Businesses nowadays have more opportunities than ever to access low-cost loans. With the 4% interest rate subsidy, businesses can get loans at interest rates of less than 5%, and sometimes 1-2%.

However, the interest rate subsidy scheme is not applied to all businesses. Therefore, it may happen that those who are eligible for preferential loans may get the soft loans for re-lending to other businesses at higher interest rates. The businesses could even deposit the sums of money at banks to get higher interest rates.

The State Bank of Vietnam said that it has anticipated these things and asked commercial banks to consider thoroughly before providing loans under the interest rate subsidy programme.

The Bank for Investment and Development of Vietnam (BIDV), in its instruction about the loaning under the interest rate subsidy programme, addresses control and supervision of subsidised loans. With strict stipulated procedures, BIDV hopes to minimise risks.

Minh Anh, Deputy General Director of VIB Bank, said that improper use of the preferential loans will occur if banks ignore necessary procedures and loosen control.

“If banks strictly follow the loan procedures, no client will be able to make corrupt use of the interest rate subsidy programme to earn profit,” Anh said.

However, Anh believes that commercial banks will follow necessary procedures in order to protect their assets and prestige. In order to get preferential loans, businesses need to have mortgaged assets and accept the strict control of banks after disbursement to ensure that the capital is used for the right purposes.

Meanwhile, Nguyen Mai Huong, Head of the Credit Support and Guarantee Division under OceanBank, also said that banks will not only be cautious when considering whether to provide loans, they will supervise the loans after disbursement.

The State Bank of Vietnam has released a new circular, guiding the implementation of the interest rate subsidy programme, while setting more requirements to be sure that businesses cannot make corrupt use of the programme.

The circular stipulates that businesses must present documents showing the purpose for preferential loans, including invoices of merchandise purchase and sale, and lists of import-export items with the confirmation of involved parties, export records.

The central bank has also asked commercial banks to strengthen control and internal auditing over the subsidised loans. If banks discover signs of corrupt use of the programme to seek profit, they must stop loaning and deal with the cases in accordance with the regulations.

Source: Vietnamnet