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Posts Tagged ‘lending’

Lending interest rates up, troubling enterprises

In Uncategorized on November 12, 2010 at 7:53 am

IMF to boost lending resources: report

In Uncategorized on July 20, 2010 at 11:26 am

SEOUL, July 19, 2010 (AFP) – The International Monetary Fund is seeking to boost its lending resources from 750 to 1,000 billion dollars to better handle future financial crises, a report said Monday.

The Financial Times, citing IMF Managing Director Dominique Strauss-Kahn, said the bigger credit lines should be used to help prevent, rather than address, crises.

IMF Managing Director Dominique Strauss-Kahn (AFP file)

“Even when not in a time of crisis, a big fund, likely to intervene massively, is something that can help prevent crises,” IMF Managing Director Dominique Strauss-Kahn told the Financial Times.

“Just because the financing role decreases, doesn’t mean we don’t need to have huge firepower… a 1,000 billion dollar fund is a correct forecast,” he said.

The Financial Times said the IMF wants to agree financing deals in advance that will be specially tailored to individual countries, rather than respond to crises with conditional loan packages.

The aim would be to cool market nervousness over any nation facing an imminent liquidity crunch, the paper said.

Strauss-Kahn was in South Korea — which chairs the Group of 20 leading economies this year — last week to attend a conference.

South Korea’s presidential panel for the Group of 20 leading economies, confirmed it was cooperating with the IMF to work out a better safety net.

“So far the lending facilities of the IMF have been focused on crisis resolution more than crisis prevention,” Jie-Ae Sohn, spokesperson of Presidential Committee for the G20 Seoul Summit, told AFP.

“But South Korea, as this year’s president of the Group of 20 leading economies is discussing with the IMF packages that would compliment and upgrade crisis prevention mechanisms.”

The spokesperson, however, declined to elaborate on how much the IMF will increase its lending resources.

Source: SGGP

New rules promote agriculture lending

In Uncategorized on July 15, 2010 at 8:58 am

New rules promote agriculture lending

QĐND – Tuesday, July 13, 2010, 21:0 (GMT+7)

The State Bank of Vietnam (SBV) has decided to reduce the mandatory reserves maintained by commercial banks engaged in agricultural lending.

The new decision aims to encourage further lending for agricultural activities. State Bank Governor Nguyen Van Giau said at a conference held in HCM City last week to launch new credit policies for agricultural and rural development.

Giau said that the decision would take effect next month.

Banks that have at least 40 percent of their outstanding loans given for agricultural production will be allowed to reduce their reserves from the current 3 percent to 1.5 percent.

Those that have agriculture loans accounting for 60 percent or more of their total lending need to maintain reserves of just 1 percent.

The Vietnam Bank for Agriculture and Rural Development (Agribank) will benefit from the new decision as its agriculture lending rate is already up to 70 percent.

Since compulsory reserves attracted no interest, reducing them would help banks cut capital costs and facilitate reduction of lending rates as well, Giau said.

He pledged that the central bank would use part of the money that it pumps into the market annually to help bank engaged in agricultural lending source long-term capital.

Under Decree No 41 issued recently by the Government, the amount of bank loans farmers and fishermen can get without collateral has increased five folds.

Those benefiting from the decree include: households and businesses in rural areas; farm owners and cooperatives in rural areas; organisations and individuals providing services for cultivation, animal husbandry, consumption and export of agricultural, forestry and fishery products and salt; and firms processing farm produce.

It also applies to enterprises involved in industry and trading and provision of non-agricultural services based in rural areas.

All the above-mentioned entities can borrow between 50 million VND (2,600 USD) and 500 million VND (26,000 USD) without collateral. These sums are five times higher than previous limits.

Firms engaged in agriculture, forestry, fishery and salt production can get bank loans of up to 50 million VND while cooperatives and farm owners can access loans worth 500 million VND.

Governor Giau also revealed at the conference that the Government was considering a pilot agricultural insurance programme by relevant ministries and other agencies.

The programme might provide financial support to farmers to help them pay premiums, he said.

Priority would be given to poor farmers, organisations and individuals engaging in large-scale production of main crops.

Source: VNA

Source: QDND

Deposit rates fixed; lending rates, USD price down

In Uncategorized on April 17, 2010 at 9:33 am

Most commercial banks have officially issued new interest rates on VND deposits and lowered lending rates to 15 percent, while the selling price of USD has declined to around VND19,000.

As of April 16, with the exception of a few banks applying deposit rates of 11.99 percent per year, the highest so far, the majority of banks fixed their rates at 11-11.5 percent.

Previously, most banks applied rates of 10.5 percent. But on top of this, they also added promotional rates to encourage depositors, meaning most account holders earned rates higher than 12 percent. Now, however, banks have put an end to such promotional programs.

