The entire amount of interest rate support has only reached VND 134 billion until January 2023.

Banks disbursed around VND 800,000 billion in outstanding loans for an interest rate package, totaling approximately VND 16,035 billion in interest support in 2022. Unfortunately, the entire amount of interest rate support has only reached VND 134 billion until January 2023.

Slow disbursement for what?

The reason for the sluggish disbursement of this support package was mostly due to concern on the part of both clients and banks. Many firms are currently hesitant to obtain loans for interest rate support because they believe the amount of interest support comes from the State budget, requiring them to undergo a slew of tight processes, including inspection by competent authorities.

According to the State Bank of Vietnam (SBV), it is difficult for banks to determine who would benefit from interest rate support when customers work in several industries. Furthermore, banks are still concerned that several previous interest rate support programs have not been settled. Furthermore, they are cautious with the amount of support from the State budget in order to minimize future risks.

Not to mention that numerous ambiguous regulations make implementation challenging. It is also important to stress that enterprises that benefit from this support package must be able to recover and repay loans according to commercial banks' internal assessments. Several banks, however, stated that assessing businesses’ resilience would be impossible and that they could only determine whether or not consumers were qualified for loans.

A soon amendment needed

Numerous experts think that Decree 31/2022 should be amended as quickly as possible to remove the regulation on businesses' resilience, instead forcing consumers to fulfill the bank's lending standards. Moreover, special regulations on inspection and supervision should be established to ensure that the SBV and working group's inspection operations are focused primarily on commercial banks. Inspection authorities undertake client checks only when legal infractions are detected at commercial banks, and solely to assure compliance with rules on interest rate support, ignoring the other scope.

"Instead of considering companies as objects of law violation, competent authorities should focus on guiding them on how to do it correctly. Businesses may now readily use the interest rate assistance package, and banks are more confident in making business loans", said Ms. Nguyen Minh Thao - Head of the Business Environment and Competitiveness Research Department at CIEM.

Furthermore, according to Assoc. Prof. Dr. Dinh Trong Thinh, a financial expert, the package's present beneficiaries are restricted, with just 11 industries, and these sectors have experienced numerous challenges, making it impossible to satisfy loan terms. As a result, the industries that benefit from this policy should be expanded.