VietNamNet Bridge – Getting impatient about the slow credit growth, banks have been trying to boost consumer credit by offering surprisingly low interest rates, which in some cases are lower than the deposit interest rates.

Commercial banks have kicked off a new interest rate race. However, they don’t scramble for depositors by offering high interest rates any more, but try to find as many borrowers as possible.

Oceanbank now offers surprisingly low interest rates to fund the clients’ purchases of houses and cars. Borrowers can choose either the credit package with the interest rate of 5.91 percent for the first six months, or 9.97 percent for the first 12 months.

In early July 2013, Techcombank launched a promotional program with the preferential interest rate of 5.99 percent per annum, targeting individual clients

Other banks have also slashed the lending interest rates in an effort to boost the lending, while they have only three months ahead to raise the yearly credit growth rate to 12 percent.

SHB now lends to individual clients at 5.88 percent per annum for the first three months, or 8.68 percent for the first six months. The customers of Phuong Dong Bank can borrow at 5.99 percent for the first three months and 12.49 percent for the next nine months

Tien Phong Bank has launched a consumer credit program, offering the preferential interest rate of zero percent for the first months. Nam A Bank, Viet Capitalbank and HD Bank have also joined the race. The Hong Kong and Shanghai Banking Corporation (HSBC) also offers the zero percent interest rate for the first three months.

Though the lending interest rates have decreased significantly from the last year, the credit growth rate remains modest. A report of the State Bank showed that by the end of August 2013, the growth rate of the whole banking system had reached 6.45 percent only, while it hoped the figure would be 12 percent this year.

Therefore, analysts believe that the interest rate downward tendency would continue, and the only solution for banks to boost lending is to increase the disbursement of consumer loans.

A banker said banks have been requested to pump more capital into the economy. But banks don’t know where they should bring capital to, as 70-80 percent of businesses cannot meet the requirements to borrow money.

The banker said in order to boost lending, banks would have to lower the requirements on borrowers. However, since they can’t do that, they have to boost consumer loans.

Commercial banks now compete fiercely with each other to obtain borrowers. The same strategy that they follow is sending staff to agencies and companies to invite the workers there to borrow money. Every credit officer has a list of hundreds of customers and he has to contact every of the hundreds of potential customers every day.

People now tend to be more fastidious about the credit packages. Nguyen Si Hung in Cau Giay district in Hanoi said the preferential interest rate of zero percent is applied for some months only, while borrowers would have to pay higher interest rates in the next months.

Also according to Hung, it’s still unclear about the fees, while customers cannot terminate the credit contracts before the due time, or they would be imposed fine.

Tran Thuy