The State Bank of Viet Nam plans to establish a standing group of 12 leading commercial banks which represent 85 percent of market share to address issues that arise in the banking system.
The group, to be known informally as G12+1, will meet every three months or as required to improve interaction between the banking system and monetary policymakers.
However, the establishment of the G12+1 is seen as the latest step by the central bank to force commercial banks to comply with interest rate regulations, with State Bank of Viet Nam Governor Nguyen Van Binh recently reiterating his intention to punish banks violating the deposit interest rate cap of 14 percent per year.
On Sept. 12, the central bank announced a list of seven banks offering interest in excess of the cap, calling leaders of these banks on the carpet to resolve the violations.
"We have to put banking operations on the right track and ensure transparency in order to better serve the economy and restore public confidence," Binh said.
The central bank has capped deposit interest rates at 14 percent as it attempts to bring average lending interest rates to 17-19 percent. However, a number of banks have exceeded the deposit interest cap to attract depositors and maintain liquidity, requiring them to lend at excessively high rates.
A number of commercial banks earlier this month announced their compliance with the State Bank goal to bring lending interest rates to 17-19 percent. Nevertheless, some enterprises have reported that they have continued to face difficulties obtaining loans at these lower rates.
Vu Manh Hung, chairman of the Binh Phuoc Young Enterprises Association and deputy head of the Viet Nam Livestock Association, told the newswire Vnexpress that livestock enterprises in the southern province of Binh Phuoc were still paying in excess of 19.5 percent per year for loans in Vietnamese dong, even though livestock producers were among agricultural producers entitled to priority lending under central bank regulations.
"The number of loan applications being approved is also very small," Hung said.
Hanh Tinh Vang (Golden Planet) Co Ltd director Ho Hoang Quoc Bao said that his company had not receive any interest rate reductions and was paying 20.5 percent on dong loans.
Viet A Bank general director Pham Duy Hung told Vnexpress, however, that 17-19 percent rates were applicable only to solid borrowers with a long relationship with the bank.
Orient Bank general director Trinh Van Tuan also said that this was the case, noting that banks themselves were servicing loans at higher rates
"It will take several months to cut real borrowing costs to 17 percent or less," Tuan said.
BIDV, Agribank, Maritime Bank, Eximbank, Sacombank, An Binh Bank, HD Bank, Nam A Bank, Sai Gon-Ha Noi Bank and Asia Commercial Bank have announced lower lending interest rates but only for good borrowers in certain sectors./.
The group, to be known informally as G12+1, will meet every three months or as required to improve interaction between the banking system and monetary policymakers.
However, the establishment of the G12+1 is seen as the latest step by the central bank to force commercial banks to comply with interest rate regulations, with State Bank of Viet Nam Governor Nguyen Van Binh recently reiterating his intention to punish banks violating the deposit interest rate cap of 14 percent per year.
On Sept. 12, the central bank announced a list of seven banks offering interest in excess of the cap, calling leaders of these banks on the carpet to resolve the violations.
"We have to put banking operations on the right track and ensure transparency in order to better serve the economy and restore public confidence," Binh said.
The central bank has capped deposit interest rates at 14 percent as it attempts to bring average lending interest rates to 17-19 percent. However, a number of banks have exceeded the deposit interest cap to attract depositors and maintain liquidity, requiring them to lend at excessively high rates.
A number of commercial banks earlier this month announced their compliance with the State Bank goal to bring lending interest rates to 17-19 percent. Nevertheless, some enterprises have reported that they have continued to face difficulties obtaining loans at these lower rates.
Vu Manh Hung, chairman of the Binh Phuoc Young Enterprises Association and deputy head of the Viet Nam Livestock Association, told the newswire Vnexpress that livestock enterprises in the southern province of Binh Phuoc were still paying in excess of 19.5 percent per year for loans in Vietnamese dong, even though livestock producers were among agricultural producers entitled to priority lending under central bank regulations.
"The number of loan applications being approved is also very small," Hung said.
Hanh Tinh Vang (Golden Planet) Co Ltd director Ho Hoang Quoc Bao said that his company had not receive any interest rate reductions and was paying 20.5 percent on dong loans.
Viet A Bank general director Pham Duy Hung told Vnexpress, however, that 17-19 percent rates were applicable only to solid borrowers with a long relationship with the bank.
Orient Bank general director Trinh Van Tuan also said that this was the case, noting that banks themselves were servicing loans at higher rates
"It will take several months to cut real borrowing costs to 17 percent or less," Tuan said.
BIDV, Agribank, Maritime Bank, Eximbank, Sacombank, An Binh Bank, HD Bank, Nam A Bank, Sai Gon-Ha Noi Bank and Asia Commercial Bank have announced lower lending interest rates but only for good borrowers in certain sectors./.
