Guidelines on government’s 4 pct loan subsidy clear: bankers

The procedures to get the subsidized loans would be very quick and simple to ensure loan applicants do not miss the chance to recover from the economic downturn, said Cao Sy Kiem, a member of the National Advisory Council for Monetary Policy. The central bank Wednesday announced guidelines for the 4 percent loan subsidies the government announced for companies, with most commercial banks saying they are clear and adequate.

The subsidy, part of a US$1 billion economic stimulus package, will be provided for loans taken by both state-owned and private businesses, except those operating in 13 specified industries like entertainment, real estate and securities. According to a circular posted on the State Bank of Vietnam (SBV) website, commercial banks have to register for the subsidies no later than the 10th day of every quarter. For loan support in February and March this year, the deadline is February 10. Banks have also been told to report monthly subsidies no later than the 10th day of the following month. Based on these reports, the central bank will transfer 80 percent of the subsidies every month. The rest will be transferred after the banks submit the whole year’s report. Eligible firms will get the subsidies for up to eight months on short-term loans taken between February and December this year. Chairman of the state-owned Vietinbank, Pham Huy Hung, said since the central bank’s guidelines are clear, his bank would immediately inform customers of the subsidy program. Hung said 60 percent of his clients are small and medium-sized enterprises and the subsidy would help them remain in business. Vietinbank is Vietnam’s fourth-largest lender by assets. Vietcombank CEO Nguyen Phuoc Thanh said his bank would start implementing the subsidy scheme. One fourth of the customers at his bank are small or medium companies. Dau Tu Chung Khoan (Securities investment) magazine Wednesday quoted him as saying the government’s decision would get credit flowing and, more importantly, lower prices. He also noted that local banks are flush with liquidity. The SBV is aiming to keep credit growth in the banking system at around 20 percent in 2009 after a rise of 21-22 percent last year. A senior official at HSBC Vietnam Wednesday told Thanh Nien Daily the bank is waiting for more detailed instructions from the central bank concerning eligibility criteria. The central bank held a meeting with commercial banks in Ho Chi Minh City Wednesday to discuss implementation of the scheme. Cao Sy Kiem, a member of the National Advisory Council for Monetary Policy, told Thanh Nien Daily the procedures to get the subsidized loans would be very quick and simple to ensure loan applicants do not miss the chance to recover from the economic downturn. Kiem, a former central bank governor, said, however, SBV needs to keep the procedures uniform at all banks so that none of them cause difficulties to borrowers. Last month the benchmark rate was lowered to 7 percent from 8.5 percent, the sixth rate cut since October. Commercial banks use it to calculate their lending rates, which should not exceed 150 percent of this rate. Some businesses said, however, they would not benefit from lower interest rates since orders have declined sharply, they have cut back on production, and do not need new loans. Reported by Thanh Nien staff