At the question and answer session focusing on banking restructuring and interest rates, the Governor for the first time gave the central bank’s ratings for local commercial banks.

Binh said that of the 37 commercial joint-stock banks in the country, eight are small-scale and unhealthy. The others were classified as “very healthy, average, and small-scale but healthy.”

Binh did not elaborate on the health of State-owned banks, however.

Also, he informed the central bank had completed the scheme for banking restructuring for submission to the Government, aiming to clean up the banking system, creating competitiveness and diversifying services.

In particular, the banking restructuring is aimed to have two local banks able to compete with the others in the Southeast Asia, some 10-15 banks capable to serve as the pillar for the entire system and 10 small-scale but healthy banks. Besides, the 1,200 people’s credit funds must also be healthily developed.

“Vietnam is full of small banks with unhealthy finance but lacking banking services,” Binh said. With the current population of 85 million people, the number of 2,500 banks and credit institutions along with 5,500 points of sales is rather low, he analyzed.

As for the interest rates, there were several questions on the high lending rates as well as the deposit rates ceiling at 14%. Binh explained the ceiling deposit rate was stipulated in 2010 when the consumer price index (CPI) target was at 7%.

However, given the inflation volatility from this year’s beginning to August, Binh admitted the ceiling deposit rate still kept at 14% was inflexible and unbeneficial to depositors.

Still, considering the inflation target of below 10% next year approved by the NA, the ceiling rate at 14% is still acceptable.

As for the lending rates, deputy Tran Ngoc Vinh of Haiphong reminded Binh of his promise to pull down the rates to 17-19% in September but the banks still refused to give out loans at these interest rates.

Binh replied healthy manufacturing firms could access lower lending rates. Moreover, the banks can lower the rates to 16% for agricultural or export companies.

Source: SaigonTimes