As such, the newly announced deposit rates reflect  the exact interest that depositors will earn, said Duong Thu Huong, general secretary of the Vietnam Bankers’ Association.

Meanwhile, following a recent SBV circular on negotiable interest policy, many large commercial banks have agreed to lower lending interest rates to 15 percent per year on average.

Deals at a branch of Eximbank. Many banks lower lending rates to 15 percent on average, while the selling price of USD declines to around VND19,000  (Photo: SGGP)  

The Bank of Investment and Development of Vietnam (BIDV) fixed its maximum rate on short-term loans at 14 percent, while offering 13 percent to small- and medium-sized enterprises and businesses engaged in agricultural production and export. For medium- and long-term loans, the rate is 14.5 percent for borrowers engaged in production and trade.  

An Binh Commercial JS Bank (ABBank) is applying rates of 14-16 percent depending on the type of loan and client; and at Sacombank, the highest rate is set at 15 percent.

Financial experts forecast that lending rates could continue reducing in the future provided that inflation is under control.

Dr. Nguyen Tri Hieu, an independent member of the Management Board of ABBank, said, “The lending rate might be pushed down to less than 10 percent per year if the inflation rate is kept at 5 percent. In such conditions, the deposit rate could be 7 percent.”

In the past few days, the price of USD against VND has continuously declined at banks and on the open market as well. On April 16, one US dollar was selling for around VND19,000 at leading commercial banks, down VND20 from the day before.

On April 17, one US dollar sold for VND18,990-19,010 and was bought for VND18,920-18,950 at several banks.

Notably, at some points in recent days, the selling price of USD on the open market was lower than at commercial banks for the first time in the past three years.

The USD supply on the monetary market is currently quite abundant, the central bank has said, adding that some banks now have a USD reserve of $400-500 million.

The central bank attributed the positive situation to the ease of speculation of the hard currency by companies and individuals, considering it a result of the improved correlation between the foreign exchange market and bank interest rates.

Source: SGGP

Banks to reduce lending, deposit interest rates

In Uncategorized on April 15, 2010 at 11:31 am

Most banks have agreed to reduce the highest lending interest rates on VND loans to 15 percent while some will also lower deposit rates by 0.5 percent. The measures were announced at a conference held April 14 in Hanoi by the State Bank of Vietnam.

At the conference, SBV Governor Nguyen Van Giau presented a circular on lending under negotiable interest rates, asking commercial banks to publicly announce their rates.

Under the circular, the negotiable interest policy is now extended to short-term loans.

The applied interest must be determined on the current demand for loans, the basis of supply and demand, the integrity of borrowers, and the potential profitability for banks.

Loan interest rates must be affordable for borrowers, especially small- and medium-sized enterprises (SMEs), and agriculture and export businesses, the governor said.

After announcing the new interest rates, commercial banks must report them to the central bank, he added.

The central bank has issued a dispatch requiring the Vietnam Banking Association to take measures that ensure deposit and lending rates adopted by its members will benefit depositors, lender, and borrowers.

Deals at a Sacombank branch in Ho Chi Minh City(Photo: Sacombank) 

Long-term rates of 14.5-15 percent

During the conference, most banks agreed with recommendations from the SBV and the Vietnam Bankers’ Association that negotiable interest rates on short-term loans should initially be less than 14 percent per year and that rates on medium- and long-term loans should be 14.5-15 percent at maximum.

Several banks have already announced their new rates. For example, Agribank will apply a rate of 13.2 percent for agribusiness borrowers and 14 percent for exporters; and at BIDV, the rates are 13 and 12 percent respectively.

Meanwhile, Military Bank and Maritime Bank are offering loans to exporters at 13.7 and 12 percent per year respectively; and Sacombank will apply a rate of 13.8 percent for agribusiness borrowers, 14 percent for exporters, and less than 15 percent for other clients.

At ACB, the lending rate on short-term loans is set at 14-14.5 percent per year, while rates of 14.5 and 15-15.5 percent are offered on medium- and long-term loans.

Deputy general director of the Asia Commercial Bank (ACB), Do Minh Toan, forecast that lending rates will decrease by 1-1.5 percent to 13-14 percent per year in the near future – possibly the second quarter of this year. 

Mr. Toan said ACB has applied four lending rates based on client classification. Accordingly, a rate of 13.8 percent is applied for borrowers with a long, positive credit history with the bank; 14 percent is applied for regular customers; 15 percent is applied for SMEs; and 15-16 percent is applied for individual borrowers.

