Banking support to back up business development

March 18, 2024 | 15:06
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Vietnam’s central bank is taking swift action on interest rate movement to align with the government’s commitment towards supporting the business community.
Banking support to back up business development
Banking support to back up business development

On March 6, the State Bank of Vietnam (SBV) issued a dispatch to mandate credit institutions to publicise their lending rates in an attempt to render practical support to the business community. This is the third time it has taken this action since the start of the year.

SBV Deputy Governor Dao Minh Tu last week revealed that banks had been actively responding to the call. “We will continue to keep tabs of and urge banks to keep up decent work on interest rate disclosure, so that customers can choose suitable lending schemes for their plans,” said Tu. “In addition, the SBV continues to manage credit growth proactively, controlling inflation and supporting economic growth.”

Other efforts involve reviewing and simplifying loan procedures and documents, applying flexible forms and measures regarding collateral, and creating better conditions for borrowing.

To boost implementation, Tu proposed to take on measures to fuel investment and consumption, and propel economic growth.

The SBV has proposed the Ministry of Construction (MoC) to preside over and join efforts with management agencies and organisations to ensure the building of at least one million social housing units for low-income people and workers at industrial zones before the end of the decade, and submit decrees guiding the implementation of the Law on Housing, the Law on Real Estate Business, and relevant circulars.

The MoC also needs to come up with regular inspections of the pace of real estate projects and their legal compliance.

Tu also stressed the need for the Ministry of Natural Resources and Environment, the Ministry of Finance (MoF), and the MoC to team up with relevant management bodies to ensure that listed real estate businesses can efficiently raise investment capital in the stock market, avoiding speculation and price manipulation.

He also voiced expectations that the MoF bolsters cooperation with relevant bodies to improve regulations on stock and corporate bonds to turn the stock market into an effective medium- and long-term capital raising channel for businesses, reducing over-reliance on credit sources.

At last week’s conference on implementing monetary policy management tasks in 2024 chaired by Prime Minister Pham Minh Chinh and Deputy Prime Minister Le Minh Khai, a representative from a big property group asked the SBV to expedite policies so as to stabilise the macroeconomic situation, keeping deposit and lending rates stable to support business development.

“We hope real estate firms can access credit sources at lower cost. Currently, the gap in lending rates between state and joint-stock banks remains fairly large, from 4-5 per cent. We expect this gap to be shortened, and borrowing costs be further relaxed to aid firms,” the representative said.

Another representative from a major industrial group revealed that as an infrastructure developer, they need enormous capital sources.

“In recent years, businesses operating in this field often have long-term plans for bond issuance and debt repayment, causing an impact on credit lending,” he said. “Previously, when there was a policy from the PM, there would always be associated set planning and timeframe, so the effectiveness of the project could be calculated. However, later on, legal procedures often took longer, putting cash flow and payment plans in trouble.”

He expects the government’s guidance to have positive spillovers on localities, reaching each state employee at local level.

In January, the SBV required credit institutions to hold an initiative to publicise information about average lending rates on their websites, as well as the gap between average deposit and lending rates, the lending rate of their diverse credit programmes, and other related details.

The following month, the SBV continued to urge commercial banks to announce their interest rates and send reports to the SBV regarding deployment.

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