Sacombank, Techcombank, Gia Dinh and ACB have all raised their lending interest rates by 0.05-0.15%/month. The lending rates are now 0.9-1.15% per month for short-term loans, and 1.2-1.3% per month for medium and long-term loans.

Analysts say that in the weeks just before, and right after Tet, some commercial banks stopped lending due to insufficient VND capital access. Most banks have only just announced they will resume lending, but are loaning far less than before.

Most of the banks are not providing loans to new clients, only providing funds to their usual borrowers. However, some banks, by February 16, had still not recommenced lending, instead waiting for new interest rate policies.

According to Tran Thi Viet Thu, General Director of Gia Dinh Bank, banks need to reconsider their lending interest rate policies, because banks have to mobilize capital at higher costs and have to lend at low rates, which does not yield profit. Mrs. Thu also said that banks have not determined their interest rate policies yet, because they still awaiting the central bank’s most recent policy decisions.

Ho Huu Hanh, Director of the HCM City Branch of the State Bank of Vietnam, has acknowledged that there is a serious shortage of VND, as banks have had to increase the compulsory reserve ratio, as required by the central bank, and arrange capital to purchase compulsory promissory notes.

Mr. Hanh said the central bank’s current priority is reducing inflation and ensuring a high economic growth rate, and, therefore, banks will have to keep a lid on credit.

Foreign currency alternative

An official from a joint stock bank said that not all enterprises can access loans even when they agree to higher interest rates. He said that enterprises will find it even harder to borrow money in the time to come, as the central bank has announced it will inspect credit institutions which have high outstanding loans, and try to tighten real estate and consumer credit.

Analysts have warned that increasing interest rates will certainly affect the production and business of enterprises, especially small and medium sized, thus badly affecting the national economy. Higher interest rates will lead to higher production costs and, resultantly, higher prices.

As enterprises are finding it hard to access VND capital, they have shifted to borrowing foreign currencies and from foreign financial institutions instead.

“Many foreign institutions in Vietnam have profuse capital and offer simple procedures for loans. They are now the preferred choice of many Vietnamese enterprises,” said Nguyen Thi Tranh, General Director of Saigon Co-op Investment and Development Company (SCID).

Source: NLD