Nguyen Hao, director of the Hoang Tan Printing and Sewing Co., Ho Chi Minh City, said, “I hope that by mid-year, when we begin fulfilling our orders, the lending rates will go down to 10 percent per year, since we cannot afford loans at higher rates.” 

Meanwhile, Le Van Truong, deputy chairman of the Management Board of Khanh Hoi Import-Export JSC, HCMC, said, “Recently, our forestry processing enterprise in Binh Duong Province has been progressing  sluggishly while waiting for a reduction in lending interest rates. I hope that in June, when the enterprise’s operations peak, lending rates will further drop to 12 percent per year – the maximum rate we can afford.”

New deposit interest rates

Also during the conference, banks agreed to reduce deposit interest rates by 0.5 percent per year from the current maximum rate of 12 percent. Soon after that, many commercial banks announced their new range of deposit interest rates, with the maximum being less than 12 percent per year.

Viet A Bank will offer a deposit interest rate of 11.8 percent per year for a 12-month account; while the rates for accounts of three, six and nine months are set at 11.5, 11.6 and 11.7 percent respectively. For one-month deposits, the rate is 11 percent. 

With this range, the bank will find it easier to mobilize idle money than previously when a ceiling rate of 10.5 percent was applied.

At Eximbank, the maximum deposit interest rate is 11.5 percent per year for a 12-month account; while the rates for three-, six- and nine-month deposits are 11.40, 11.43 and 11.45 percent respectively.

Sai Gon Thuong Tin, meanwhile, will offer lower rates of 11.1 percent for a one-year account and 10.56 percent for one-month deposits.

Mr. Toan of ACB said that many commercial banks want to reduce deposit rates slowly, fearing that a one-time reduction will discourage depositors, causing a decline in banks’ capital mobilization.

Source: SGGP

Lending a helping hand to Agent Orange victims

In Uncategorized on April 5, 2010 at 3:40 pm

Lending a helping hand to Agent Orange victims

QĐND – Monday, April 05, 2010, 21:53 (GMT+7)

A seminar was held in Quang Ngai province on April 5 to discuss the consequences of Agent Orange/Dioxin on the environment and people’s health.

This was part of a project carried out by the Hanoi Public Medicine University in coordination with the Quang Ngai provincial Department for Health to provide assistance to victims of toxic chemicals sprayed by US troops during the war in Vietnam.

In his report, Professor-Doctor Le Ngoc Trong, an adviser in the project, described the US’s chemical warfare in Vietnam was the cruelest in human history.

He said that during the war, the US forces sprayed 72 million litres of toxic chemicals over 2,600 million hectares of land and forest, accounting for more than 10 percent of southern Vietnam.

Participants at the seminar also discussed measures for rehabilitation of Agent Orange victims.

Doctor Tran Trong Hai from the Hanoi Public Medicine University raised a project on functional rehabilitation for Agent Orange victims from 2008 to 2010 in Thai Binh, Quang Ngai and Dong Nai provinces, at a total cost of VND25 billion.

According to recent statistics from the Ministry of Labour, Invalids and Social Affairs, Quang Ngai now has 16,000 people with disabilities suffering Agent Orange infection. The province and relevant agencies have mobilised tens of millions of Vietnam dong, built nearly 300 charity houses and provided free healthcare services for about 5,000 local Agent Orange victims. At present, more than 4,000 families of Agent Orange victims are still living below the poverty line.

Source: VOV

Source: QDND

State bank removes lending cap

In Vietnam Economy on March 3, 2010 at 3:38 am

State bank removes lending cap

QĐND – Tuesday, March 02, 2010, 22:27 (GMT+7)

The State Bank of Vietnam has removed the interest-rate cap on medium- to long-term loans, a move expected to end a two-year struggle by banks to maintain liquidity.

It is also expected to bring an end to unlawful lending practices that had banks charging above the interest-rate cap to improve their profit margins.

“Interest rates will increase but the increase will be controlled,” said national Monetary Policy Advisory Council member Cao Si Kiem. “Supply and demand for capital will meet each other at a point of real value and help create stable factors for credit growth.”

The change would also signal sound policy management and indicate a socialist-oriented market economy.

But removal of the cap also comes with worries about the higher cost for credit among enterprises.

As anonymous sources, who asked that their banks in Hanoi not be identified, told Vietnam News their contract interest for institutions now ranged from a yearly 14-18 percent, up 6 percentage points against Feb. 26 when it was 12 percent.

“An average lending interest of 17 percent coupled with price increases for gas, electricity, water and even wages, will challenge enterprises,” warned Asia Food Co general director Nguyen Van Tan.

“I’m not sure small and medium enterprises can bear such high prices for long,” he said.

ACB Computer Co general director Nguyen Ba Anh said; “We need capital so we will have a rare chance to negotiate interest with banks while ignoring how much it costs”.

