Easy credit is pie in the sky

Under Instruction 01/2012/CT-NHNN on the implementation of monetary policies to ensure banking system safety, preferential loans will be given to businesses in agriculture and rural development, export production, supporting industries and labour intensive  enterprises.

Orient Commercial Joint Stock Bank (OCB) just gave birth to a VND2 trillion ($95.2 million) credit package to corporate customers operating in import export and manufacturing areas with interest rates 2-2.5 per cent lower than common rates of 18-19 per cent, per year.

Sacombank set aside VND1 trillion ($47.6 million) to support firms with diverse interest rates (the lowest set at 16.5 per cent, per year) with loan durations of four months. However, the beneficiaries of this support credit package were import-export firms.

Meanwhile, ACB launched a $100 million preferential credit programme to firms importing and exporting rice, seafood, cashews, petroleum, plastic and steel products.

“We are eager to assist importers-exporters through enriching firm’s working capital with preferential dollar loans,” said ACB’s deputy general director Do Minh Toan, adding that State Bank’s recent easing of ceiling deposit rate by 1 per cent point was auspicious for banks to gradually relax lending rates.

“However, in the near term negotiable lending rates could not fall down quickly since it takes some time for banks to drain out the deposits earlier raised at high rates. Current lending rates to firms at ACB range from 18-18.5 per cent, per year,” said Toan.

“In fact, negotiable lending rates started to drop after the Lunar New Year 2012. However, hiking credit still remains an arduous task to banks because high lending rates scare firms, while banks have to tightly control credit growth targets this year,” said HDBank’s corporate customers deputy general director Pham Thien Long.

Long said HD Bank currently charged export businesses 17-18 per cent, per year lending rates, down 1 per cent compared to early 2012.

“Our bank will further revise the rate to match market conditions, but 16-18 per cent per year [lending] rates would be best option in current context,” said Long.

According to the central bank, as of February 20, 2012 credit sources were down 0.53 per cent against the previous month, of which VND credit shed 0.371 per cent, while that in foreign currencies shrunk 1.11 per cent. Compared to end of 2011, credit sources were down 2.51 per cent.