Interest Rate Subsidy Gets More Beneficiaries

Accordingly, in addition to beneficiaries stipulated in the Decision 131/QD-TTg dated January 23, 2009, interest rate incentives will be granted to financial companies (except for those operating in consumption credits and credit card) which seriously observe the regulations of the State Bank of Vietnam on safe operation, reserve fund for possible credit risks, and bad debt (less than 5 per cent). 

 

Besides, short-term loans in Vietnamese currency used in the mining sector will also be given with preferential interest rates.

 

According to Decision 131/QD-TTg dated January 23, 2009, the State will offer interest rate incentives to credit organizations (State-run commercial banks, commercial joint stock banks, joint venture banks, branches of foreign-invested banks operating in Vietnam, fully foreign-invested banks and central people’s credit funds) in giving capital and short-term loans for business and production activities in 2009.

 

The grace period will be eight months maximum, applied for loans under contracts inked and realized from February 1 to December 31, 2009. The interest rate subsidy is 4 per cent per annum on real loans.

According to enterprises, the time for soft loans is only seven months (usually banks need a certain period of time to appraise and it is not easy to build, execute and advance a project and complete capital turnover in such a time).

 

This is the time for banks to go against the usual measures to introduce lending programmes and capital to enterprises. Military Bank (MB) has disbursed some VND1,000 billion out of its VND35,000 - 40,000 billion dedicated to the financing programme. A number of consulting seminars will be held this week to introduce and speed up the lending.

 

Banks also find it difficult to select borrowers. According to Ms Nguyen Minh Hang, Director of Credit Management Department at MB, the biggest trouble of the programme is to seek correct answers for each case.

 

Ms Hang pointed out that the State Bank of Vietnam has issued a circular to introduce the implementation of the decree. About 13 industries and fields are inaccessible to the lending programme. In fact, the sector classification has to be based on instructive legal documents and this is also a headache.

 

For instance, what is the solution to a company involved in one of 13 excluded industries and fields but having an investment project included in the financing programme? A steel trading company should be classified into processing industry or importing to enjoy the aid or not. Even, the use of the loan is also needed to be taken into account: paying salary, importing equipment or buying foreign currencies for import. Or, if the capital is used to expand business, the spending purpose is also needed to be considered.If it is used to buy real estate to build factory to scale up production, to fix assets, then the loaning is not permitted.

 

To tackle those difficulties, banks need to build up detail portfolios, assess capital use purposes and seek instructions from the central bank when necessary. With such amount of work, both banks and borrowers have to try their best.

 

Lending is being expedited. As of March 6, commercial banks lent VND113,708 billion with interest rate subsidy, according to the State Bank of Vietnam.  

 

Particularly, State-owned commercial banks and people’s credit funds loaned VND89,430 billion, commercial joint stock banks VND22,607 billion and foreign-led banks the rest.