Low-cost capital plentiful, but borrowers keep glacial

Low-cost capital plentiful, but borrowers keep glacial

The lending interest rates offered by many commercial banks have reduced to below the deposit interest rates. However, businesses don’t intend to borrow money at this moment.

Banks’ adventure to look for more borrowers…

The banks’ doors have never been opened so widely to businesses. A banker said that not only profitable businesses, but the ones with “bad profiles” due to bad debts, can also access bank loans at low interest rates nowadays.

A senior executive of VietinBank said the bank has been trying every possible method to help businesses restructure their debts, while it keeps pumping more capital to help businesses recover from the difficulties. Only if businesses can revive will they be able to pay debts to the bank.

Le Hung Dung, President of Eximbank, while affirming that the bank will not be easy in providing loans, said that bankers would not be able to collect debts if they don’t share difficulties with the clients.

Nguyen Thi Ngoc Van, Deputy General Director of DongA Bank, said the bank focused on the debt resettlement over the last nine months.

“We came to see with our own eyes how businesses operate, to help them overcome the difficulties. We also continue funding their production projects,” Van said, adding that the bank now offers loans at the low interest rates of 8-10 percent per annum.

The State Bank of Vietnam has recently released the Dispatch No. 7558, paving the way for commercial banks to take risks to push up lending. The dispatch says the businesses with bad debts also can borrow new loans, if they have new feasible production or business projects.

As such, commercial banks, which always keep their wits about the businesses which cannot pay due debts, now can continue providing loans to the businesses.

…but the lending still goes at a snail’s pace

Just some months ago, businesses complained that the overly high interest rates made it impossible for them to access bank loans. However, this proves to be not the main reason. Even though the interest rates have fallen significantly, businesses still keep away from banks.

In fact, businesses don’t have the demand for loans, because they don’t have feasible business projects. As the national economy is still in big difficulties, it is foreseeable that the products would be unsalable in the context of the weak purchasing power.

Van from Dong A Bank also said though the bank has made every effort to attract borrowers (allowing the debt payment delay, restructuring debts, offering new loans to the businesses which still cannot pay old debts), businesses still keep indifferent to the attractive loans.

This explains why the bank’s credit growth rate in the first nine months of the year was modest at 1.2 percent, much lower than the initially planned target of 9 percent.

VietinBank, though having launched a lot of low-cost capital packages, still complained that the redundant capital amount is very big.

The first half-year report of the bank showed the minus credit growth rate of the bank, while it had only turned positive by the end of September. Meanwhile, the bank initially planned the 15-17 percent credit growth rate for 2013.

vietnamnet