Lending interest rates are unlikely to be lowered in the near future due to demand-supply mismatch, the local online newspaper Saigon Giai Phong quoted Le Dat Chi, Head of Financial Department, University of Economics Ho Chi Minh City, as saying.

Earlier this year, the central bank took measures to strictly enforce the deposit rate cap of 14% p.a. in an effort to bring the lending rates down to 18%- 19% and consolidate the banking system. However, local enterprises still had to borrow at around 22- 23% per annum, much higher than the 14% rate cap.

Chi commented on the issue, saying that local firms cannot get access to sufficient bank loans as the government also requested commercial banks to cut outstanding loans in non-production sectors.  Firms in need of funds, thus, had no bargaining power on interest rates and had to suffer from sky-high rates.

Several commercial banks presently enjoyed substantial profits at the expense of local businesses, Chi said, adding that the government has been actively deploying administrative measures, yet failed to ease the local interest rates. The government should apply both administrative and economic measures, Chi suggested.

Source Sophie/ StoxPlus