Unmatured Debt Settlement by Business Challenging Banks

Enterprises who borrowed money from banks at high interest rates are now proposing to pay the debts before they mature in order to get new loans at lower rates, which pushes banks into an embarrassing situation.

 

Some bankers recently complained that the proposal for making payments before maturation has created difficulties for them, and that they are trying to negotiate with banks on adjusting the interest rates, while they will not accept the payment before maturation.

 

A representative from a joint-stock bank said that previously banks asked clients to pay add-on fees if clients demanded a disbursement for loans before schedule.

 

However, banks have stopped collecting this kind of fee after the State Bank of Vietnam asked banks to stop collecting any additional fees for loans. The official said that now, as many clients want to pay debts before maturation; the bank is considering re-imposing that kind of fee.

 

He also said that the bank’s branches have been continuously calling the headquarters recently to ask about how to deal with the payments before maturation. However, he said that the bank’s credit committee has not made any decisions about the fee, as it still wants to negotiate with clients on the interest rates that can be acceptable for both sides.

 

“Adjusting the lending interest rates instead of accepting payment before maturation is proving to be the choice of many banks, as this will benefit both the banks and the clients,” he said.

 

After the State Bank of Vietnam reduced the basic interest rate to 11 per cent, commercial banks have slashed both their deposit and lending interest rates. The popular lending interest rates are between 13.5 per cent and 16.5 per cent, while the preferential rate offered by Vietcombank to some clients is now at 12 per cent per annum.

 

Despite the lower lending interest rates, the disbursement has been going very slowly because banks still have high requirements for loans, while enterprises have been facing many difficulties in their business due to low purchasing power. (Investment & Securities)