Vietnamese banks reluctant to participate in government's US$1.43b loan program

They fear vague lending regulations.

A fear of non-payments and vague lending regulations are making banks reluctant to participate in the government’s US$1.43 billion loan program for low-cost housing meant to revive the property market and address a growing housing shortage. The program took effect June 1.

State Bank of Vietnam, the central bank, intends to inject the money into the banking system to offer soft loans to buyers and developers of low-cost homes.

Despite the program’s focus on home buyers, however, banks are prioritizing lending to firms, especially large state-owned ones, because of lesser risk.

Some with 70% of the program’s funds have been set aside for home mortgages. SBV expects banks to extend loans to low-income earners, government workers, and military personnel at 6% interest.

SBV will refinance Agribank, BIDV, Vietcombank, VietinBank and Mekong Housing Bank at 4.5% for the program.