VietNamNet Bridge – The State Bank of Vietnam (SBV) has decided to exclude four groups of subjects out of the non-production sectors, which is considered as a move to loosen the lending regulations.

Banks given opportunities to push up lending

Just several days before the central bank’s decision was made, bank officers were asked by the bosses to focus on collecting debts. However, the pressure on banks has been eased, since the central bank announced the decision on excluding four groups of subjects out from the list of non-production sectors.

The four groups include 1) the loans to help individuals purchase houses and pay debts with their incomes 2) the loans to the businesses which build houses to sell or lease to low income earners, workers in industrial zones 3) the loans to the businesses which build houses for workers in industrial zones, and apply the rents not exceeding the levels declared by local authorities 4) the loans to the real estate developers who will put their products into operation prior to January 1, 2012.

Banks have been instructed by the State Bank to reduce the outstanding loans to non-production sectors to 16 percent by the end of 2011. This is a part of the policy on focusing on lending manufacturers, while the lending to non-production sectors (real estate, securities) is not encouraged.

Now four groups of subjects have been excluded out of the list of non-production sectors, which means that banks will have more opportunities to push up lending.

Director of a big bank branch said that he feels happy with the decision, because he has some clients belonging to the groups of subjects, which are now not considered as “non-production sectors” any more.

“We will have the opportunities to fund the projects on building houses for state agencies’ officers, houses for resettlement or houses for the poor, which are facing difficulties in arranging capital, including the ones of HUD or Hacinco,” he said.

“As we still have “room” to lend more, we will disburse money to the clients who can satisfy the requirements. This will partially help investors ease their difficulties in bank access,” he added.

Meanwhile, deputy general director of a joint stock bank said that the latest decision by the State Bank, by the nature “gives back the real name to individual consumer credit, which was once considered as a kind of non-production sectors”.

“At our bank, the consumer credit has been resumed. The number of people who have the demand for borrowing money to repair and upgrade their houses is relatively big. Meanwhile, the value of each loan is small, just some hundreds of millions of dong,” he said, adding that the lending interest rate to be applied to the subjects would be 22-23 percent per annum.

Is it accessible?

Dr Cao Sy Kiem, former Governor of the State Bank of Vietnam, said that the decision by the State Bank is a reasonable move, because it clearly classifies the credits to different sectors.

“The four groups of subjects clearly contribute to the economic growth. Therefore, it is quite reasonable to exclude them from the list of non-production sectors,” Kiem said.

However, he said that the decision will not help much in pushing up lending, because banks only have one month ahead to fulfill their business plan, during which, they will not have much time to consider applications for borrowing, and disburse money.

He also said that with the current high lending interest rates of 20-23 percent, not many borrowers would want to access bank loans.

Ngo Tri Long, a well-known economist, also said that the central bank has loosened the “credit valve”, but the slight loosening will not help much.

Meanwhile, a real estate developer who builds houses for low income earners said that the decision by the central bank would only benefit commercial banks, not real estate firms.

Nguyen Van Duc, Deputy Director of Dat Lanh real estate firm, also said that the procedures for borrowing money cannot be fulfilled just within one month.

Source: Tien phong