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Door to consumer credit open wide   2009-02-10 - VietNamNet/DTCK

Right after the State Bank of Vietnam removed the ceiling interest rate on consumer credit, commercial banks rushed to launch several thousand billion VND of new consumer credit programmes onto the market. However, the interest rates of the loans are ‘unnattractive’ to many borrowers.

 

The door opens

 

It is clear that individual clients now have more opportunities than in 2008 to access bank loans

Phung Duy Khuong, Deputy General Director of East Asia Bank, said that the bank is pushing up the issuance of credit cards, while encouraging clients to use the overdraft service with Dong A Bank cards – applied for those who purchase commodities in installments at Big C and Best Carings.

 

General Director of Lien Viet Bank Nguyen Duc Huong said that the bank is still providing consumer credit. As for credit without mortgaged assets, a client can borrow up to VND500mil, provided that he can show financial capability.

 

At ACB, the loan limit for credit without mortgaged assets is VND200mil/client, while the figure for credit with mortgaged assets is VND500mil per client. ACB has announced the loan limit of VND2,000bil for individual clients who need the loans to purchase houses in installments. The loans will be valued at some 70% of mortgaged assets’ values.

 

ACB said that the bank has estimated a 70% credit growth rate for this year, or double last year. Therefore, besides the VND35,000bil it will disburse under the interest rate subsidy programme, the bank also plans to push up consumer credit.

 

At Techcombank, clients can borrow VND200mil at maximum (those who don’t have mortgaged assets. Meanwhile, for clients who have mortgaged assets, the loan limit may be as high as 70-80% of the mortgaged assets’ values. Techcombank has also confirmed its plan to push up consumer credit this year.

 

But interest rates skyrocketing

 

It is clear that individual clients now have more opportunities than in 2008 to access bank loans. However, they are facing the problem that interest rates are on the increase. Banks have been raising interest rates since the central bank removed the ceiling interest rate scheme, paving the way for banks to loan at negotiated interest rates.

 

At East Asia Bank, Dong A Bank cardholders have to pay 1.02% per month in interest rate, or 12.744% per annum. The interest rate applied for clients over-drafting with Dong A bank cards and purchasing commodities at Big C and Best Carings is 12% per annum.

 

Bui Tan Tai, Deputy General Director of ACB, said that the maximum lending interest rates are 12.75% and 15.5%, respectively, for credit with and without mortgaged assets.

 

Meanwhile, Huong said that the rate offered by Lien Viet is 12% per annum at maximum.

Techcombank demands the interest rate of 14% per annum only for normal consumer loans, but it requires the very high interest rate of 18% per annum for loans without mortgaged assets.

Explaining the high interest rates for credit without mortgaged assets, Ho Anh Ngoc, Techcombank’s Director of Individual Financing Division, said that this credit proves to be highly risky, with the capital loss rate as high as 5%.

 

Analysts have affirmed that the removal of the ceiling interest rate scheme is a wise move at the moment as it can help push up loans while Vietnam is striving to stimulate consumption. However, they have also said that the consumer credit market will not be bustling in the immediate time.


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