ID :
40312
Tue, 01/13/2009 - 09:27
Auther :
Shortlink :
http://m.oananews.org//node/40312
The shortlink copeid
Regulators ask banks to lower rates on old loans
HCM City (VNA) - The State Bank of Vietnam has encouraged domestic commercial
banks to lower high interest rates on old loans in an attempt to alleviate
borrowers' difficulties.
The central bank's new policy is also expected to help banks reduce their bad debts.
Between July and October, interest rates on bank loans stood at a record level of
between 18 and 21 percent per year. As a result, borrowers who took out bank loans
at high interest rates have to pay great amounts of money for loans that have not
yet come to their maturity date.
To cut costs, many borrowers have sought credit on the black market to pay off their
loans ahead of schedule.
However, most borrowers are enterprises that have a large volume of unsold products
or materials in stock, and no assets that can be used as collateral to get loans
from other financial sources.
Therefore, borrowers who fall into this category are much more in need of local
banks' support in order to settle their debt-related problems.
In reality, many commercial banks have already made adjustment on interest rates on
some old loans to enterprises. However, the interest rate cuts were implemented in
different ways.
The Bank for Agriculture and Rural Development (AgriBank) has accepted a 2 trillion
VND decrease in its turnover when it decided to cut interest rate on old loans that
had been given to households involved in such industries as agriculture, forestry,
fishing and salt production.
The newly-cut interest rate was only 12.72 percent - 0.03 percent lower than the
current lending interest rate's ceiling.
Since the beginning of this year, the Dong A Bank has begun cutting high loan
interest rates from 21 percent to between 18 and 15 percent. The bank's preferential
policy is applied to labour-intensive enterprises, and those involved in steel and
plastic industries.
Bank industry insiders said that cutting the interest rates on old loans has created
certain difficulties for the banks because they still have to pay high interest
rates for deposits whose terms have not yet ended.
Vu Thi Vang, vice chairwoman of the Dong A Bank's managing board, admitted that when
banks cut interest rates on old loans, they have to suffer certain losses.
However, since banks still participate in the game, they have to share difficulties
with their customers, Vang said.-Enditem
banks to lower high interest rates on old loans in an attempt to alleviate
borrowers' difficulties.
The central bank's new policy is also expected to help banks reduce their bad debts.
Between July and October, interest rates on bank loans stood at a record level of
between 18 and 21 percent per year. As a result, borrowers who took out bank loans
at high interest rates have to pay great amounts of money for loans that have not
yet come to their maturity date.
To cut costs, many borrowers have sought credit on the black market to pay off their
loans ahead of schedule.
However, most borrowers are enterprises that have a large volume of unsold products
or materials in stock, and no assets that can be used as collateral to get loans
from other financial sources.
Therefore, borrowers who fall into this category are much more in need of local
banks' support in order to settle their debt-related problems.
In reality, many commercial banks have already made adjustment on interest rates on
some old loans to enterprises. However, the interest rate cuts were implemented in
different ways.
The Bank for Agriculture and Rural Development (AgriBank) has accepted a 2 trillion
VND decrease in its turnover when it decided to cut interest rate on old loans that
had been given to households involved in such industries as agriculture, forestry,
fishing and salt production.
The newly-cut interest rate was only 12.72 percent - 0.03 percent lower than the
current lending interest rate's ceiling.
Since the beginning of this year, the Dong A Bank has begun cutting high loan
interest rates from 21 percent to between 18 and 15 percent. The bank's preferential
policy is applied to labour-intensive enterprises, and those involved in steel and
plastic industries.
Bank industry insiders said that cutting the interest rates on old loans has created
certain difficulties for the banks because they still have to pay high interest
rates for deposits whose terms have not yet ended.
Vu Thi Vang, vice chairwoman of the Dong A Bank's managing board, admitted that when
banks cut interest rates on old loans, they have to suffer certain losses.
However, since banks still participate in the game, they have to share difficulties
with their customers, Vang said.-Enditem
