Banks will lend more than VND100 trillion (US$4.3 billion) with preferential interest rates of 3-4 per cent per year to support the economy, according to Nguyen Tuan Anh, director of State Bank of Vietnam (SBV)'s Credit Department of Economic Sectors.
The rate cut is estimated to be worth VND3 trillion, Anh said at a preferential interest rate event held last week by Vietnam Economic Review.
In addition to this support package, the banking industry has also implemented many other support policies for firms and individuals, Anh said, adding the banking industry had restructured VND520 trillion in loans for borrowers and cut interest rates of VND16 trillion since the outbreak of the COVID-19 pandemic.
“The very large number has shown the banking industry has tried its best in recent times to share difficulties with firms and people during the pandemic,” Anh noted.
However, expert Le Xuan Nghia said the VND3 trillion rate support package is too small to create a rebound for the economy to recover. Therefore, he said, the size of the aid package should be larger.
Nghia suggested the central bank should use its monetary policies to cut rates by some 1 per cent per year besides another stimulus package with an interest rate reduction of roughly 2-3 per cent per year. He expected the measures would create a stronger interest rate reduction effect for businesses.
The support packages should be widely applied for all industries and businesses with simpler procedures. Accordingly, businesses that have faced difficulties, reduced revenue, had negative profits and had no collateral, can also access the support packages, Nghia said.
Besides, Nghia also proposed the Ministry of Finance consider the issuance of bonds to borrow from people or the central bank. He estimated the central bank’s foreign currency reserves are now very large, about four times higher than that in 2009.
Regarding credit growth, SBV's Anh said the banking industry has been actively boosting lending in the past two months, but credit demand is still weak due to the impact of the pandemic. He expected credit would increase more rapidly after the social distancing measures are removed.
According to the SBV, credit by the end of last month increased by 7.18 per cent compared to the beginning of this year, and is expected to reach 12 per cent for the whole year.
Anh affirmed that banks haven't tightened lending, but created favourable conditions for firms to access bank loans.
"The credit growth target this year is 12 per cent, but if necessary, the rate can be adjusted to create favourable conditions for firms,” Anh said. — VNS
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