Banks aid 318,000 COVID-19 affected borrowers

The interest rate reduction was commonly 0.5-2 percentage points per year (Photo: VNA)

Hanoi (VNS/VNA) - Commercial banks cut interest rates on 980 trillion VND (42.6 billion USD) worth of loans to support 318,000 COVID-19 affected individual and corporate borrowers by the end of April, the latest data from the State Bank of Vietnam (SBV) showed.

The interest rate reduction was commonly 0.5-2 percentage points per year. Some credit institutions even offered a higher rate cut of 2.5-4 percentage points per year.

It was estimated if the banks cut the rate by 1 percentage points on average for the 980 trillion VND in loans, their profits will be lowered by at least 100 trillion VND.

By the end of April, banks also rescheduled debt repayments for more than 170,000 customers with loans of nearly 130 trillion VND, according to the SBV’s data.

The SBV has required commercial banks to further simplify lending procedures to help COVID-19-affected firms easily access preferential interest rate loans. However, he noted, banks must still meet lending standards to ensure the safety and stability of the financial and banking system.

Some businesses have recently claimed they could not access new loan packages with preferential interest rates due to their failure to meet banks’ lending standards and proposed that banks ease lending rules.

However, Nghiem Xuan Thanh, chairman of Vietcombank, said most companies that could not access the package are inefficiently operating their businesses.

Banks would not ease lending standards as they must avoid risks, Thanh noted, explaining that the package does not come from the State budget but from commercial banks.

Echoing Thanh, Tran Hoang Ngan, head of the HCMC Economic Development Institute, said banks are themselves businesses so they are always afraid of bad debts.

According to Nguyen Quoc Hung, director of the SBV’s Credit Department, in the current situation, it is forecast the bad debt ratio of the banking system will increase this year and negatively affect the country’s plans to deal with bad debts and recover poor-performing banks./.