The State Bank of Vietnam injected another 11 trillion VND (579 million USD) into the nation’s capital-starved commercial banking system late Tuesday, hoping to stabilise lending interest rates that had skyrocketed following recent deregulation.
Of the total, about 8.2 trillion VND (431.57 million USD) was lent to banks for a 28-day term at an annual interest rate of 8 percent the remaining 2.5 trillion VND (131.58 million USD) was lent for seven days at a rate of 7.5 percent per year.
The latest bank bailout came as commercial banks had begun charging businesses interest up to 20 percent per year on medium-term loans.
It followed injections of capital into the banking system totalling 60 trillion VND (3.15 million USD) from the State social insurance fund in 2009, and another 70 trillion VND (3.68 billion USD) from the central bank in the first two months of this year, aimed at easing a liquidity crisis in the commercial banking system. Commercial banks have reportedly already repaid a large share of these loans.
At a meeting with commercial bank representatives last Saturday, State Bank of Vietnam Governor Nguyen Van Giau suggested that major banks should be making loans at 14-14.5 percent per year for medium – and long-term loans and shorter term loans at just 12 percent.
Many enterprises had companied to the media that they could not afford borrowing costs in excess of 14 percent.
When the central bank allowed negotiable interest rates, Giau said, the expectation had been that banks would compete to attract borrowers and lending interest rates would fall, but this hasn’t been the case./.
Of the total, about 8.2 trillion VND (431.57 million USD) was lent to banks for a 28-day term at an annual interest rate of 8 percent the remaining 2.5 trillion VND (131.58 million USD) was lent for seven days at a rate of 7.5 percent per year.
The latest bank bailout came as commercial banks had begun charging businesses interest up to 20 percent per year on medium-term loans.
It followed injections of capital into the banking system totalling 60 trillion VND (3.15 million USD) from the State social insurance fund in 2009, and another 70 trillion VND (3.68 billion USD) from the central bank in the first two months of this year, aimed at easing a liquidity crisis in the commercial banking system. Commercial banks have reportedly already repaid a large share of these loans.
At a meeting with commercial bank representatives last Saturday, State Bank of Vietnam Governor Nguyen Van Giau suggested that major banks should be making loans at 14-14.5 percent per year for medium – and long-term loans and shorter term loans at just 12 percent.
Many enterprises had companied to the media that they could not afford borrowing costs in excess of 14 percent.
When the central bank allowed negotiable interest rates, Giau said, the expectation had been that banks would compete to attract borrowers and lending interest rates would fall, but this hasn’t been the case./.
