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Credit market sees weak flicker of hope for interest rate reductions
The fact that the Bank for Investment and Development of Vietnam BIDV announced the interest rate reductions for some subjects of lenders, has sparked a hope that the market interest rates begin decreasing.
BIDV on December 15 announced the interest rate reduction to 14-14.5 percent per annum applied to the loans to fund exports and the loans to the agricultural sector, small and medium enterprises and the enterprises that have to settle with the consequences of the floods and typhoons.
The interest rate reductions are mostly applied to short term loans (less than 3 months) and the four priority subjects of lenders. The enterprises can enjoy the lending interest rates lower by 0.5 percent than the current average market interest rates
As for the loans to fund export, the maximum lending interest rate is 5 percent per annum. Meanwhile, the interest rate of 15.5 percent at maximum will be applied to the enterprises in agriculture and rural development. The lower interest rate of 14.5 percent would be reserved for the enterprises that have to settle the consequences of the floods the typhoons.
This is for the fifth time in the last four months of 2011; BIDV eases the lending dong interest rate. After that, the interest arte has decreased from 20 percent to 14.5 percent. Besides, BIDV also runs a credit program, under which 5 trillion dong has been disbursed to support the export deals. The beneficiaries of the program can enjoy the interest rate which is 2 percent lower than the current market interest rate.
As such, a lot of enterprises would be able to access the cheap capital of BIDV and enjoy the interest arte of 13.5 percent, which is even lower than the current ceiling deposit interest rate of 14 percent stipulated by the State bank of Vietnam.
The move by BIDV is believed to trigger a new movement of slashing lending interest rates of other commercial banks. Some bankers have revealed that they are also considering slashing interest rates. Once G12, the group of the most powerful banks in Vietnam, which hold 80 percent of the credit market share, decided to ease interest rates, a new interest rate ground will appear in Vietnam,
Meanwhile, an executive from Ocean Bank said that though many banks have not announced big programs on interest rate reduction, they have been allowing low interest rates for some kinds of loans already. Therefore, he affirmed that easing interest rate in a possible mission.
Businesses still keep conscious when hearing about BIDV’s decision to reduce interest rate. The new low interest rate is only applied to some kinds of loans, not for all. However, analyst says that once the interest rate for the production sector decreases, this would be good for the national economy, and other economic sectors would have the opportunity to enjoy lower interest rate.
An expert from the Finance Academy has pointed out that while the deposit interest rate has decreased to 14 percent per annum, the lending interest rate still keeps unchanged. This can be understood that banks only keep the doors open narrowly to some subjects of lenders, while they continued tighten the monetary policies to curb the inflation.
The problem is that previously, banks paid overly high deposit interest rate; therefore, they now still cannot slash lending interest rate, because the mixed capital is not cheap enough.
There are now enough conditions for banks to consider slashing lending interest rate: the deposit interest rates have decreased, the high inflation has been curbed, while the liquidity has been improved.
In November, the inflation rate was lower than one percent, while the figure is expected to be as low level in December.
Phuoc Ha
vietnamnet
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