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Bank to probe stimulus abuse   2009-06-09 - Viet Nam News

Officials will uncover and deal with any abuse of the stimulus package

The issuing of low-interest loans under the Government’s stimulus package will be checked during a nation-wide inspection tour by State Bank of Viet Nam officials.

The tour will focus on loans and interest rates, compliance under foreign currency management policies and the governance of safety limits in banking operations.

Bank officials said there would be regular investigations throughout the year in all cities and provinces as officials looked to uncover any abuse of the stimulus package. They also want to protect the safety of the credit organisations.

Under the package, the Government has offered 4 per cent subsidy of interest rate for loans to businesses, estimated to be worth up to US$1 billion. The aim is to promote production, boost exports and foster investment and consumer spending.

A bank official, who wanted to be anonymous, said the public was concerned some borrowers servicing a debt with a much higher rate would use the loans to fund their debt repayments and not invest in their business.

Others thought those who secured low-interest loans had used the money to buy securities, which resulted in the recent stronger securities market.

The official said the SBV had not uncovered any such cases. It began checks when the package was introduced in March.

"We have found some cases of wrong receivers and taken the money back," he said. "This time we hope to find the violators, if there are any."

By June 4, borrowing under the Government stimulus package’s subsidised loan scheme was at VND332 trillion (US$18.4 billion), an increase of 4 per cent over the previous week.

Of the total, the State-owned commercial banks and the Central People’s Credit Fund had disbursed more than VND240 trillion ($13.3 billion). Non-State enterprises accounted for about VND220 trillion ($12.2 billion) of the total.

The tour and random checks will run until July 25 and include checks nationwide on banks’ foreign currency management.

The foreign currency market was also a hot topic as enterprises sought foreign currency to fund imports while the banks set a high price for currency, said the officials.

Government inspectors of all ministries and departments have been asked to change their plans this year and report any violations of the stimulus package rules covering subsidised loans.

Tran Van Truyen, the Chief Government Inspector, said the inspectors were investigating how the package was implemented in localities and if there were any irregularities.

In the localities, inspectors would focus on the disbursement of funds for projects, Truyen said.

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