,000 billion VND, all of which are entitled to lower interest rates because the branch applies a floating interest rate mechanism, with lending interest rates from 14.5 - 18.5%/year. Thanks to the abundant mobilized capital of over 3,827 billion VND, we are able to ensure the supply of capital with low interest rates for all subjects. That is something that not every bank can do, especially at a time when many banks are facing liquidity difficulties like now.
Implementing the direction of the Vietnam Bank for Agriculture and Rural Development on the regulation of VND lending interest rates, on February 22, 2012, the Agricultural Bank of Nghe An province directed all type 3 branches in the province to consider the interest rate framework prescribed by the Vietnam Bank for Agriculture, and at the same time, based on the creditworthiness and potential of customers to apply appropriate interest rates for all subjects, from 15.5% - 21.5%. Accordingly, customers classified as A according to the customer classification criteria prescribed by the Vietnam Bank for Agriculture
Mr. Phan Hoang Vuong - Director of Nghe An Provincial Agricultural Bank said: The Agricultural Bank system publicly lists lending interest rates for each customer group to ensure the bank's customer rights and policies, regularly checks the strict implementation of lending at the prescribed interest rates. Reducing lending interest rates is the sharing of financial benefits of the Agricultural Bank with traditional customers, mainly production households and enterprises in agricultural and rural areas, creating conditions for these units to access loan capital. In order to effectively implement lending, Nghe An Branch of the Agricultural Bank has developed specific lending programs according to each production and business program of each field, tree, animal, and specialized agricultural production area.
The Investment and Development Bank, Nghe An Branch, is always the leading unit in implementing the Government's monetary policy, aiming to stabilize the macro-economy, curb inflation, and remove difficulties for businesses. Since the beginning of February 2012, the Investment Bank system has reduced lending interest rates, with import-export customers at 15.5%/year, customers in the group of well-classified enterprises at 17%/year (short term), and 17.5%/year (medium and long term), production customers at 17.5%/year, consumption at 18-19%/year... Up to now, the Investment and Development Bank, Nghe An Branch has a total outstanding debt of 2,700 billion VND, mainly for corporate customers and individual businesses, consumer customers only account for 3-4%. Most customers are able to borrow capital at 17-17.5%/year.
Mr. Bui Thanh Chung - General Director of Vietnam - Laos Economic Cooperation Investment Joint Stock Company shared: "Lower bank interest rates are a good sign for businesses, because most businesses depend on bank loans to serve production and business. As a unit specializing in import-export and domestic business, often needing a large amount of capital, the interest rate issue affects competitiveness.
In the first and second quarters of 2011, the company's monthly interest payments on bank loans averaged 1.1 billion VND, making us extremely miserable. In August and September 2011, the company borrowed from the State Commercial Bank at an interest rate of 19.5%/year and from the Joint Stock Commercial Bank at 21%/year. Now the export loan interest rate is 16.5%/year and the domestic business loan is 17.5%/year, which has reduced by 2% - 3%/year. Although the interest rate has decreased compared to the previous period, 16.5%, 17.5%/year is still high for manufacturing and business enterprises. We hope that the interest rate will continue to decrease further so that we can turn things around."
Mr. Thai Dai Phong - Director of Duc Phong Company Limited confided: "The loan interest rate of 16%/year is still high for businesses. Input costs are high but businesses cannot push up the product cost structure, because the high price structure of goods will make it difficult to compete in the market, goods cannot be consumed, stagnant, in stock, making it even more difficult for businesses. If any business structures the interest rate of 10% - 15%, it is only enough to cover the interest rate, but if the interest rate is 5%, it means a loss. In my opinion, the bank interest rate must fall below 10% for businesses to make a profit."
Vinh International Commercial Joint Stock Bank (VIB) has also joined in reducing lending interest rates for customers, with an average interest rate 1.5% lower per year than usual. This is also the first commercial joint stock bank to announce a reduction in interest rates. Thus, although this is only the first step in the roadmap for interest rate reduction of banks, it has created a positive signal for businesses and the economy, moving forward to implement further interest rate reductions according to the direction of the State Bank of Vietnam.
Quynh Lan
