Capital injection needed to cut loan interest rates
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 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
You should also see
Vuong Dinh Hue permitted to cease holding positions, working
The 13th Party Central Committee on April 26 agreed to let Vuong Dinh Hue cease holding the positions of Politburo member, member of the 13th Party Central Committee, and Chairman of the 15th National Assembly (NA) in the 2021 - 2026 tenure.
See more
Business
Vietnam’s rice exports may exceed 2024 target
With positive results recorded so far, Vietnam can exceed its target of 7.6 million tonnes in rice export volume set for 2024, Nguyen Ngoc Nam, Chairman of the Vietnam Food Association, said at a conference in the Mekong Delta city of Can Tho on April 26.
Business
Ample room for Quang Ninh to attract FDI
The northeastern province of Quang Ninh has ample room to attract foreign direct investment (FDI) and realise the goal of attracting 3 billion USD in FDI this year and 10 billion USD in the 2020-2025 period.
Business
Long An, Dong Nai introduce strengths in RoK
The southern province of Long An and Dong Nai introduced their investment climate as well as socio-economic development orientations at an investment promotion conference held in the Republic of Korea (RoK) on April 26.
Business
Vietnam makes initial efforts to approach creative industries: CIEM
Vietnam has made initial efforts to approach creative industries and services, particularly a policy framework related to creative economy development, according to a new report released by the Central Institute for Economic Management (CIEM).
Business
HCM City wants to become major partner, customer of NVIDIA: Official
Chairman of the People’s Committee of Ho Chi Minh City Phan Van Mai has told the Vice President of Worldwide AI Initiative at NVIDIA, Keith Strier that the city wants to become a major and good partner and customer of the firm in Vietnam.
