Many banks promote preferential loans for business households and small businesses at the end of the year. (Photo: SGGP)
Loosening the rate of unsecured loans
The Monetary Policy Department under the State Bank of Vietnam (SBV) said that in the last week of November alone, commercial banks lent about VND61 trillion more, approximately the level of credit for October this year. Credit has increased rapidly in the last months of the year but mainly concentrated on small and medium-sized enterprises and those in priority fields, trade, service, and production. It is a signal that economic and trade activities have been gradually recovering.
In order to direct credit balance into production and business sectors, from the beginning of the fourth quarter of this year, commercial banks have launched several preferential interest rate packages to support customers to access low-cost capital sources to solve difficulties quickly and overcome the pandemic. Specifically, PVCombank offers a credit package of VND9 trillion with an interest rate of only 5 percent per annum for micro-enterprises and business households, with a loan term from three months to ten years. At the same time, PVCombank has accelerated the approval process to within 24 hours and immediately granted a limit of up to VND10 billion. From now to February 28, 2022, Nam A Bank also reduces the lending interest rate to 5.99 percent per annum for existing loans of individual customers who borrow money to serve their living and production, and business activities.
Commercial banks have not only offered preferential interest rate packages but also loosened the rate of unsecured loans or accepted off-plan collateral to support businesses, especially small and medium-sized ones that were severely affected by the Covid-19 pandemic. Maritime Commercial Joint Stock Bank (MSB) has just launched loan products for small businesses without collateral. It has also set up a service portal at www.vaynhanhsme.msb.com.vn to receive applications for loans from enterprises online, give feedback, and contact customers to complete loan applications within 24 working hours.
Similarly, VPBank has increased the limit of the unsecured loan package to VND3 billion, with a loan term of 36 months. At the same time, it has reduced interest rates by 2 percent for all loans applying this package. VPBank also set up an online service portal at bit.ly/vontinchaponline to assist customers in applying for loans to increase working capital, expand production scale, purchase fixed assets, or repair factories for production and business activities. Military Commercial Joint Stock Bank (MB) is also sponsoring up to 100 percent of the contract value and 90 percent of the capital needs for wood exporting businesses, accepting collateral as 100 percent of the income from the letter of credit (L/C). For seafood enterprises, MB also provides loans of up to 100 percent of the contract value and accepts various collaterals, such as inventory, debt collection rights, depreciated machinery and equipment, and waterway transport vehicles.
More mechanism to unblock the capital flow
According to Dr. Can Van Luc, a member of the National Monetary and Financial Policy Advisory Council, with an increase from the beginning of the year until now, along with the fact that many banks have just been extended credit growth limits, credit growth for the whole year may reach 13 percent. Experts also forecast that credit demand will continue to be high in 2022, thanks to the recovery momentum of the economy.
The Ministry of Finance has advised the Government on an interest rate compensation package of VND40 trillion, with the interest compensation level at 2-3 percent per annum. If this package is approved, in the coming time, more than VND1 quadrillion of low-interest credit will be pumped into the economy. It is also the reason why commercial banks will simultaneously deploy preferential loan packages with interest rates aimed at small and medium-sized enterprises and those in priority fields, trade, and services.
According to Dr. Can Van Luc, besides the normal increase, interest rate support packages that are being built will be a significant motivation for credit growth. Along with the natural credit growth of about 9-10 percent, the total credit growth in 2022 will be at least equal to 2021 or 13-14 percent.
However, related to the above interest rate compensation package, commercial banks said that the most important thing is the policy and legal corridor to unblock the capital flow instead of the size of the support package because several enterprises have fallen into bad debt and are being restructured by banks following Circular No.01/2020 of the State Bank of Vietnam. However, when the circular expires in June 2022, if there is no special mechanism, businesses with bad debts will not have the opportunity to access the stimulus package. Then, the interest rate support credit package, no matter how large, will not make much sense because businesses with bad debts will not be eligible for loans. Meanwhile, due to the impact of the pandemic, many enterprises have been suffering from bad debts.
