Illustrative image (Photo: baodautu.vn) According to Le Xuan Nghia, former vice chairman of the National FinancialSupervisory Commission, the Government should not force banks to be involved inthe Government’s economic recovery packages such as interest rate cuts or debtrepayment postponement.
Bank loans should follow existing legal regulations to avoid risks for lenders,he said, adding it was also necessary to be cautious about preferentialinterest rate programmes as it could distort market interest rates.
According to Nghia, after crises, commercial banks are often the areas thatsuffer the most as they have to deal with a large number of bad debts.Therefore, many countries around the world often don’t let banks be involved inthe crisis. Instead of using capital from banks, governments directly use moneyfrom the State budget to aid businesses.
Regarding the Government’s socio-economic recovery and developmentprogrammes, Hoang Van Cuong, member of the National Assembly’s Finance andBudget Committee said it is necessary to combine fiscal and monetary policiesto partly increase public debts and use the capital source to lower interestrates to enable firms to have access to preferential loans without needing toforce banks to cut rates.
Previously, deputy governor of the State Bank of Vietnam (SBV) Dao Minh Tu wasalso concerned if there is no timely and effective support from fiscalpolicy, an excessive expansion of credit size and preferential interest rateprogrammes can cause difficulties not only for the SBV’s monetary policymanagement but also the country’s strategy on improving the financial strengthof banks.
Current policies on restructuring and delaying the debt payment time are atemporary and necessary solution in the short term, but extending the restructuringtime will be risky for the banking system in the medium term, Tu explained,adding the implementation of many credit packages with different preferentialinterest rates will also distort the interest rate and credit markets.
According to Tu, the banking industry this year will also suffer a strongerimpact on rising risks of debt recovery. If including debts, which hadrepayment terms restructured or interest rates reduced according to the SBV’sCircular 01/2020/TT-NHNN, the bad debt ratio of the banking system was about7.31 percent by the end of last year.
To avoid a rise of bad debts, Nghia suggested the Government require banks toset aside more provisions for risky loans.
Some banks have already increased provisions for their risky loans. Forexample, ACB last year spent more than 3.33 trillion VND in provisioning forcredit risks, 3.5 times higher than in 2020./.
VNA
