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Finance companies outsiders of interest rate subsidy program
The Vietnam Banking Association (VNBA) has sent a dispatch to the Government, asking to add finance companies into the list of companies and banks that join the program on interest rate subsidy program.
In the dispatch, the association expressed its worries that there will be the possible ‘run’ of clients from finance companies to commercial banks to enjoy benefit from the interest rate subsidy program, if finance companies cannot provide loans with the interest rate subsidy.
VNBA cited the Decision 131 by the Prime Minister on subsidizing interest rates for institutions and individuals to help them carry out production and business plans as saying that only commercial banks and the central people’s credit fund are allowed to join the interest rate subsidy program, while finance companies were not mentioned in the above said decision.
Meanwhile, if referring to the Government’s Decree No. 79 dated October 4, 2002 and Decree No. 81 dated July 29, 2008, finance companies are allowed to ‘provide short term, medium and long term loans in accordance with the regulations by the State Bank of Vietnam.’
There are fifteen finance companies now operating in Vietnam which have the total outstanding loans of over VND 15 trillion.
According to VNBA, if the finance companies are not allowed to join the interest rate subsidy program, this may lead to some problems.
First, several thousands clients, who have been borrowing short term loans from finance companies, will not be able to enjoy benefits from the program, though they are the subjects to the interest rate subsidy as stipulated in the Decision 131. As the result, what may happen is that the clients will give up finance companies to come to commercial banks from which they can get an interest rate subsidy.
Second, new clients will not seek capital from finance companies any more as they cannot get the interest rate subsidy from there.
As the result, the finance companies, which have been facing big difficulties due to the impacts of the economic development slowdown, will meet more difficulties in operation once the number of clients decreases.
VNBA, while citing the above said reasons, strongly recommended that the Prime Minister should add finance companies into the list of the companies and banks that join the interest rate subsidy program.
VietNamNet, TBKTVN
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