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Medium- and long-term IRSP going slowly
While disbursement under the short-term interest rate subsidy programme (IRSP)has been very successful with a high volume of capital loaned, the medium- and long-term interest rate subsidy programme has been going very slowly.
Statistics show that 331,906 billion dong has been disbursed under the short-term interest rate subsidy programme. Meanwhile, the preferential medium- and long-term loans have just seen a modest disbursement level.
Bankers say that it is because the demand for long-term capital from businesses is not high. Moreover, it takes banks more time to check business’ investment plans for long-term loans. The third reason is that banks are having difficulties mobilising medium- and long-term capital which has resulted in a lack of capital for loaning.
According to Pham Quoc Thanh, Deputy General Director of ABBank, to date, his bank has disbursed 1,800 billion dong worth of capital under the interest rate subsidy programme, but most of the capital has been in short-term loans, medium- and long-term loans have just accounted for five percent.
Thanh said that medium- and long-term loaning is increasing slowly because it always takes time to verify borrowers’ investment projects, from one to two months.
Thanh also said that the demand for long-term capital is not high at this moment as businesses’ markets have been narrowed. This has forced businesses to think twice before asking for loans, even though they can enjoy the 4 percent interest rate subsidisation.
However, Thanh said that as there is still a lot of time left to implement the medium- and long-term interest rate subsidy programme, it is very likely that outstanding loans under the programme will rise in the time to come.
As for Viet A Bank, to date, outstanding loans under the interest rate subsidy programme have reached 200-300 billion dong, while the bank has been focusing on short-term loaning. Viet A Bank’s General Director Pham Duy Hung said that the bank continues seeking clients and feasibility projects to loan money to. However, Hung said that it is not so easy to find feasible projects at this moment; therefore, outstanding loans will not likely increase in the near future.
Viet A Bank has continuously raised VND deposit interest rates to attract idle capital from the public. The highest interest rate now being applied by Viet A Bank is 9.8 percent per annum.
Asia Commercial Bank (ACB) also said that it is trying to look for clients to lend to. By mid May 2009, ACB had just disbursed 200 billion dong worth of medium- and long-term loans.
The HCM City branch of the State Bank of Vietnam has reported that by the end of May 2009, the loans provided under the interest rate subsidy programme had reached 60 trillion dong. However, only 680 billion dong worth of medium- and long-term capital had been disbursed.
Some commercial banks have reported the credit growth rate of 40 percent by the end of May 2009 over the beginning of the year, much higher than the same period of last year.
Meanwhile, banks fear that they cannot mobilise long-term capital even though they have raised deposit interest rates. The rates for long-term deposits have nearly hit 10 percent per annum, while the rates for short-term deposits are just hovering around 7.5 and 8 percent.
As the stock market has been warming up, people would rather inject money in stocks rather than bank deposits. Moreover, as people fear that high inflation will return, they would rather make short-term deposits rather than long-term.
VietNamNet, DTCK
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