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On April 12, 2012, one day after central bank issued Circular 08/TT-NHNN of April 10, 2012, which pulled the loan ceiling rate down from 13 to 12 per cent per year, Techcombank announced its plan to offer VND4 trillion ($190.4 million) supportive credit packages to its corporate customers that would carry an interest rate of 15 per cent per year.
This preferential credit, however, would be available only to businesses involved in import/export or essential goods production or those operating in agricultural and rural areas.
On the same day, ABBank rolled out a VND2 trillion ($95.2 million) supportive package that is only for import/export firms and has an interest rate that is 2 per cent per year lower than those that are regulated.
Similarly, Eximbank unveiled a preferential VND6 trillion ($285.7 million) package with a 16.5 per cent per year interest rate that is being offered to export, small and medium-sized firms.
Also on April 12, Sacombank set aside a VND1 trillion ($47.6 million) concessionary credit package that would target agricultural, forestry and fishery/trading households. The interest rate for the first month is 12 per cent per year. However, in later months the interest rate is to be revised rooted on the bank’s regulated interest rates. Sacombank’s floor interest rate currently is 16 per cent per year.
For its part, ACB intends to slash its lending rates by 1-1.5 per cent sometime this week.
“With copious available capital sources, ACB will step up its capital support for firms operating in export, production and trading fields,” said ABC deputy general director Do Minh Toan.
Current negotiable lending rates at the bank range between 17.5-18 per cent per year.
“Loans will be made available to those firms which have annual revenue of VND300 billion ($14.2 million) or more,” said Toan.
Toan did, however, admit that there is a low rate of disbursement of the supportive credit package capital. For instance, nearly one month after the VND1 trillion ($47.6 million) preferential credit package was launched to allow small and medium-sized firms to carry out financial restructuring, only VND300 billion ($14.2 million) has been disbursed.
Orient Commercial Joint Stock Bank (OCB) came up with a concessionary credit package backed with VND2 trillion ($95.2 million) in mid-March 2012 with interest rates 2-2.5 per cent lower than regulated ones. While its current lending rates are fairly high at around 19 per cent per year, OCB only rendered lower cost loans to firms that deal in food, seafood, rubber, textile-garments, chemicals and plastics.
While most banks have lowered their lending rates in the recent past, the current average borrowing cost of 17-18 per cent per year is not low enough to entice most firms to apply for a loan.