Finance and banking

Central bank punishes loan violators

HCM CITY — The central bank has instructed some commercial banks to throw the book at executives in charge following reports of violations of loan and interest rate rules.

The director of the State Bank of Viet Nam branch in HCM City, Ho Huu Hanh, ordered the Technological and Commercial Bank (Techcombank) to dismiss its city director Luong Huu Lam for covering up for his subordinates rather than punishing them for various violations committed on his watch.

The SBV said that the branch loaned VND350 million (US$20,700) to a client. Over and above the mortgage of a car valued at VND526 million, the client was forced to "mortgage" an amount of VND70 million in cash.

The central bank said besides Lam two other executives of the bank’s branch in Thu Duc District, Le Duc Tho and Ngo Anh Quoc, too had to be dismissed for the infraction.

Hanh also asked the bank to refund the cash "mortgage".

In another case of reported violation, the branch increased the annual interest rate for a client from 19.6 per cent to 24.4 per cent on July 1.

A third client was asked not to withdraw VND7.2 million out of an overdraft amount of VND24 million ($1,420).

Hanh said all these transactions were illegal and instructed Techcombank to repay the money to the borrowers.

Earlier, when the SBV wrote to the bank, Lam had replied that it had scrupulously followed the interest rate rules.

Another bank to attract the wrath of the SBV is the Sai Gon Thuong Tin Commercial Bank (Sacombank), which has been instructed to review its activities and penalise the director of its HCM City branch, Le Truc Thuan.

Thuan allegedly allowed his subordinates to force clients to pay higher interest rates than allowed by the SBV.

Hanh has ordered Sacombank to dismiss Diep Bao Hieu, the head of the transaction department at its Tan Dinh Sacombank Saigon, District 1, for forcing a client to pay a higher interest rate than regulated by the SBV.

Hieu had sent a note demanding over 23 per cent while the ceiling rate is 21 per cent.

The SBV has given Techcombank until today and Sacombank until next Tuesday to carry out its orders.

Earlier this month VIB dimissed its customer director of HCM City branch Nguyen Xuan Do at the behest of the central bank for violation of loan rules. — VNS

(from Vietnamnews)