Businesses can now get loans at about 8-9 per cent for the short term - compared to more than 20 per cent in 2011. — Photo dantri.com.vn

HA NOI (Biz Hub ) — The economy is heading to the year-end season and commercial banks are struggling to boost capital demand from enterprises that could help them to meet their credit sales targets.

The banks have slashed lending rates under the central bank's instruction; a policy designed to ease pressures on overbearing loan repayment costs. And have advertised promotional activities in order to drum up more business.

Businesses can now get loans at about 8-9 per cent for the short term - compared to more than 20 per cent in 2011. While others offered nil interest incentives to attract borrowers. HDBank, for instance, offers loans at zero interest for the first month.

However, with the year-end season looming and the economic slump still dampening the economic horizon they are facing a double-whammy to sales targets that may prove hard to avoid as the final quarter wraps up.

Also, in order to tackle the chronic credit demand in the fourth quarter and Tet, several banks such as NamA Bank, OCB, HDBank, SeABank have been licensed to expand the lending cap up to 30 per cent.

A representative of a HCM City-based bank said that: "There is no where to run. Our business must guarantee a minimum benefit which comes from the credit business. This route puts pressure on our team to disburse capital to market members. We must meet our credit growth target."

Nguyen Hoang Minh, director of the State Bank of Viet Nam's HCM City branch said that credit growth would struggle to exceed 10 per cent, and would fall below the anticipated rate of 12 per cent.

Being led by such a target, some banks are on the way to expanding into unsecured loans, historically a high-risk venture.

Banking staff have also been approaching potential clients and have conducted one-on-one consultations to encourage them to take out further bank loans.

However this was not as easy as it sounds, Industry insiders said it was still not easy for companies to afford to expand in the current market turmoil, or for small-and medium-sized firms who did not have sufficient assets to put up as collateral.

Cao Sy Kiem, chairman of the Viet Nam Small and Medium Sized Enterprises Association, said that although capital demand from the business community was always higher in the final quarter, the capital flow was still at a standstill due to still-high interest rates.

Economist Tran Du Lich said that borrowing costs were not the only problem. Many enterprises were getting stuck in the current context of weak purchasing power, increasing inventory levels, and growing bad debts.

Analysis also warned that banks in their turn must be very cautious in new loan contracts to avoid non-performing loans. — VNS