Bank-business dialogue comes to deadlock, businesses at the stake

Bank-business dialogue comes to deadlock, businesses at the stake

Ignoring the businesses’ complaints about the lack of capital, banks do not hurry to push up lending. The dialogues between banks and businesses have not helped reach a common voice to settle the problem.

Businesses at stake

The bank loan interest rate escalations have been attributed to the tightened monetary policies Vietnam has been applying in an effort to curb the inflation.

Nguyen Trong Kha, Director of K&H Technology Transfer Company said at a meeting between bankers and businesses held some days ago in the central city of Da Nang, that it was not small businesses which caused inflation, but they still meet the barriers when approaching bank loans.

“We have been facing too many big difficulties because we cannot access bank loans. How can we maintain our production?” Kha said.

The other businessmen, who attended the meeting, also said that the banking system has turned a deaf ear to businesses’ difficulties. The State Bank has vowed to stabilize the interest rates and promised credit packages with preferential interest rates. Meanwhile, in fact, the interest rates have been fluctuating so heavily, thus putting big difficulties for enterprises and making investors hesitant to scale up production.

“In other regional countries, businesses can borrow money at the interest rates of 3-4 percent. Meanwhile, in Vietnam, the interest rates have pushed up to the sky high rates. This like putting businesses on the bale-fire,” said Nguyen Thi Anh Dao, Chair of Dong A University, a member of the Small and Medium Enterprises Association.

Dialogue comes to deadlock

In reply, Nguyen Chi Dung, a member of the board of directors of An Binh Bank, said banks cannot slash interest rates, because they have to pay high for mobilized capital.

“We have to pay 9 percent per annum in interest rate for deposits. If we lend at 12 percent per annum, we will not make profit,” he said.

Meanwhile, Deputy Governor of the State Bank Nguyen Dong Tien said: “We really want to ease the interest rates, but this would still depend on the capital mobilization situation and the government’s policy on curbing inflation.”

Local authorities release ultimatum for banks

The above said meeting between bankers and businessmen has become the hot topic of discussion of the public, especially because commercial banks received an ultimatum from the local authorities: banks should either to lend or die.

Nguyen Ba Thanh, Secretary of the Da Nang City Party Committee was firm with the banks’ executives at the meeting.

“If some banks deliberately do not ease the lending interest rates, I would tell Da Nang’s people to withdraw their deposits from the banks to deposit at other banks. If so, don’t say that I did not warn you,” he said.

Thanh uttered the words after he realized that the meeting did not help bankers and businessmen reach a common voice to settle the current problems.

Dao has asked that the Governor of the State Bank should inform in advance about the policies the central banks apply, and make statement about how high the interest rates should be. “If not, more than one million businesses would go bankrupt, and the national economy would be shaken,” Dao said.

According to the Da Nang Branch of the State Bank of Vietnam, by the end of July 2012, only 11.8 percent met no problems when approaching bank loans, while 49 percent of businesses said they met big barriers, while only 13 percent of businesses could access preferential loans as per the current policies.

vietnamnet