Commercial banks should make efforts to reduce costs, reduce or stabilise interest rates until the end of the year. This is a consistent policy of the State Bank of Vietnam (SBV) to support businesses and economic growth.
The deputy Governor of the SBV Dao Minh Tu affirmed the above at the BankingBusiness Conference held by the SBV and HCM City People’s Committee on April 18.
The conference’s purpose was to remove difficulties for businesses on capital, helping them allocate more capital on production and business activities and contribute to promoting economic growth of each locality.
Recently, the SBV has determined that small and medium enterprises are one of the five priority areas, directed credit institutions to focus on lending capital, and stipulated the ceiling interest rate for short-term loans in VND for this field 1 percent to 1.5 percent per year lower compared to other common areas. The SBV has also implemented special credit programmes and policies to support businesses to access capital in some sectors and fields and perfected the legal framework on lending activities of credit institutions in the direction of strengthening decision-making authority and responsibility.
However, some businesses in the agricultural sector still find it difficult to borrow capital. Tu Minh Thien, deputy Head of the Management Board of HCM City High-Tech Agriculture Zone, said that, despite the central and city agricultural support policies, there are still some limitations in accessing capital. Specifically, small and medium-sized enterprises are only capable of small and partial investments while preferential interest rates are entitled to only high-tech and large-scale investment projects.
‘Many businesses are suffering from bad debt due to high interest rates in the previous years, now it prevents them from accessing support programmes. Some investors are still afraid to borrow capital for investment projects due to high risks and pressure from debt repayment,’ said Tu Minh Thien.
Lu Nguyen Xuan Vu, Chair of Tam Nong Business Club in HCM City, said that there are many difficulties when agricultural businesses approach bank capital. While businesses in other areas can recover capital quickly, those in agriculture are unlikely to regain capital in one to two years. Their collaterals are often low-priced agricultural land and it allows them a loan of only half its valuation. They expect the government to have policies to support businesses in this area.
‘We store honey for a whole year to sell in both domestic and overseas market, so we need to have bank loans to temporarily stock up. If we cannot borrow money or it is not disbursed regularly, we must export all our storage to have capital to maintain business activities. Therefore, we need stable lending policies from banks,’ shared Vu.
Responding to businesses’ opinions, deputy Governor Dao Minh Tu affirmed that he did not neglect the agricultural and rural areas, which is one of the five priority areas regarding capital. Currently, the regulation on short-term lending in the rural agriculture sector has a maximum interest rate of less than 6.5 percent per year and commercial banks must apply the regulations properly. Bank capital will focus on production and business activities, especially in priority areas, and the SBV stated that there is no shortage of capital.
‘The SBV will continue to require commercial banks to reform administrative procedures favourable for customers and businesses while still ensure safety requirements. Fees, interests, review and approval schedule should be transparent for businesses to know and comment,’ said Tu.
