Banks only cut rates for selected borrowers

Governor of the State Bank of Vietnam Nguyen Van Binh issued the directive on July 7, but failed to attach clear guidance on how exactly banks should follow the order, the credit institutions said.

Although the order took effect on July 16, several banks were then still unable to reach an agreement on the rate cut to inform their branches to follow.

Understandably, it is the borrowers who now face the consequences.

N.T.K, CEO of a printing company in Ho Chi Minh City’s District 1, said he borrowed VND100 billion from Eximbank at various interest rates, with the lowest standing at 16.5 per cent a year.

As the bank did not inform him of any rate reduction on July 16, L. chose to contact the lender through his initiative, only to be told that the bank “is still considering and will announce the rate cut, if any, soon,” he told Tuoi Tre.

Meanwhile N.H.P, director of TM C Ltd Co, based in Phu Nhuan District, said he was rejected by Vietnam Textile and Garment Finance JSC when he asked to have the 19.5 per cent rate slapped on his VND1 billion loan dropped to 15 per cent.

He said, “The lender said they only cut rates for short-term loans, while the central bank ordered that all existing loans be subject to the rate cut, with no specification put on their terms.”

A chief official from the Ho Chi Minh City branch of the SBV said his institution ordered banks to lower interest rates on old debts on July 11, but few banks have reported their implementation.

ACB said it will only cut interest rates on loans borrowed for business development, while borrowers operating in the real estate sector have to repay loans at the old rates.

Meanwhile, OCB said only the four preferential sectors are subject to their rate reduction. The beneficiaries include small- and medium-sized enterprises, and businesses operating in the supporting industries, and agricultural and export sectors.

As for other borrowers, the bank will consider the rate based on their reputation, its deputy CEO Pham Linh said, adding there is currently no incentive intended for the realty businesses.

Sacombank said only borrowers that are businesses can enjoy the 15 per cent rate for their unsettled loans.

Meanwhile, SHB said 35 per cent of its customers are borrowing at above 15 per cent a year, and it has ordered branches to cut rates with no difference between individual and business borrowers.

Nguyen Hoang Minh, deputy director of the central bank, admitted that the lack of guidance has caused banks to hesitate in reducing rates.

“Banks are waiting for a clear direction on who will be subject to the rate cut; whether they are businesses or individual customers, and for long- or short-term loans,” said Minh.