“Personally I think that not many small and medium enterprises could raise new loans at new rates without having difficulties with production or business.”

Some economists were reminded of late 2007 when the price for goods escalated and the central bank had to apply the brakes to the money supply after inflation hit a 10-year high of 12.63 percent. So while approving the central bank’s decision, Cao Si Kiem warned of high pressure to use monetary policy to control inflation. The central bank’s decision allows negotiated interest rates for mid- to long -term business and investment loans an short- mid – to long- term loans for bank cards.

Source: VNA

Source: QDND

Low rates boost lending to small businesses

In Uncategorized on November 11, 2008 at 10:43 am

Low rates boost lending to small businesses

by Thien Ly

In the wake of the State Bank of Viet Nam’s decision to cut the prime interest rate by 1 percentage point on November 3, a host of banks have cut lending interest rates from 1 per cent to 1.5 per cent.

The ceiling rate is now 18 per cent, and the lowest rate about 15 per cent.

Many banks have given their lending priority to capital-strapped small- and medium-sized enterprises, which make a nearly 40 per cent contribution to the national GDP.

The Bank for Investment and Development of Viet Nam (BIDV) is offering SMEs loans with a 15 per cent interest rate, a decrease of up to six per cent compared to earlier this year.

Lien Viet Bank has also cut its lending interest rate to 15.5 per cent, down by 1.5 per cent.

Meanwhile, the Agriculture and Rural Development Bank (Agribank) has applied the loan interest rate of 15.5 per cent a year to households in rural areas to help them develop production.

Companies involved in export and import of essential products are also able to receive priority loans with rates of 15 per cent and 16 per cent.

Some banks are considering granting loans to property investors that have sufficient financial capacity and feasible projects.

With loan rates of 15 and 16 per cent, many companies can get access to bank loans to implement their production and trading plans.

This change is of great significance since expanded production would create more jobs and stimulate consumer spending. As a result, deflation could be avoided.

Loan interest rate cuts have benefited both companies and banks and other credit organisations.

Thanks to several sharp cuts to lending rates, BIDV since August has disbursed nearly VND2 trillion (US$212 million) of the total VND3 trillion that it has planned to lend SMEs.

But many SMEs still cannot meet banks’ credit requirements, including using property as collateral. Banks and authorised agencies are seeking ways to help enterprises settle this difficulty.

Fishing for local buyers

Many processed seafood export companies have sought to sell to more local outlets because of difficulties exporters have faced overseas.

But seafood companies have little experience in the local market.

With its population of more than 80 million, Viet Nam is recognised to be one of the largest potential markets not only in Asia but in the world.

Average seafood consumption in urban areas is 18 kilos per capita per year and 12 kilos a year for rural areas.

But seafood processing enterprises have only had a modest share of this lucrative market.

The An Giang Fisheries Import and Export Joint Stock Company is one of the first enterprises that has pioneered selling catfish in the domestic market.

The company spent VND30 billion to introduce the fish to domestic consumers, but this year has only achieved domestic turnover of an estimated VND90 billion, far less than its past export turnover.

The Cho Lon Investment and Import – Export Holding Company (Cholimex) now is selling about 20 kinds of processed seafood products in the domestic market and earns about VND2 billion a month.

However, Cholimex’s domestic consumption rate of processed seafood accounts for only 10 per cent of its total products.

Sai Gon Aquatic Products Trading Joint Stock Company (APT) also achieved only VND3 billion a month in domestic turnover for its processed products.

Seafood companies have not made investments in building distribution networks in the domestic market, and most products are sold at supermarkets and not at traditional markets.

The latter is considered to be the most important consumption channel, with up to 90 per cent of the total commodities being sold there.

Many local consumers also prefer fresh seafood and not processed products. —

Interbank market given lending cap

In Uncategorized on August 22, 2008 at 3:56 pm

HA NOI — Each month, mutual charges issued by credit institutions on the interbank market are now restricted to one and a half times the prime rate set by the State Bank of Viet Nam.

The order was sent on Tuesday, effective immediately. The prime rate this month is 14 per cent per year, which means the lending interest cap for banks is now 21 per cent yearly, as opposed to the former negotiated lending interest rates without caps.

This is the first time the interbank market has operated with a lending cap. The same cap has applied to lending activities between banks and non-credit institutions since May.

The regulation is said to have been introducedto curb the rising (more than 21 per cent yearly) lending interest rates among banks in past weeks.

However, speaking to Viet Nam News yesterday, director of SBV’s Department for Monetary Policy Nguyen Ngoc Bao denied the rumour and said, “The regulation just aims to create a common interest rate for both the interbank and general markets.” —