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Central bank loosens credit valve for real-estate
The lowering of the ceiling rate for deposits was made in a bid to reduce lending rates to assist businesses and ease banks’ bad debts, State Bank Governor Nguyen Van Binh told a press briefing yesterday, while announcing that the tightened credit valve imposed on the real-estate sector is now open.
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A man is pointing at the updated interest rate board of BIDV, with the deposit rate set at 12 percent a year |
The deposit rate cap was yesterday slashed from 13 percent to 12 percent a year, the second consecutive cut within a month, in the central bank’s effort to cool down lending interest rates.
In elaborating the loosened credit on real-estate, the governor said that while loans used to be offered to borrowers wanting to buy houses for accommodation, those investing in or speculating on properties are now also eligible to access loans.
“The opened credit will help reduce the unsold stock of the real-estate sector, which will thus create an appropriate flow of capital in the economy,” Binh told the media.
“Once the frozen realty market has been partially melted down, it can also ease the burden of high unsold inventories of several other sectors, such as the cement and steel manufacturing.”
With the deposit interest rate cap lowered to 12 percent a year, Binh said lending rates are expected to revolve around 13 to 16 percent a year.
“Certain credit institutions will offer even lower rates,” stated Binh.
He added that lending to the real estate sector will account for around 10 percent of the banking system’s total outstanding loans.
Inaccessible
Regarding the recent complaints of the manufacturing sector that businesses are still unable to access bank loans even though several types of interest rates have been slashed, the governor said it is not necessarily true that all kinds of businesses can borrow the money.
“Businesses can surely borrow at only 14 to 16 percent a year if they can meet all necessary requirements,” he confirmed.
There are different types of enterprises, with different financial abilities, said Binh, adding that this is the reason why banks cannot offer loans to those in critical financial states.
“Banks are also businesses, not money producers. The money belongs to the economy and its people.
“Banks are responsible for protecting the money, not granting loans to any borrower who asks for one.”
Even businesses that meet requirements but are operating in the sectors that are not encouraged to access bank loans cannot borrow at lower interest rates, added Binh.
“Those falling into this category will still have to borrow at a high rate of 20 – 25 percent a year,” he said, adding that the move is intended to create more lending for preferential borrowers, including the agriculture and rural sectors, or medium- and small-sized enterprises.
“On the other hand, if the preferential borrowers have weak financial muscle, loans will also be inaccessible,” he added.
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