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Banks still collecting fee, despite SBV warnings   2010-01-18 - VietNamNet/TT

Commercial banks, besides lending interest rates, are still collecting additional fees from borrowers, though the State Bank of Vietnam (SBV) has threatened to impose heavy punishments.


The current basic interest rate is eight percent per annum, which means that commercial banks can lend money at no more than 12 percent per year. Businesses complain that the actual interest rate is 15-16 percent.


T., Director of a telecommunication company, contacted a bank to ask for a loan and was told that he would have to pay an interest rate of 1.5 percent per month or 18 percent per annum. This includes a one percent per month interest rate and 0.5 percent in “assets management fee.”


According to Tuoi Tre newspaper, banks have many methods banks to dodge laws and charge high interest rates. The written lending interest rate in credit contracts is 12 percent per annum, but borrowers in fact must pay 15-16 percent, with the so-called “fee.”


If businesses borrow money to run their production or business projects and they mortgage real estate to obtain the loans, then they must bear an “asset management fee” of six percent per annum. If they mortgage vehicles, they will have to pay 4-5 percent. The fee is collected quarterly.


A SBV HCM City Branch official noted that a lot of people have called the hot line to complain that they must borrow money at interest rates higher than the ceiling. There have been more calls about high interest rates than calls about shutting down gold exchanges, which SBV assumed was the burning issue now.


The SBV official observed that the central bank will undertake inspection tours to the banks about which people complained.


Many businesses forced to borrow money at high interest rates have not reported it to SBV because they feel happy just to get the loans.


Commercial banks complain that they are now between a rock and a hard place. They have to pay higher rates to depositors, while they cannot raise lending interest rates accordingly.


A director of a joint stock bank explained that, in theory, he pays 10.49 percent per annum to depositors, but in fact he must to pay nearly 12 percent, including bonuses and gifts.

As such, the capital costs price that bank branches must pay their headquarters is now nearly 14.5 percent, forcing them to lend at 16-17 percent in order to make a profit.


A member of the National Advisory Council for Monetary Policies believes that it is necessary to allow commercial banks to charge a legal additional fee on borrowers, allowing them to cover expenses they pay in mobilizing capital.


Commercial banks now lack capital so badly that they are trying to have businesses borrow in dollars instead of dong. Bankers say the dollar supply is now profuse and dollar capital is cheaper, at 8-8.5 percent per annum, half the dong rate.

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