The statistics of the State Bank of Viet Nam's Ha Noi branch showed that the total outstanding loans as of August 31 fell by 2.88 per cent against the end of last year to VND917.88 trillion ($43 billion).— Photo batdongsan

HA NOI (Biz Hub) — Overdue debts at credit institutions in Ha Noi reached VND61.3 trillion (US$2.9 billion), or 6.72 per cent of the total outstanding loans, by the end of August, Hanoimoi online reported.

The statistics of the State Bank of Viet Nam's Ha Noi branch showed that the total outstanding loans as of August 31 fell by 2.88 per cent against the end of last year to VND917.88 trillion ($43 billion). Meanwhile, the total deposits were up 6.75 per cent to reach VND1,117 trillion ($52 billion).

Dong lending interest rates for priority borrowers from agriculture, rural areas, exports sector, small and medium enterprises, support industries and high-technology production are 7 to 8 per cent. For ordinary businesses, the rates are 9 to 10 per cent for short loans, and 10.5 to 12 per cent per annum for mid-to-long term loans.

Companies which have transparent financial capacity, good business strategies and good performance results may get dong loans at 6 to 7 per cent per year.

The amount of bad debts at Ha Noi-based banks is in accordance with the nationwide trend.

Late last month, Nguyen Thi Hong revealed that Vietnamese commercial banks' bad debt ratio rose to 4.84 per cent by late June 2014, representing a 3.61 per cent increase year on year.

She attributed the increase to sluggish production and business, resulting in delay in debt payments for a number of businesses, and the implementation of new debt regulations in SBV's Circular No 09/2014/TT-NHNN based on the classification of bank risk.

The circular, which deals with the classification of bank assets, the setting up of risk provisions and the manner by which provisions against credit risks are to be deployed, will force an increase in risk provisions, according to Hong.

The Chairman of the Viet Nam Asset Management Company (VAMC) told reporters that since October 2013, his company had purchased VND58.9 trillion ($2.8 billion) worth of bad debts from 35 credit institutions. — VNS