Commercial Banks Call for More Mechanisms to Support Lower Interest Rates | Bank and finance
According to the SBV, at the beginning of September this year, credit institutions exempted, reduced or lowered interest rates for more than 1.13 million customers with a total outstanding balance of more than 1.58 quadrillion of VND; granted loans to 628,662 new customers at a lower interest rate than before the pandemic, for a total of VND 4.46 billion.
From January 23, 2020 to August 31, 2021, the total amount of interest that credit institutions have exempted, reduced or lowered for customers was around VND 26 trillion. In which, the total amount of interest that 16 commercial banks pledged to reduce from July 15 to August 31 was over VND 8.86 trillion, or 43.01% of the commitment.
In addition, credit institutions have restructured the repayment period and kept the debt group unchanged for 215,320 customers, with over 227 trillion VND outstanding. The value of the accumulated debt which was restructured from January 23, 2020 reached approximately 520 trillion VND. In Ho Chi Minh City alone, outstanding restructured and reduced-interest loans to customers at the end of August exceeded 1.61 quadrillion VND, mostly for companies struggling due to the pandemic. of Covid-19.
To continue to support customers and stimulate demand for credit in the last months of the year, in addition to the support programs initiated, many commercial banks have also implemented many additional methods to help customers resume production. and business activities and to resolve some individual needs after relaxed social distancing. For example, BIDV has just launched a package to help small traders get back to business.
As a result, business households and small traders only need to prove their business activities to access all loans, with interest rates of 5.3% per annum. And BIDV will grant a credit card with a limit of up to VND 100 million.
The ACB representative also informed that a source of capital of up to VND 10 trillion with an interest rate of 5% per annum and above was ready to meet the capital needs of individual clients and businesses to restore production and commercial activities. Above all, in the first days of October, business households during disbursements would be further reduced by 0.2% per year.
Not only by supporting businesses, but MSB will also be deploying a set of financial solutions to support clients who are parents by the end of November of this year. Specifically, MSB has a policy of opening credit cards to parents of pupils and students without proving their income and the credit limit based on tuition fees.
Be careful with bad debt
To continue to eliminate capital difficulties for companies, SBV said an interest rate support program of VND 3 trillion is expected to be launched in October this year, equivalent to a loan balance of around 100,000 billion VND.
According to Mr. Nguyen Tuan Anh, director of SBV’s credit department for economic sectors, at present, there is a need for more support packages to share the difficulties and help companies to restore production and Commercial activities. However, there must be a clear and specific mechanism for the policy to be effective in achieving the most important objective of macroeconomic stabilization and inflation control.
In 2009, there was a VND17 trillion package to offset interest rates for businesses. While the policy has had some effect, so far bad debts have yet to be addressed. Therefore, experts said that besides resources, the new mechanism would be the key to rolling out the interest rate support program smoothly and controlling risks, avoiding repeating the same mistake.
The head of a state-owned commercial bank explained that according to current regulations, companies must guarantee the absence of bad debts and have income, profits and collateral to apply for loans. According to this regulation, most businesses will not be eligible for loans, and even if commercial banks want to support them, they cannot lower their lending standards. This entanglement must be resolved by the SBV.
As a result, commercial banks need a clear mechanism to consider lending to businesses in today’s environment. Dr Nguyen Quoc Hung, secretary general of the Association of Vietnamese Banks, said the bank needs the intervention of the authorities to make the policy appropriate, timely and effective. “The government can issue bonds and borrow from the central bank like other countries to have enough resources to support the economy,” suggested Dr Nguyen Quoc Hung.