May 10, 2012

Vietnam - Vietnam banks to select borrowers for new lending rate cap


The 15 percent cap on lending interest rates the State Bank of Vietnam (SBV) imposed to aid four preferential sectors was officially applied yesterday, but banks said they have yet to implement the regulation as there are too many borrowers qualified for the low rate.

Borrowers operating in the four sectors subject to the ceiling rate, including the supporting industry, exporting and agriculture sectors, and small- and medium-sized enterprises, are estimated to account for as much as 60 – 70 percent of banks’ total outstanding loans, they said.

Hence, commercial banks said they will have to work together to develop a particular requirement for businesses which are able to access loans at the ceiling rate.

“We cannot let every business from the targeted sectors borrow at 15 percent a year,” they said.

According to a central bank circular, the maximum interest rate slapped on short-term loans in Vietnamese dong will be equal to the maximum deposit interest rate as required by SBV for terms from one month and above, plus3 percentage points a year.

Banks said the 3-percentage point gap between input and output interest rates is too low, so they have to calculate carefully on the loans to offer.

VietBiz24



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