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How high the efficiency of the interest rate subsidy program?
Experts said that a big proportion of loans given under the 4% interest rate subsidy program have come back to banks under different circumstances.
“We have been trying our best and we have disbursed VND 300 billion only under the interest rate subsidy program. I cannot understand why other banks have disbursed so much capital within such a short period,” said the General Director of a joint stock bank.
To date, except the State Bank of Vietnam, no other state management agencies can say for sure how may percents of the sum of VND 113.7 trillion which had been reportedly disbursed under the interest rate subsidy program by March 6 have been really put into production and business. For many years, newspapers and research institutes have not received the figures about the total outstanding loans of the banking system.
The State Bank of Vietnam only releases on its website the figures about the increase and decrease of months over previous months or the same periods of the last year.
According to Ho Huu Hanh, Director of the HCM City Branch of the State Bank of Vietnam, by February 2009, the total outstanding loans of local banks increased by 0.46% only over the end of January, reaching VND 505 trillion. The figure proves to be very low if compared to the targeted credit growth rate of 21-22% in 2009.
The slow growth of loaning proves to coincide with the report from joint stock banks. Despite the low lending interest rates, businesses still hesitate to borrow money. They only want to access loans when they seen that inventory items can be cleared.
In order to clear stocks, businesses have to slash sale prices and suffer losses. And it is clear that no bank wants to give loans to assist businesses sell inventory items. Meanwhile, as businesses cannot sell products, they dare not borrow more money.
According to the central bank, the total outstanding loans in February rose by 0.23% over January and 0.54 over the end of 2008. More than VND 93 trillion worth of capital was disbursed in February under the interest rate subsidy program, while the outstanding loans increased by 0.23% only. The figures have raised the doubts that may be a part of the preferential loans has been used to pay old debts.
The noteworthy thing is that while joint stock banks keep cautious with the loaning under the interest rate subsidy program, the disbursement rate of state owned banks was four times higher than joint stock banks.
By March 6, 2008, state owned banks had disbursed VND 89.4 trillion, versus VND 22.6 trillion disbursed by joint stock banks.
The main clients of state owned banks are general corporations and economic groups, and only the businesses can ‘absorb’ so much money within one month. Once again, the question about the efficiency of the preferential loans has been raised
Commercial banks’ liquidity has been reportedly improved after they complained about the lack of liquidity in several days in February. The liquidity improvement cannot be attributed to the increases in mobilized capital (the deposits in February increased by 0.44% only over the end of the last year, a very low figure). Experts said that it is because of the high volume of businesses’ debt payment.
Therefore, worry has been raised that a part of the capital disbursed under the interest rate subsidy program has come back to banks under different ways. In this case, the program’s purpose of stimulating demand will not be completed.
VietNamNet/VnMedia
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