Vietnam bank loans to double by end 2013

Bank loans in Vietnam will double by the end of 2013 on the back of subsidized interest rate schemes and large consumer credit demand.

This is according to a recent survey conducted by an India-based market research and information analysis company.

Bank lending in Vietnam is treated as an arm of the government policy, with banks directed to offer preferential interest rates and debt relief to farmers and still often enjoying a cozy relationship with large state-owned enterprises, according to ENCOS' “Vietnam Financial Sector Forecast to 2013” study.

However, the lending practices of state-owned banks, generally favor state-owned firms over private companies. As a result, private firms often have to use short-term borrowing to finance long-term investments.

The growing rate of interest on depository products offered by banks and increasing consumer confidence on the banks, the bank deposits are projected to grow at a fast pace.

Most of the banks in Vietnam are raising interest rates to attract more funds to meet their capital requirement.

Banks, which have not announced hike in interest rates, have launched promotion programs to mobilize more capital as their capital demands have become increasingly high. Besides, a number of banks in Vietnam are offering negotiable deposit rates to attract more customers.