VietNamNet
Bridge – The decision by the State Bank
on slashing the deposit interest rate ceiling to 9 percent has raised the worry
that this would lend a hand to the black credit to grow.
In
theory, when the deposit interest rates decrease, which cannot bring
considerable profits to depositors any more, they would keep money in coffers
or lend on the black market to get higher profits.
Though
the interest rates have been eased continuously in the last several months, the
credit still has witnessed a minus growth rate so far this year, which has been
blamed on the bad debt, described as the “clot of blood” that causes the cash
flow congestion.
The
State Bank of Vietnam has reportedly suggested establishing a bad debt trade
company with the total capital of 100 trillion dong, which would buy back the
bad debts from banks to rescue businesses. Once getting free from the bad
debts, commercial banks would be able to push lending. If so, businesses would
be able to access bank loans at reasonable costs, which would help them resume
the production.
However,
Dr Vu Viet Ngoan, a well-known economist, said one should not put too much hope
on the State Bank’s suggested bad debt trade company. Ngoan said that this is
just one of the measures to deal with the bad debts, while it would not be able
to settle the problem of the whole banking system.
Dr
Le Dang Doanh has also warned that dealing with the bad debts would be a
complicated process which would take a big sum of money. Therefore, it’s still
unclear if 100 trillion dong is enough to clear the debts.
The
International Monetary Fund (IMF) has estimated that the bad debt settlement
would cost 5-15 percent of GDP, which is really a big sum of money.
Experts
have suggested that the State would contribute 30 percent of capital to the
debt trade company, while the other 70 percent of capital would be sourced from
the commercial banks, with the capital contribution ratios depending on the
debt volumes they want to deal with.
The
outstanding loans grew by minus 0.76 percent in the first five months of the
year, while no sign of high growth rate has been seen for June. It is highly
possible that the 15-17 percent targeted credit growth rate for 2012 is unattainable.
Once
the lending in the official market does not increase, i.e. businesses cannot
access bank loans due to the strict requirements set by the banks, they may
seek capital on the black market.
“If
the interest rates keep decreasing to the levels below the inflation rate,
people would withdraw their deposits from banks and lend to each other to enjoy
higher interest rates,” Doanh has warned.
“I
do not think that this is what we want. I believe that the State Bank would
apply necessary measures to prevent this,” he continued. “It would be better
not to refuse the merger of businesses in order to obtain cheaper capital
sources and access bank loans.”
According
to Nguyen Thi Hong, Director of the Monetary Policies Department under the
State Bank of Vietnam, the State Bank has been adjusting key interest rates in
an effort to ease the lending interest rates, thus helping ease the businesses’
difficulties.
Hong
said that the average lending interest rate in the first five months of the
year dropped sharply by 2-5 percent from that at the beginning of the year.
Source:
VTC
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