Banks Disobedient to Rate Policy Shall Be Fined

SBV Deputy Governor Le Minh Hung said the SBV Governor ordered the entire banking system to strictly obey this reduction. Since July 15, all banks announced to bring down highest lending rates to 15 percent per annum. Some banks have issued instructions and plans for deployment, particularly the Group of 14 (14 largest banks with 90 percent of market share) like Vietcombank, Agribank, BIDV, ACB and SHB. The headquarters of such banks issued instructive documents to guide their branches to quickly reduce lending rates for customers, especially corporate borrowers. However, he admitted that some banks have not applied the order yet because of time matters and disobedient attitudes. He said although the central bank does not have sanctions on such cases, it has many solutions, both soft and hard, to deal with. “The SBV will take measures to handle banks for not sharing. That is the overall standpoint adopted by the Governor at the meeting with banks," he added.

 

Remarking on the fact that some banks impose certain conditions like only supporting businesses with good health (Group 1), Hung said the standpoints of the Government and the SBV are to support troubled entities [and the degree of support] depends on conditions and capabilities of lending institutions. However, the support for only healthy businesses is not satisfied and mismatched to the spirit of instructions. “The standpoint of the SBV is to share supports with all entities, particularly troubled businesses, but the safety of credit operations must be ensured. If banks refuse to follow or [intentionally] support wrong objects, the SBV will also launch a crackdown on them. The SBV will discuss and deal with these cases at upcoming meetings with its Ho Chi Minh City Branch,” said Hung.

 

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Disbursing low-rate loans Mr Phan Huy Khang, CEO of Sacombank, said: “One day after Sacombank and 16 companies signed credit agreements worth VND1,110 billion (belonging to the bank’s support package worth VND2,000 billion and US$50 million) at an interest rate of 13 percent per annum, it disbursed another VND412 billion and US$8.1 million as of 3:30 pm on July 18, bringing the disbursed value to VND850 billion, and US$38.1 million, respectively. The bank is processing new applications for soft loans.” Only two days after the order on reducing interest rates of old loans to 15 percent per annum (July 15-17), VPBank slashed interest rates for nearly 400 loans worth over VND460 billion. About VND10 trillion will be subjected to new rates. Mr Ly Xuan Hai, Director of Asia Commercial Bank (ACB), said: ACB has slashed old loans for corporate and individual customers with good credit profiles. The lender will also restructure loans to add more customers to the top-rate group which is being granted preferential treatments.

olutions aimed at forcing banks to comply with the central bank’s orders in the coming time, the central bank will frequently send its staffs to work with local authorities, SBV branches and enterprises to discuss solutions to overcome hardships in addition to the probe into the implementation of the request concerning the lending rate cap of 15 percent. However, according to Mr Hung, it is very important that banks understand that this is a good time to slash interest rates of old loans to 15 percent per annum because if borrowers are in hardship and interest rates remain high, both banks and businesses will not resolve their difficulties.

 

To date, many banks instructed their units to lower lending rates and reported the progress to the central bank, mostly G14, while the rest have made no move or unclear response to the order, mostly in the groups of lower-quality lenders.

 

Commenting the rate cut for old loans, Vo Tri Thanh, Deputy Director of the Central Institute for Economic Management (CIEM), said: Every bank should comprehend that this is just an immediate sacrifice and meaningful sharing with businesses for a long-term and sustainable benefit. So, it is important that businesses and banks of should work together to understand each other to overcome hardships together.

 

Many experts show their supports for the central bank’s crackdown on banks that only pledge, not take action. However, the central bank should show the names of those banks to the public, an epxert said, citing public pressures may outweigh administrative orders.