VietNamNet Bridge – Eximbank
has shocked other bankers and businesses when announcing the credit program
which offers to lend to businesses at the surprisingly low interest rate of 7
percent per annum. However, the super-cheap capital package has raised doubts
among businesses.
7 percent or 13 percent per annum?
Thanh Nien has cited the latest report by the State Bank
of Vietnam, reporting that the current lending interest rates are between 14
and 16.5 percent on the market. The lowest interest rates are now 16-18 percent
for medium and long term loans, and 12 percent for short term.
While a lot of businesses complain that they cannot access
the loans at the low interest rate of 12 percent per annum, Eximbank has
unexpectedly announced the credit packages with the reference interest rate of
7 percent per annum.
Those, who join the program, would have to sign a
contract, committing to bear the exchange rate fluctuation of 3 percent at
maximum (in case the dollar price increases by 3 percent by the end of the
year). In case the exchange gap is higher than 3 percent (the dollar price
increases by more than 3 percent), Eximbank would bear the excessive increase.
Eximbank has reported that 1200 billion dong worth of
capital of the program has been disbursed just within a week.
Similarly, ACB has reportedly disbursed 2 trillion dong
under the program of providing credit packages with the dong interest rate of 8
percent. With the packages, borrowers would have to bear the exchange rate
fluctuation risks, if they occur.
However, Lao dong has quoted its sources as saying that
the announced low interest rates turn out to be relatively high. As the
interest rate has been set up at 7 percent per annum, borrowers would have to
pay the interest rate of 3.5 percent for six month loan.
If counting on the exchange rate fluctuation of 3
percent, borrowers would have to pay 3.5 + 3 percent in total to the banks,
which means 13 percent per annum. In case clients want longer term loans, the
interest rates they have to pay would be even higher than 13 percent.
Eximbank’s General Director Truong Van Phuoc said on Tien
phong that in order to obtain low cost capital, Eximbank has converted its
capital in foreign currencies into dong to lend in dong. Phuoc has also pointed
out that the above said way of calculation is not reasonable. In case the
dollar price keeps stable and does not increase, borrowers would bear the low
interest rate of 7 percent only. This means that in case the dong/dollar
exchange rate keeps stable, the credit program would benefit borrowers.
Bankers and experts have different opinions about the
move of Eximbank.
Dr Le Tham Duong from the HCM City Banking University has
raised a question why the bank does not provide dollar loans to businesses at
the interest rates of 6-6.5 percent, but it has to convert dollars into dong to
lend in dong at the interest rate of 7 percent.
And Duong has come to a conclusion that by doing this,
the bank has been trying to dodge the laws to lend in dollars. Under the
current regulations, borrowers have to meet a lot of requirements to be
eligible for borrowing in dollars. Therefore, banks and businesses need to
apply some “trifling skills” to be able to access low-cost bank loans.
While some analysts have warned that the credit packages
of Eximbank would put pressure on the dong/dollar exchange rate, because banks
would have to buy dollars when the credit contracts fall due, others have
affirmed that the profuse dollar supply would help keep the exchange rate
stabilized.
C. V
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