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| Clients borrow money at a Vietcombank branch in Ha Noi. — VNS Photo Thai Ha |
HA NOI (Biz Hub) — Credit institutions should cut lending rates further by at least 1 to 2 per cent to meet the banking sector's growth rate of 12 to 13 per cent this year.
State Bank Governor Nguyen Van Binh said this, adding that credit institutions should make the cut right in the first quarter as it was reported that credit growth was negative 1.66 per cent as of February 20, while production was stagnant and capital mobilisation was steady.
According to the central bank's latest data, the average lending interest rates in Vietnamese dong for the past six months remained unchanged.
It said between mid-July 2013 and the end of February this year, at State-owned commercial banks, the average lending rates to priority sectors including agriculture, rural areas, supporting industries and exports ranged from 7 to 9 per cent yearly in the short term loans and 11 to 12 per cent yearly for medium- and long-term loans. The rates applied by normal commercial loans ranged from 9 to10.5 per cent for short-term loans and 11.5 to 12.8 per cent for medium- and long-term loans.
At commercial joint stock banks, the common lending rates to priority sectors were between 8 and 9 per cent yearly in the short term loans and 11 to 12 per cent annually for medium- and long-term loans. The interest rates at other commercial loans ranged from 9.5 to 11.5 per cent for short-term loans and 12 to 13 per cent for medium- and long-term loans.
To boost credit growth, besides the rate reduction, Binh said that credit institutions must also actively help firms to access credit.
He cited HCM City as an example. Thanks to the Capital Supply-Demand Linking Programme, credit institutions in the city lent VND13 trillion, or US$590.9 million, with the interest rates pegged between 8 and 9 per cent for short-term loans and 10 per cent for long-term loans.
The programme to establish stronger links between commercial banks and enterprises to facilitate access to preferential credit will expand this year to include small traders.
With its success, the programme is likely to be duplicated nationwide in a move to boost credit growth and help firms access credit.
Binh said that the banking industry would work with construction material firms to hold a conference to discuss measures to link the firms and banks in HCM City in a move to boost construction material consumption. — VNS