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Business loans still costly for many
Although many banks have started lowering loan interest rates, companies still find it very difficult to access them.
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| An employee checks motorbike brakes at Vinh Phuc-based Nissin Viet Nam. Businesses still find it difficult to access bank loans even though some banks have begun to lower interest rates. |
After the four big banks – the Bank for Investment and Development of Viet Nam (BIDV), Viet Nam for Foreign Trade of Viet Nam (Vietcombank),Viet Nam Joint Stock Commercial Bank for Industry and Trade (VietinBank), and the Agriculture and Rural Development Bank (Agribank) – announced cuts in rates, many other banks vied with each other to do the same, raising hope among businesses.
However, many are still paying interest rates of up to 20 per cent.
The State Bank of Viet Nam said following the rate cuts, loans for agriculture and exports now average 14.5-16 per cent, going down to as low as 13.5 per cent.
Interest rates on loans for manufacturing and other businesses stand at 16.5-20 per cent, and on loans for non-production purposes, still at 21-25 per cent.
The director of a HCM City paper company said his firm was highly rated by two major banks but could still get loans only at 17.5 per cent from them.
Mai Hong Bang, general director of the Minerals Industrial Joint Stock Company (Vinavico), said the lowest rate his company was offered by a major joint stock commercial bank was 17-18 per cent.
Even at these rates, the company could only get a loan worth 60 per cent of the value of is collateral.
Many other companies have similar complaints, and say they cannot reduce prices to more competitive levels as result. Others even fear for their survival.
Many analysts pointed out that though many banks had announced cuts in lending interest rates, only to a small number of companies benefited.
Nguyen Tri Hieu, a senior financial expert, said most banks gave priority to businesses involved in exports, agriculture, and other rural-based activities, or with long-term relationships with them.
This was because their own cost of raising capital was still high, he said.
Dang Bao Khanh, deputy director of the Southeast Asia Joint Stock Commercial Bank, agreed, saying that with the current deposit interest cap of 14 per cent plus the expenses on advertising and promotion, the banks' cost of funds was around 16 per cent.
Analysts said banks did not want to lend too much yet, and required enterprises to meet many stringent conditions because their bad debts ratios were still high.
Besides, with the economic context remaining difficult, businesses continued to face very high risks, making the banks cautious, they said.
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