The home affairs ministry on Friday urged 11 governmental financial institutions to come up with schedules for withdrawing from the lending business, pointing to the need to reduce their outstanding loans over the medium and long term.
In a report to the Finance Ministry and six other ministries and agencies, the Public Management, Home Affairs, Posts and Telecommunications Ministry argued that the benefits of concessional loans provided by the public lenders have been declining as private banks continue to cut rates.
Thus, the governmental lenders need to review their lending practices and seek a complementary role, it said. such as loan guarantees for private banks, the report says.
As of the end of March 2002, governmental lenders accounted for 21 percent of the total domestic loans provided by all financial institutions, including private lenders.
Their large market share and low interest rates have long been criticized as a major factor behind the private sector's banking woes.