Why is the disbursement of the 120,000 billion VND support package low?

At the conference on Credit for Real Estate and Social Housing Development organized by the State Bank of Vietnam (SBV) in coordination with the Ministry of Construction on November 13 in Hanoi, the 120 trillion VND credit program was discussed.

Ms. Ha Thu Giang, Director of the Department of Credit for Economic Sectors under the State Bank of Vietnam, speaking. Photo: Manh Thang

The representative of the State Bank said that it has directed and guided the implementation of credit programs of 120,000 billion VND for investors and buyers of social housing, workers' housing, and projects to renovate and rebuild apartments with interest rates 1.5% to 2% lower than the average lending interest rate of 4 state-owned commercial banks. In addition to credit programs for social housing and housing for policy beneficiaries, the implementation of the 120,000 billion VND program is one of the solutions contributing to improving the supply of social housing and the imbalance of supply and demand in the market.

Ms. Ha Thu Giang, Director of the Department of Credit for Economic Sectors under the State Bank of Vietnam, said that with the VND120,000 billion Program, up to now, based on the list of projects eligible to participate in the Program of 23 People's Committees of provinces and cities, BIDV and Agribank have signed credit contracts with a total committed credit amount of VND1,091 billion for 3 projects, the disbursed amount to date is VND105 billion. At the same time, they have committed to provide credit for 2 projects with a committed amount of VND605 billion.

"The biggest difficulty with the VND120,000 billion program is the limited supply. Up to now, only 23 provincial and municipal People's Committees have announced a list of projects eligible to participate in the program. In addition, according to the report of the State Bank of Vietnam's provincial and municipal branches, through reviewing the projects in the list, out of the 54 announced projects, 5 projects have been approved for credit; 30 projects (55.5%) have not yet had a need for loans; 11 projects (20.4%) are not eligible for loans, of which 6 projects are still facing legal problems; 8 projects (15%) are being appraised by commercial banks. Therefore, the implementation of the program has not been as expected," said Ms. Giang.

In the coming time, the State Bank will monitor and closely follow the implementation of the 120,000 billion VND Program to coordinate with the Ministry of Construction to consider and propose solutions to promote the implementation of the Program, contributing to promoting investment, construction as well as purchase of social housing by people.

Real estate bad debt ratio increases

Ms. Giang said that the quality of real estate credit has potential risks: The bad debt ratio of real estate credit by September 2023 was 2.89%, an increase compared to December 31, 2022 (1.72%). Credit for consumption and self-use purposes decreased while real estate business credit increased very high, this is a point to note when the demand for credit to buy real estate tends to decrease, partly reflecting the market's purchasing power is decreasing compared to the previous period.

In terms of operational safety of banks, real estate credit demand is usually medium and long term while the capital mobilized by banks is mainly short term with interest rates changing according to the market. Therefore, if banks cannot balance the term between mobilization and lending appropriately, they may face liquidity risks. In addition, there is also a concentration of credit for the real estate sector at some banks, with high growth rates.

Source: https://nld.com.vn/kinh-te/tai-sao-goi-ho-tro-120000-ti-dong-giai-ngan-thap-20231113113454367.htm