State Bank of Vietnam Governor Nguyen Van Binh has asked commercialbanks to refinance outstanding loans at lower interest rates in a bid tohelp businesses facing difficulties.
Addressing ameeting on July 7, Binh said lenders will be expected to offer borrowersbetter rates effective July 15. Therefore, bankers this week needs toidentify new rates and immediately inform their networks to beginimplementing the adjusted rates.
"We must beresponsible for society as well as protecting our prestige," Binh said."Maintaining high lending rates is offensive to society."
Binh noted that both deposit and lending interest rates had fallensharply in the first six months of the years, but these rates were onlyapplicable to new loans. Meanwhile, businesses still suffered under thehigh rates on older loans, and many were facing insolvency unless theysaw some relief.
According to the central bank, baddebts in Vietnam hit 5.18 billion USD as of April, or 4.14 percentof total outstanding loans, up from 3.06 percent in 2011.
Binh said interest rates on outstanding loans should be reduced to nomore than 15 percent and should gradually stabilise to match new,prevailing interest rates.
In May, the State Banklowered the ceiling on deposit interest rates from 15 to 14 percent peryear. Key lending rates were also lowered, with the refinancing ratereduced from 13 to 12 percent, the discount rate from 11 to 10 percent,and the interbank rate from 14 to 13 percent.
Meanwhile, bankers at the meeting raised concerns about the slow rate ofcredit growth in the first six months of the year. While the annualgrowth rate of the credit market was previously targeted at 15-17percent, most bankers said the more realistic figure was below 10percent.
Vietnam International Bank (VIB) presidentHan Ngoc Vu attributesd the low credit growth to the economic recessionwhich has resulted in low consumer demand and slowed businessproduction.
According to the State Bank's HanoiBranch, credit growth in Hanoi reached just 2.36 percent in the fisthalf of the year, the slowest pace in a decade.-VNA
Addressing ameeting on July 7, Binh said lenders will be expected to offer borrowersbetter rates effective July 15. Therefore, bankers this week needs toidentify new rates and immediately inform their networks to beginimplementing the adjusted rates.
"We must beresponsible for society as well as protecting our prestige," Binh said."Maintaining high lending rates is offensive to society."
Binh noted that both deposit and lending interest rates had fallensharply in the first six months of the years, but these rates were onlyapplicable to new loans. Meanwhile, businesses still suffered under thehigh rates on older loans, and many were facing insolvency unless theysaw some relief.
According to the central bank, baddebts in Vietnam hit 5.18 billion USD as of April, or 4.14 percentof total outstanding loans, up from 3.06 percent in 2011.
Binh said interest rates on outstanding loans should be reduced to nomore than 15 percent and should gradually stabilise to match new,prevailing interest rates.
In May, the State Banklowered the ceiling on deposit interest rates from 15 to 14 percent peryear. Key lending rates were also lowered, with the refinancing ratereduced from 13 to 12 percent, the discount rate from 11 to 10 percent,and the interbank rate from 14 to 13 percent.
Meanwhile, bankers at the meeting raised concerns about the slow rate ofcredit growth in the first six months of the year. While the annualgrowth rate of the credit market was previously targeted at 15-17percent, most bankers said the more realistic figure was below 10percent.
Vietnam International Bank (VIB) presidentHan Ngoc Vu attributesd the low credit growth to the economic recessionwhich has resulted in low consumer demand and slowed businessproduction.
According to the State Bank's HanoiBranch, credit growth in Hanoi reached just 2.36 percent in the fisthalf of the year, the slowest pace in a decade.-VNA
