Lenders convert dollar into dong to help SMEs, SBV asks
The State Bank of Vietnam (SBV)’s Ho Chi Minh City branch has asked lenders with strong dollar reserve to convert the greenback into Vietnam dong in order to provide low-cost loans for businesses, who are struggling with the fund shortage.

SBV’s HCMC branch has asked lenders with strong dollar reserve to convert their greenbacks into Vietnam dong in order to loan out at “reasonable rates”, Minh says.
“The rate on dollar deposits is capped at 3 percent per annum, while the rate on dong deposit is 14 percent per annum. Thus the banks can take profit from loaning out the converted amount at the rate of 15-16 percent per annum,” he says.
The branch also cooperates with the city’s credit guarantee fund to help SME make financial reports to apply for lenders’ loans.
“We have asked the state bank to keep closer eye on the interbank market in an effort to cool off the high interest rate,” Minh says.
Interbank lending rate amounts to 27-28 percent per annum, he adds.
“Large lenders favor providing loans via interbank market due to slowing credit growth. Small banks, meanwhile, raise their saving rates as they cannot afford the high-cost loans,” Minh says.
“SBV focused on five key tasks in the first half of the year,” deputy director Nguyen Hoang Minh, of the branch, says in an interview with Dau Tu Tai Chinh Newspaper.
“They include capping the credit growth rate to below 20 percent, reducing credit to non-production sector to below 16 percent, restoring the stability of the currency and gold markets, ensuring banks’ safety and interest rates.”
SBV accomplished all of the tasks, with the total deposits increasing 4.2 percent to VND840 trillion (US$42 billion) and outstanding loan rising 6 percent to VND46 billion, says Minh.
Of the amount, dong and US dollar deposit rose 5.3 percent and 1 percent respectively, he adds.
In June, the State Bank of Vietnam lowered the rate cap on dollar deposits from 3 to 2 percent, and cut the limit for institutions to half a percent.
“SBV’s regulation on capping rates on dollar deposit to 2 percent per annum proves efficient as people switch from depositing the greenback to saving dong,” Minh says.
The deputy director, however, assumes that lending rate remains out of small- and medium-size enterprises (SME)’ reach as many banks still offer depositors interest rates, which are higher than the cap of 14 percent per annum.
“SME also struggle with fund shortage since they fail to provide financial reports,” he says.