Deputy Governor of the State Bank of Vietnam Đào Minh Tú

 

Disbursement of the the social housing credit package worth VNĐ120 trillion (US$4.73 billion) remains stagnant due to bottlenecks in legal procedures as well as interest rates which are considered quite high compared to the general level.

 

Deputy Governor of the State Bank of Vietnam Đào Minh Tú spoke to Việt Nam News Agency about how the disbursement could be accelerrated.

 

The credit growth of the banking sector is now more than 6 per cent but still far from the target of 15 per cent for the full year. How will the banking industry achieve the credit growth target?

 

With drastic measures of the Government, the Prime Minister and action programmes of the State Bank of Việt Nam, credit growth has accelerated quite positively since March after registering negative growth in the first two months of this year.

 

The growth momentum will be maintained in the remaining months of this year. I believe that credit will continue to expand, and the banking sector will strive to fulfil the annual target of 15 per cent.

 

Credit growth, in fact, depends on many issues of the economy such as credit demand, consumption demand and investment demand. For example, with regard to support policies for enterprises and projects, it is necessary to raise measures to remove difficulties in legal procedures to create a favourable environment for businesses. Then, the demand for credit will increase.

 

Hopefully, with the drastic efforts, the credit growth target this year will be within reach.

 

The VNĐ30 trillion credit package for the forestry and fishery sectors is being disbursed very smoothly and quickly. Meanwhile, the VNĐ120 trillion credit package for social housing is very sluggish. What are solutions to speed up the disbursement of the social housing credit package?

 

That’s the fact. The VNĐ30 trillion credit package for the forestry and fishery exports can be said to have been disbursed very positively. After completing the disbursement for VNĐ15 trillion, the disbursement for another VNĐ15 trillion is underway.

 

This is a very positive signal for the agriculture and rural sector, especially in forestry and seafood farming, processing and exports. If the VNĐ30 trillion package is fully disbursed, there will come another VNĐ15 trillion or a necessary amount of credit to be introduced to meet the capital demand of these sectors.

 

In my opinion, the package is a good solution which has significantly promoted the production, processing and exports of the agricultural sector.

 

As for the VNĐ120 trillion credit package for social housing, there are indeed many difficulties for disbursement. The problems have been analysed by the Ministry of Construction, including legal bottlenecks of housing projects.

 

Currently, the State Bank of Vietnam is proposing that the Government adjusts the existing package to make it more preferential to home buyers.

 

Accordingly, this credit package will be revised in the direction of increasing incentives for home buyers. Specifically, the lending rates will be around 3 per cent lower than the long-term commercial lending rates of the Big4 (compared to the current gap of 1.5-2 per cent). The interest rate will be adjusted every three months instead of six months as currently.

 

After a five-year preferential period, the banks will continue to offer preferential interest rates to home buyers at a minimum of one to two per cent lower than the commercial rates instead of floating as currently. The point is very clear. The interest rate after five years will not be floated so that borrowers won’t have to worry about bearing high interest rates after five years.

 

The lending policies for the developers will remain the same as they are now.

 

If the proposals get the approval of the Government, the State Bank of Vietnam will join with the Ministry of Construction to speed up the disbursement of this package.

 

Is it right that some private commercial banks have registered to participate in disbursing this credit package?

 

Yes, it is. In addition to four State-owned commercial banks, VNĐ30 trillion each, four private commercial banks have registered to provide the preferential credit with a sum of VNĐ5 trillion each. Thus, the credit package will increase by VNĐ20 trillion to amount totally VNĐ140 trillion.

 

The State Bank of Việt Nam always fully supports, facilitates and encourages commercial banks to participate in the social housing development programmes by their own resources. First of all, this is to lend home-buyers then developers with the most reasonable interest rates.

 

We highly encourage and create favourable conditions for commercial banks through appropriate mechanisms and policies to harmonise all factors related to ensure safety of the banking sector, credit growth and inflation control. — VNS

 

The VNĐ120 trillion social housing credit package currently provides loans to home-buyers at the preferential rate of 7.5 per cent per year and 8 per cent for developers. The rates will be revised every six months based on the average of the Big4 - BIDV, Agribank, Vietcombank and Vietinbank.

 

Statistics of the State Bank of Vietnam’s Credit Department showed that to date, a sum worth VNĐ1.344 trillion from the package was disbursed, 96.4 per cent of which was provided to project’s developers, while just a modest sum of VNĐ4.9 billion was provided to home-buyers.

 

Agribank is the bank with the highest disbursement rate.

 

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