Banks advised not to get involved in economic stimulus packages to avoid bad debts | Business
Hanoi (VNS/VNA) – Although companies and individuals need the large
economic stimulus packageTo bounce back from the pandemic, the government should consider limiting commercial banks’ participation in packages to help them avoid bad debt risks, experts suggest.
According to Le Xuan Nghia, former vice president of the National Financial Supervisory Commission, the government should not force banks to participate in government economic stimulus packages such as interest rate cuts or postponement of debt repayment.
Bank loans must follow existing legal regulations to avoid risks for lenders, he said, adding that there was also a need to be careful about preferential interest rate schemes as they could distort rates. of market interest.
According to Nghia, after crises, commercial banks are often the sectors that suffer the most because they have to deal with a large number of bad debts. Therefore, many countries around the world often do not allow banks to be involved in the crisis. Instead of using bank capital, governments are using state budget money directly to help businesses.
With regard to the social situation of the governmenteconomic recovery and development programs, Hoang Van Cuong, a member of the Finance and Budget Committee of the National Assembly, said that it is necessary to combine fiscal and monetary policies to partly increase public debts and use the source of capital to lower interest rates to allow companies to access preferential loans without the need to force banks to lower their rates.
Previously, Deputy Governor of the State Bank of Vietnam (SBV) Dao Minh Tu was also concerned about the lack of timely and effective fiscal policy support, excessive credit size expansion and preferential interest rate programs that may cause difficulties not only for the SBV. the management of monetary policy but also the country’s strategy in terms of improving the financial soundness of banks.
The current policies of restructuring and delaying debt payment are a temporary and necessary solution in the short term, but extending the restructuring deadline will be risky for the Bankin the medium term, Tu said, adding that the implementation of many credit packages with different preferential interest rates will also distort the interest rate and credit markets.
According to Tu, the banking sector will also suffer a stronger impact this year from the growing risks of debt collection. Including debts, whose repayment terms were restructured or interest rates reduced in accordance with SBV circular 01/2020/TT-NHNN, the bad debt ratio of the banking system was approximately 7.31% at the end of last year.
To avoid an increase in bad loans, Nghia suggested that the government force banks to make more provisions for subprime loans.
Some banks have already increased provisions for their subprime loans. For example, ACB spent over VND 3.33 trillion on credit risk provision last year, 3.5 times more than in 2020./.