VietNamNet Bridge – The State Bank of Vietnam and big commercial banks have agreed on the plan to slash the interest rates to 17-19 percent. However, businesses still think that it is too early to rejoice the news right now, because they can see big obstacles ahead in the process of lowering interest rates.

Good interest rates only applied to specific borrowers

The Saigon-Hanoi Bank SHB has launched the two trillion dong program on funding the development of agriculture and rural areas, offering preferential interest rates to the loans under the program to be disbursed from August 29 to December 31, 2011. The preferential interest rates of 17-18 percent will be applied to the loans to fund the purchases of farm produce, food, seafood, agricultural production, husbandry and plantation.

SHB said that the program was launched in response to the central bank’s policy on slashing interest rates, which aims to help clients easily access the bank loans to improve their production capability in the current difficult circumstances.

Offering preferential interest rates under the frame of special programs targeting specific subjects with modest capital is the move that many commercial banks have taken recently.

Not only SHB, a lot of other commercial banks have also announced the programs on offering preferential interest rates targeting limited subjects, such as agricultural production enterprises. An Binh Bank has launched a credit program targeting business households and merchants, offering the preferential interest rate which is 1.5 percent lower than the normal interest rates.

Lien Viet Post Bank has also predicted that the interest rates would go down from early September, when the highest possible interest rate would be about 20 percent. However, the representative of the bank said that whether banks can lend money would still depend on many other factors rather than the interest rates. Especially, banks are not allowed to obtain the credit growth rate of more than 20 percent this year.

In the latest news, the Vietnam Finance Supervision Council has suggested lowering the ceiling credit growth rate in 2011 from 20 percent to 15 percent, saying that 20 percent proves to be unattainable goal.

Businesses and analysts keep cautious when talking about the future

The stock market receives the information about the interest rate decreases in a reserved attitude. Commenting about the news, the HCM City Securities Company keeps cautious when noting that everyone expects the 0.5-1 percent interest rate decreases, but the State Bank does not have much “space” to freely exercise the monetary policies, and the watchdog agency well understands this.

Meanwhile, the Thang Long Securities Company has commented that one should not expect sharp interest rate decreases, while the risk with the dong/dollar exchange rate has arisen.

Businesses: it’s not easy to access bank loans

Dr Le Xuan Nghia, Deputy Chair of the National Finance Supervision Council, said that hopefully, the interest rates would go down in September, but it is still early to say exactly how sharp the interest rate decreases would be.

Big commercial banks have slashed the lending interest rates by 1-2 percent. Non-state owned banks are offering loans at the interest rates of 21-24 percent per annum, while finance companies 20-22 percent.

Businesses prove to keep calm when hearing about the interest rate reductions. A director of a farm produce company, a subject to the preferential loans, said that in principle, he will get benefits from the programs launched by banks. However, he is not sure if he can get bank loans or not, because he will have to go through a lot of complicated procedures to get the nod from banks on the loans.

Meanwhile, analysts have noted that businesses would not dare to borrow money even if the interest rates go down. Since the purchasing power remains weak, the sale has been going very slowly, businesses do not dare to make heavy investment in the production.

The inflation rate in August dropped to the deepest low in the last 11 months, but is remains high. The inflation rate has exceeded the 15 percent threshold, and experts believe that the figure would far exceed 17 percent by the end of the year, because the consumer price index (CPI) always increases significantly in the last months of years.

The State Bank of Vietnam has called on commercial banks to ease interest rates, but to date, it has not released any concrete policies or incentives to encourage banks to do that.

Phuoc Linh