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Money under pillow, how much?
Banks have been tightening credit, but a lot of enterprises still can arrange capital for production and business because they are raising money from relatives, friends and staffs. The money which people kept under their pillows is now being put into business and helping businesses overcome difficulties.
Ha is a big real estate investor in HCM City. She not only borrows money from banks to put into real estate projects, but also raises money from relatives and friends. She pays 3%/month in interest on the money she borrows from them, much higher than the bank interest rates in the pre-2008 period. She helps relatives and friends purchase houses in installments. Relatives who were once empty-handed now have real and personal assets after cooperating with Ha.
Ha had been having difficulties in the past year since banks stopped disbursement, while creditors claimed debts. Her assets are very big, but they are lying in houses and land, while she did not have money to pay short-term debts. Thanks to her relatives’ assistance she can pay most of her short-term debts, and is waiting for the real estate market to heat up again.
Ha is one of the businessmen no longer relying on bank loans in doing business.
Recent surveys have found that a lot of enterprises are not using banks’ credit services. Meanwhile, enterprises which have been relying on bank loans are now tending to seek non-bank capital sources, especially as banks are trying to tighten monetary policies. The enterprises have been calling for capital from their staffs, while banks, which once faced problems in liquidity, are asking staffs to persuade relatives to deposit money at the banks.
How much money under pillows is there?
In a recent talk about the inflation rate and monetary policies, Truong Van Phuoc, General Director of Eximbank, asked the audience: “Are there dollars in your pockets?”. In another meeting, banking expert Le Trong Nhi also asked the audience: “Who has dollars in their pockets, please hands up!” Both Phuoc and Nhi wanted to say that money, VND and foreign currencies, not only lie in banks’ coffers and in circulation, but under people’s pillows as well.
However, no one can say for sure how much money under pillows there is.
One year ago, the VN Index on the bourse increased continuously. People could not understand why there was so much money to be injected in stocks. Local newspapers, quoting experts, wrote that the money was once under people’s pillows, and then was put into investment.
VNN
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