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14 July 2009

Vietnam banks keep consumer credit tight

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Commercial banks in Vietnam, after a period of trying to lure more clients to consumer loans, have begun setting additional conditions on loans, local website VietNamNet Bridge reported.

They have begun to do this since the State Bank of Vietnam announced it would take inspection tours to examine the credit quality and outstanding loan growth rates at some banks which have been considered as growing too rapidly.

Unlike the beginning of the year, many commercial banks now have become hesitant with consumer credit, especially credit with no collateral. Asia Commercial Bank (ACB) has recently set the new condition on those who want loans but do not have collateral that they cannot live in leased houses. The provision also applies to those who own houses but lease the houses to others and then rent houses to live in.

ACB’s credit officer said that previously, the bank only required borrowers to show ‘ho khau’ (permanent residential registration book), have the monthly income of 5 million dong per month, have a stable job (for more than one year) and a fixed telephone line. However, as more and more clients have been seeking unsecured credit, the bank has set more conditions to ‘filter’ clients and reduce risks.

Techcombank stopped providing loans with no collateral in May.

The general director of a big joint-stock bank admitted: “Banks’ credit policies have seen some changes”.

The personal banking director of another bank said that his bank does not intend to expand unsecured credit for many reasons, including high risks and difficulties in loan management. The bank has raised the minimum income level borrowers need to have to be eligible for loans to 5 million dong from 3 million dong.

Meanwhile, other banks maintain consumer loaning with easy conditions, but require high interest rates. Prudential Finance, for example, is providing loans with no mortgaged assets required at 17.4 percent per annum.


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