The State Bank of Vietnam needs to inject capital into the banking system to help credit institutions cut lending costs without causing a systematic imbalance in interest rates.
The National Financial Supervisory Commission (NFSC) made this proposal in its September economic report, which infonet.vn cited.
SBV figures in September showed that lending interest rates for general production and business remained stable at nine to 10 percent for short-term loans and 10.5 to 12 percent for medium- to long-term loans. Meanwhile, deposit interest rates fell by 0.1 to 0.3 percentage points to five to six percent for short-term loans, six to 7.2 percent for loans of less than 12 months and 7.3 to 7.8 percent for longer-term loans.
The NFSC backed up its comments with reports from 15 credit institutions and said the average profit margin between deposit and lending interest rates in the first half of this year decreased by 50 percent year-on-year.
"The growing imbalance of interest erodes the financial capacity of credit institutions and the risk provisioning toward bad debts as well," the report said.
The commission also suggested the volume of low-interest capital that the central bank should inject.
To date, the banking system handled more than 249 trillion VND (11.6 billion USD) in non-performing loans (NPLs), compared with 464 trillion VND (21.7 billion USD) in bad debt in September 2011. After three years, an estimated 53.6 percent of NPLs were resolved.
The Vietnam Asset Management Company (VAMC) is expected to purchase 70 trillion VND (3.2 billion USD) of NPLs by the end of this year, plus 78 trillion VND (3.7 billion USD) in provisional funds from commercial banks and credit institutions.
SBV Governor Nguyen Van Binh told the National Assembly Standing Committee meeting last week that the central bank would take drastic measures to handle bad debts.
However, in its latest report, the NFSC said the VMAC was in need of a State-sourced financial stream to become more competent in purchasing bad debts. Otherwise, the VMAC will need more time to lengthen tenures of special notes to help credit institutions accumulate long-term capital sources.-VNA
The National Financial Supervisory Commission (NFSC) made this proposal in its September economic report, which infonet.vn cited.
SBV figures in September showed that lending interest rates for general production and business remained stable at nine to 10 percent for short-term loans and 10.5 to 12 percent for medium- to long-term loans. Meanwhile, deposit interest rates fell by 0.1 to 0.3 percentage points to five to six percent for short-term loans, six to 7.2 percent for loans of less than 12 months and 7.3 to 7.8 percent for longer-term loans.
The NFSC backed up its comments with reports from 15 credit institutions and said the average profit margin between deposit and lending interest rates in the first half of this year decreased by 50 percent year-on-year.
"The growing imbalance of interest erodes the financial capacity of credit institutions and the risk provisioning toward bad debts as well," the report said.
The commission also suggested the volume of low-interest capital that the central bank should inject.
To date, the banking system handled more than 249 trillion VND (11.6 billion USD) in non-performing loans (NPLs), compared with 464 trillion VND (21.7 billion USD) in bad debt in September 2011. After three years, an estimated 53.6 percent of NPLs were resolved.
The Vietnam Asset Management Company (VAMC) is expected to purchase 70 trillion VND (3.2 billion USD) of NPLs by the end of this year, plus 78 trillion VND (3.7 billion USD) in provisional funds from commercial banks and credit institutions.
SBV Governor Nguyen Van Binh told the National Assembly Standing Committee meeting last week that the central bank would take drastic measures to handle bad debts.
However, in its latest report, the NFSC said the VMAC was in need of a State-sourced financial stream to become more competent in purchasing bad debts. Otherwise, the VMAC will need more time to lengthen tenures of special notes to help credit institutions accumulate long-term capital sources.-VNA
