TT - A number of banks said after the application of agreed interest rate for the medium and long term loans, some loan customers to invest in production tended to  refuse when banks make loans at interest rates over 18% per year.

There was competition trend among banks in a beneficial direction to the borrower. Banks also don’t rush to mobilize capital for higher interest rates, although there is solicitation.
High but will reduce
According to State Bank, last week, when permitted to negotiate medium - long term interest rate, the State Bank has increased the interest rate, fluctuating around 12-14% per year, 15-17 % per year for joint stock banks. There are some banks also offer 18% interest per year. However, many banks admitted that 17-18% interest rate per year exceeds the stamina of the business.
However, the situation is not too pessimistic because for the first time the application of agreed rate, high interest rate is unavoidable. General trend is to decline interest rates because banks will have to compete with each other. There are reasons to believe that the plan of mid – long term loan interest rate will be reduced. According to State Bank, the capital of banks was plentiful so the loan is being actively pushed out starting May 3rd 2010 by pulling down interest rates loans.
Mr. Ly Xuan Hai, general director of Asia Bank (ACB), said ACB is excess over 30,000 billion VND. Mid-long term interest rate loans in the ACB will be at 15 to 16.5% per year, which will extend loans from 7 years to 10 years. According to Mr. Hai, in the current conditions, interest rates from 15 to 16.5% per year can be accepted by businesses. In Saigon Thuong Tin Bank, enterprises using multiple bank service, interest rate loan is 15% per year, another case of the highest 17% per year.
Many banks also said that despite the interest rate loans is high but this fit in with the mobilization rate applied. Banks is paying for raising capital (including the public interest, promotion and rewards are more than 12%) and costs about 3% of the loan, the lending rate is 17-18%.
Compete to find borrower
With the advantage of cheap raising capital, State commercial banks  started to compete in reducing lending interest rates. A deputy director of a Vietinbank’s branch  said the floor of aagreed loan in some of VietinBank’s branch is 14.5% per year applies to all types of businesses. Vietcombank’s Deputy transaction department in Vietnam also said that capital for loans of the bank is in excess so they have to  actively look for customers who have good projects to lend. At this time, they offer 14% of the applicable interest rate per year for large enterprises, small business is 15% per year.
Another factor leading banks to have to reduce lending interest rates are that it’s hard to find the borrower to accept the agreed interest rate. Mr. Tran Quang Truong, Deputy General Director of Tan Binh services, investment, exporting, importing and business JSC (TANIMEX), commented that businesses will be difficult to expand investment in the current phase as investment costs have increased very high.
"A few years ago invested only 1.5 million VND  per m2 a factory, now has doubled due to construction material and labor costs increased, interest rates is up too force companies to consider. Companies themselves have to choose, only select the projectwith  high feasibility, or find capital through channel issuing shares, bonds ... "- Mr. Truong said.
 Many banks admitted credit growth this year is not simple because banks are afraid to pump capital into the field of real estate but focuses on business production.
Mr. Cao Sy Kiem, chairman of Association of Small and Medium Enterprises, said tha difficulties has been overcome in 2009 but businesses still hesitate to expand production and business investment. Therefore, medium - long term credit will constitute no more than high proportion of the total outstanding balance of banks.