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Consumer credit: Demand real, but capital virtual
While commercial banks say they are ready to fund all consumer credit demands, clients complain that they cannot get bank loans, though they meet all the requirements set by the banks.
Linh, a client, asserted that he is an ‘ideal’ client in the eyes of bankers. He lives in Hanoi, and he is now the deputy head of a division in a company that is performing well. Linh has a monthly income of over VND10 million a month, and he needs to borrow VND40 million from a bank.
Linh said that he still cannot get the loan he wants, though he applied for the loan one month ago. Affirming that all the procedures for the loan have been completed, the bank still has not disbursed the money. When Linh contacted the staff of the bank, an employee said: “Our boss has not approved the loan.”
The bank that Linh tries to seek loans from is one of the banks that has announced a consumer credit program beginning very soon, right after the State Bank of Vietnam released Circular No. 01, allowing bankers to apply negotiation-based interest rates.
Meanwhile, another client, who asked to be not named, said that the bank that he contacted set a very strange requirement in which the client has to find guarantors who will have to pay debts for the client in case the client cannot pay debts. The guarantors also have to follow necessary formalities set by the bank.
Local newspaper Thoi bao kinh te Vietnam has reported a case in which the borrower had spent one month moving heaven and earth to follow procedures and wait. However, he still cannot get the loan, and it is even difficult to meet and persuade credit officers.
Meanwhile, in early February 2009, a lot of banks began launching advertisement campaigns on big consumer credit programs. Some banks offer a high limit of loans, as high as VND200-500 million, or even VND1 billion.
Clients have complained that it is not as easy to get bank loans as advertised by banks. Some clients have raised concerns that the advertised campaigns aim to polish banks’ images and catch the attention of the market, rather than pushup loans.
In many cases, borrowers said that it took them one month to access bank loans, though banks committed to disburse after only a few days, or even a few hours.
Meanwhile, when asked about the complicated procedures, bankers said that they need to spend time checking the conditions of the borrowers and the feasibility of the loans, since consumer credit proves to have high risks. Besides, banks’ disbursement plans need to be designed to fit to the conditions at different times.
Analysts said that in the current economic difficulties, which have certainly influenced the income of people, a lot of banks have tightened loaning, while also setting higher and stricter requirements for loans.
“The simple procedures and high loaning limit which banks have promised should be understood as the procedures applied to ideal clients,” a credit officer said.
Clients now fear that they will not have the chance to access cheap consumer credit as the bank interest rate is on the rise. The deposit interest rates offered by many commercial banks have been increasing since the end of February, which makes them believe that the lending interest rates will increase in the time to come.
VietNamNet, TBKTVN
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