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Call to remove rate caps on short loans (09/03)
06/08/2010 - 15 Lượt xem
"Keeping a cap on short-term but not on mid- and long-term loans would hinder monetary policy management and distort the market," said Thuy.
Countering concerns that borrowers would be discouraged if banks raise the cost of borrowing, the chairman stated that with the current banking regulations, borrowers suffered more.
Thuy also said that it was hard for banks to comply with the rate cap as the deposit interest rate is capped at 10.5 per cent. Thus, Prime Minister Nguyen Tan Dung had approved the removal of the deposit interest cap and the Governor of the State Bank, Nguyen Van Giau, was working on this issue.
According to several members of the committee, both lending and deposit rates are unreasonably high. The central bank is believed to be aware of this issue but is stuck in legal regulations.
The central bank has ordered its branches to check promotions for deposits (including value, form of promotions and actual interest rates) and fees charged on loans (including types of fees, places and time for collecting fees).
The decision is seen as a move aimed at solving relevant issues while many banks are trying to absorb capital by offering more and more promotions, giving bonus interest rates, cash, gold and other valuable gifts to make the actual interest rate higher than the quoted rate of 10.5 per cent.
And to improve profit margins, banks are also charging more types of fees on loans and increasing the value of fees, pushing the real cost of borrowing to 16-18 per cent.
The State Bank also asked its branches to report over negotiable interest rates for consumer loans made via bank cards and the proportion of negotiable loans over total outstanding loans and bad debts.
All reports must be submitted to the central bank today.
Source: VietNamNet/Viet Nam News
