Commercial banks are offering personal loans to increase credit growth and stimulate consumption but a finance ministry official has queried the wisdom of this move, warning it could bring back inflation.
Pham Quoc Thanh, deputy general director of An Binh Commercial Joint Stock Bank (ABBank), said his bank is offering incentives to borrowers.
It is offering a 10 th of a tael of gold, or 3.75 grammes, for every 100 million VND (USD6,000 USD) to customers borrowing at least 500 million VND for buying a house or vehicle, he said.
Thanh said boosting personal loans would stimulate consumption.
The Bank for Technology and Commerce of Vietnam (Techcombank) is also offering a promotional programme for a loan package worth VND1.5 billion (VND90,000) for buying a house and vehicle and household articles.
Personal loans account for 35 percent of Techcombank’s total outstanding loans.
In the last few months commercial banks limited personal loans as the Government tightened monetary policy in the face of soaring inflation.
The commercial banks’ plans to provide loans to boost consumption again raises inflation concerns, Vu Dinh Anh, deputy head of the Ministry of Finance’s Price and Market Research Institute, said.
He warned against increasing liquidity in the economy.
If the personal loans are not closely monitored individuals could use them to invest in stocks and property, causing serious consequences, he said.
To stimulate consumption, analysts said, it is better to reduce prices of goods and services rather than increase credit.