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Bank curbs on lending leave firms in a fix
Banks have not only put up lending rates but, grappling with liquidity problems, are also reluctant to lend, leaving companies that are dependent on financing for their year-end production and trading activities in a fix.
Many banks have hiked interest rates from 16 and 17 per cent until recently to as high as 20 per cent.
They explained that it was a consequence of the recent hike in deposit interest rates by up to 2 per cent to 13-14 per cent.
But they were still not willing to step up lending because the rate hikes failed to yield results and their liquidity was still low.
Rumour that the Government was likely to tighten monetary policy at the end of the year was also a reason for banks to be wary of increasing lending, they explained.
A CEO of a joint-stock bank headquartered in HCM City's District 1 said increasing rates was actually a measure banks adopted to curtail lending.
A deputy general director of a major joint-stock lender said his bank gave priority to businesses involved in manufacturing and exports but did not plan to step up lending. Tran Hong Anh, director of a plastic goods manufacturer in District 8, said his firm needed credit worth VNÐ10 billion (US$5 million) to import plastic nuts for manufacturing for export.
"When I showed my contract to export plastic goods to Malaysia in December, the bank informed me the interest rate would be 19.5 per cent. However, it only gave us a promise to lend.
"If we do not have the money in time for production, we will be penalised a large sum of money."
Le Quang Hung, Chairman of the Garmex Sai Gon Corporation, said his company now paid 12.75 per cent interest on its bank loans but had been informed of a hike.
"We are considering shifting from dong to dollar loans. The rate on dollar loans is only 5.5 per cent. But [then] we will have to sell the dollars we earn from exports."
Most major banks reported that their loan rates would increase from 12 per cent to 12.6 per cent or 13 per cent while smaller banks said it would be around 14 per cent, Do Duy Thai, CEO of Thep Viet Joint Stock Company, said.
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