Governor of the State Bank of Vietnam: "No interest rate adjustment at the present time"
In the past few days, some banks have mobilized funds exceeding the 14% interest rate ceiling. Many public opinions believe that there will be interest rate adjustments such as raising the deposit interest rate ceiling, applying a lending interest rate ceiling, raising the rediscount interest rate...
In the past few days, some banks have mobilized funds exceeding the 14% interest rate ceiling. Many public opinions believe that there will be interest rate adjustments such as raising the deposit interest rate ceiling, applying a lending interest rate ceiling, raising the rediscount interest rate...
However, in an interview with the press on the afternoon of May 26, State Bank Governor Nguyen Van Giau affirmed that there is no policy to adjust interest rates at this time.
No ceiling on loan interest rates
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“There have been some opinions about this issue, but I affirm that this is not the policy of the State Bank and the State Bank has not made any adjustments to lending interest rates or mobilizing VND,” the Governor said.
Many people think that the regulation of lending interest rate ceiling is easy to manage, if commercial banks lend at high rates, customers will complain, but in reality, life is not that simple.
The Governor explained that controlling lending interest rates seems good, and it seems to make society feel secure, but the consequence is that credit demand is higher than supply, and if it is capped, it will be unfeasible and risky. When people bribe each other, it can lead to leniency and loosening of credit conditions. The consequence is that not only is that bank at risk, but it also causes damage to the entire system.
Resolutely handle banks that exceed the 14% ceiling
Currently, many banks have mobilized interest rates exceeding the ceiling of 14% and many businesses have to borrow at an interest rate of 23%. Therefore, in recent days, there has been a lot of information suggesting that mobilization interest rates should be adjusted to suit the current situation. However, Governor Nguyen Van Giau said that interest rate adjustment must be based on macroeconomic signals. In fact, at the end of April, the State Bank considered it when it saw world prices fluctuate. However, prices are now gradually decreasing, and current political instability in the world is showing a downward trend, so it is difficult to push prices higher.
The Governor believes that the macro conditions are improving, inflation is decreasing, so why should we raise the ceiling on deposit interest rates? Will the inflation rate for the whole year reach 18% or not, but we propose to raise deposit interest rates to 18%. We should not demand positive real interest rates at this time, but we should only aim for that goal. When the market expects better policies and inflation to decrease, those who propose to increase interest rates need to review their responsibility to society and the country.
For banks that violate the ceiling on deposit interest rates, the Governor said that they must be strictly handled and disciplined, and the State Bank will not be lenient with this behavior. If the State Bank discovers any commercial bank branches that violate the ceiling, the branch director will be disciplined, and even considered for suspension of operations of that branch.
The Governor emphasized that when the country is in difficulty, we must share, do not use high inflation as an excuse to disrupt the market and negatively affect public opinion. In the future, the State Bank will closely cooperate with the police and the press to detect, investigate and promptly handle the above violations.
“Currently, the State Bank is focusing on handling a case of interest rate violation in Ho Chi Minh City. When it is finished, we will make it public,” said the Governor.
Residential deposits increase
The Governor said that as of May 23, compared to the end of 2010, the growth rate of capital mobilization in the entire banking system increased by 1.48%. Of which, the rate of capital mobilization in VND decreased by 2.75% but the rate of foreign currency mobilization increased by 18.84%.
Mobilized capital in VND decreased, but mainly in the economic organization sector with an absolute amount of 156,700 billion VND. "We believe that when interest rates increase, they always withdraw money for production and business. This is completely healthy, because thanks to that, production costs decrease, economic liquidity is improved; at the same time, it also contributes to reducing the money expansion coefficient in the economy," he said.
In contrast, residential deposits increased by 11.84%; of which, VND increased by 107,300 billion VND, equivalent to 11.39% and foreign currency deposits increased by 8.63%.
The Governor affirmed that the policies to reduce aggregate demand and the management solutions on interest rates and exchange rates are having a positive effect. This is reflected in the flow of deposits from the population into the banking system. Imagine if the above amount of 107,300 billion VND continues to be outside the banking system, how it will negatively affect the prices of goods.
Another important figure is that as of May 23, 2011 compared to April 30, 2011, foreign currency deposits of residents decreased by 2.89%, which shows that a part of the population has sold foreign currency to banks.
The decrease in economic organization deposits increases liquidity for the economy, while residential deposits increase, showing that market developments have been and are going in the right direction of the Government's management.
Also compared to the end of 2010, as of May 23, 2011, total outstanding credit increased by 6.2%. Of which, VND increased by 2.59%, foreign currency credit increased by 18.9%. The net increase in credit volume for the economy in nearly 5 months reached 135,800 billion VND, equivalent to about 33% compared to the expected credit volume for the whole year. This increase is reasonable and within control.
The Governor also said that according to Resolution 11 of the Government, credit must be focused on the production sector, especially lending to agriculture - rural areas and exports. Currently, credit growth in this sector is about 22.2%, which is more than 3.5 times higher than the general credit growth rate for the whole economy of 6.2%.
Meanwhile, in terms of credit structure, the proportion of loans to the non-production sector has decreased by 1.92% compared to 18.87% at the end of 2010. Thus, the current non-production credit structure is 16.95% and compared to the target of 16% at the end of 2011, I think this target will be achieved.
As of May 23, 2011, there are some credit institutions that still have high credit growth rates, for example: Western Bank 24%, Vietnam Commercial Bank 26%. The Governor said that he has directed the inspection of these two banks.
According to Vietnam+
