Figures published on the central bank’s website show the following disbursement.:

The State-owned Mekong Housing Bank (MHB) VND1.42 trillion ($81.61 million); the bank will provide VND24 trillion ($1.38 billion) at the subsidised rate this year; about 15 Agribank branches in HCM City and others in the Cuu Long (Mekong) Delta about 12 trillion ($689.65 million); and Sacombank VND2.03 trillion ($116.72 million).

The bank plans to disburse VND4–5 trillion ($229.88-287.35 million) to the end of March;

The Asia Commercial Bank (ACB) has disbursed VND1 trillion ($57.47 million) of a planned VND7.4 trillion ($425.29 million);the Viet Nam Export-Import Commercial Joint Stock Bank (Eximbank) VND1.2 trillion ($68.96 million) of a planned VND7 trillion ($402.3 million) to the end of March; the Housing Development Commercial Joint Stock Bank (HDBank) VND356 billion ($20.56 million); and Sai Gon Commercial Joint Stock Bank (SCB) VND253 billion ($14.54 million).

State Bank of Viet Nam governor Nguyen Van Giau has chaired meetings with representatives of 40 credit institutions in HCM City and numerous banks in northern Viet Nam to review the subsidy and deal with any difficulties arising from it.

The governor reiterated that the programme was intended to reduce the price of goods, maintain production and create jobs.

Commercial banks needed to ensure implementation of the policy to be transparent because there were no policies that allowed borrowers to monitor lenders, he said.

Banks should avoid unregulated competition and credit institutions should not ease their lending requirements.

The governor emphasised that effective implementation of the subsidy would enhance the status of the banking industry.

The support policy provided an opportunity for commercial banks to improve their regulations; extend their operations; renovate technology, enhance management capacity and assess staff qualifications.

The governor was told that implementation of Prime Ministerial Decision 131 had not been difficult.

As a result, commercial bank representatives at the meetings focused on ways to improve the policy and regulations and simplify borrowing procedures to make the programme more effective and convenient for their customers.

Raising capital

Banks are apparently determined to meet borrower demand for the 4 per cent subsidy and several are reported to have made a great effort to absorb all available "idle" money.

The central bank says interest for three-to-12-month dong-deposits at State-owned banks last week ranged from 6.82-7.4 per cent and from 7.24-7.5 per cent at joint stock banks – an average rise of about 0.5-1 per cent. Most banks also slightly raised interest for long-term deposits to meet the demand of stimulus lending till the end of this year.

This contrasts with the middle of last year when some banks that lacked liquidity heavily raised the interest paid for very short to short-term deposits.

"The interest increase this time is intended to mobilise more capital in preparation for growing applications to borrow at the subsidised interest rate," explained VP Bank Deputy General Director Nguyen Thanh Binh.

The Dai A Commercial Joint Stock Bank (DaiA Bank), has raised its yearly interest rate to 8.3 per cent for 18-month deposit.

The banks is also offering a 7.65 per cent rate on a six-month term deposit and a 7.8 per cent rate on a 12-month term deposit.

DaiA Bank General Director Quach Cong Phong said the interest rate paid for deposits had been increased to raise capital to expand its provision of credit.

The 12-month rate of the Maritime Bank has been raised to 7.5 per cent and the Sai Gon-Ha Noi Bank has increased its maximum deposit rate to 8.1 per cent.

ACB did not increase its interest rate but instead launched promotion programmes to attract depositors.

Individuals or organisations depositing VND5 billion or more receive a gift worth one-tenth or a second-tenth of a tael of gold.

Customers who deposit smaller sums are also given valuable gifts.

ACB General Director Ly Xuan Hai said the bank wanted to grow by 90 per cent so it must increase capital by 80 per cent.

The global economic crisis would continue to hamper economic growth, production and consumption and capital would become scarcer and have higher value than in previous years, he said.

It meant that liquidity would continue to be a major problem for the banking system.

Beating inflation

Vietcombank General Director Nguyen Phuoc Thanh said the Government’s decision to subsidise interest rates had created opportunities for enterprises that need capital to expand.

Other bank officials said the raising of interest was to balance the benefit to depositors against inflation which increased during the first two months of the year.

The Consumer Price Index for January increased by 0.32 per cent against December after a three-month fall.

In February, the CPI increased 1.17 per cent against the previous month. — VNS