The Monetary Policy Department under the State Bank of Vietnam (SBV) said that in the last week of November alone, commercial banks lent about VND61 trillion more, approximately the level of credit for October this year. Credit has increased rapidly in the last months of the year but mainly concentrated on small and medium-sized enterprises and those in priority fields, trade, service, and production. It is a signal that economic and trade activities have been gradually recovering.
In order to direct credit balance into production and business sectors, from the beginning of the fourth quarter of this year, commercial banks have launched several preferential interest rate packages to support customers to access low-cost capital sources to solve difficulties quickly and overcome the pandemic. Specifically, PVCombank offers a credit package of VND9 trillion with an interest rate of only 5 percent per annum for micro-enterprises and business households, with a loan term from three months to ten years. At the same time, PVCombank has accelerated the approval process to within 24 hours and immediately granted a limit of up to VND10 billion. From now to February 28, 2022, Nam A Bank also reduces the lending interest rate to 5.99 percent per annum for existing loans of individual customers who borrow money to serve their living and production, and business activities.
Commercial banks have not only offered preferential interest rate packages but also loosened the rate of unsecured loans or accepted off-plan collateral to support businesses, especially small and medium-sized ones that were severely affected by the Covid-19 pandemic. Maritime Commercial Joint Stock Bank (MSB) has just launched loan products for small businesses without collateral. It has also set up a service portal at www.vaynhanhsme.msb.com.vn to receive applications for loans from enterprises online, give feedback, and contact customers to complete loan applications within 24 working hours.
Similarly, VPBank has increased the limit of the unsecured loan package to VND3 billion, with a loan term of 36 months. At the same time, it has reduced interest rates by 2 percent for all loans applying this package. VPBank also set up an online service portal at bit.ly/vontinchaponline to assist customers in applying for loans to increase working capital, expand production scale, purchase fixed assets, or repair factories for production and business activities. Military Commercial Joint Stock Bank (MB) is also sponsoring up to 100 percent of the contract value and 90 percent of the capital needs for wood exporting businesses, accepting collateral as 100 percent of the income from the letter of credit (L/C). For seafood enterprises, MB also provides loans of up to 100 percent of the contract value and accepts various collaterals, such as inventory, debt collection rights, depreciated machinery and equipment, and waterway transport vehicles.
More mechanism to unblock the capital flow
According to Dr. Can Van Luc, a member of the National Monetary and Financial Policy Advisory Council, with an increase from the beginning of the year until now, along with the fact that many banks have just been extended credit growth limits, credit growth for the whole year may reach 13 percent. Experts also forecast that credit demand will continue to be high in 2022, thanks to the recovery momentum of the economy.
The Ministry of Finance has advised the Government on an interest rate compensation package of VND40 trillion, with the interest compensation level at 2-3 percent per annum. If this package is approved, in the coming time, more than VND1 quadrillion of low-interest credit will be pumped into the economy. It is also the reason why commercial banks will simultaneously deploy preferential loan packages with interest rates aimed at small and medium-sized enterprises and those in priority fields, trade, and services.
According to Dr. Can Van Luc, besides the normal increase, interest rate support packages that are being built will be a significant motivation for credit growth. Along with the natural credit growth of about 9-10 percent, the total credit growth in 2022 will be at least equal to 2021 or 13-14 percent.
However, related to the above interest rate compensation package, commercial banks said that the most important thing is the policy and legal corridor to unblock the capital flow instead of the size of the support package because several enterprises have fallen into bad debt and are being restructured by banks following Circular No.01/2020 of the State Bank of Vietnam. However, when the circular expires in June 2022, if there is no special mechanism, businesses with bad debts will not have the opportunity to access the stimulus package. Then, the interest rate support credit package, no matter how large, will not make much sense because businesses with bad debts will not be eligible for loans. Meanwhile, due to the impact of the pandemic, many enterprises have been suffering from bad debts.
