The credit growth rate of many commercial banks has nearly reached or exceeded the allowed level of 20 percent. Therefore, banks now have to restrict disbursement and seek new channels to spend their money.

According to the State Bank of Vietnam, in May 2011, the outstanding loans increased by 0.01 percent only. Notably, the loans in Vietnam dong decreased by 0.64 percent.

In fact, many banks have no “credit room” any more (their credit growth rate has exceeded the threshold of 20 percent), and they have been hurrying to collect debts to reduce the outstanding loans to the allowed level. Vietbank, for example, had had the credit growth rate reaching 26 percent by the end of May, while Phuong Tay 24 percent.

Other banks can still lend more, but they say they find it very difficult to set up the business plan suitable to the required credit growth rate of less than 20 percent for the whole year 2011.

Some small and medium joint stock banks now try to check all the loans and take back the loans which have matured. They now intend to restrict new loans if they do not think the lending is necessary.

A director of a branch of Viet A Bank said that his bank recently has released an internal notice, asking branches to check the loans to individual clients. Currently, branches have to report loans to the head office for approval.

Do Lam Dien, from Corporate Bank under Maritime Bank said he believes that the outstanding loans are still within the safety line, but the bank restricts the lending to new clients, while it only focuses on satisfying the demand from loyal clients in a cautious manner.

Dien said that banks face very high risks in providing loans in these circumstances. The more they lend the bigger risks they would face. Therefore, many banks decide to purchase government bonds to “spend” their money – a safe solution.

“We understand well that when we cut down credit, this will badly affect businesses and consumer loan borrowers. However, at present, safety should be put on the top priority,” Dien said.

A senior executive of Nam A Bank said that the outstanding loans of his bank have not increased over the last month. “Collecting matured debts are now the priority of the bank,” he explained.

Businesses have confirmed that they find it more difficult to borrow money from banks over the last month. The owner of a business specializing in trading car parts on 1A Highway in HCM City said that he always borrowed and paid money on schedule and he is listed among “good clients” of banks. However, he still cannot borrow 5 billion dong, even though he has been trying to contact a lot of banks over the last month.

“They (the banks) refuse to lend, or tell me to wait,” he said.

Diep Thanh Kiet, Deputy Chair of the HCM City Association of Textile, Garment and Embroidery Association, said that the association’s member companies all complain about the difficulties in accessing capital. The lending interest rates are now overly high. However, even when accepting the sky high interest rates, many of them still cannot obtain loans.

Especially, complicated procedures have become more complicated than ever. The State Bank of Vietnam has recommended commercial banks to be sparing with accepting real estate as collaterals for the loans. Meanwhile, real estate or workshop premises are the main mortgaged assets of banks.

It is very difficult to borrow capital to maintain production at this moment. Banks would not only consider the mortgaged assets of the borrowers, but also consider their profiles and prestige.

“The difficulties in accessing bank loans have forced many enterprises to shut down some divisions, which have badly affected the production efficiency. Especially, many workers have become jobless.

An economist in HCM City said that in order to ease difficulties for enterprises, the State should consider acting as guarantee for small and medium enterprises to borrow capital, provided that the investment projects of the enterprises can pay debts and bring effects to the society.

“The State should step by step ease the lending interest rates based on the progress made in the fighting against  inflation, because this will bring long term benefit to the national economy,” he said.

Source: VNE