Credit growth as of the end of November 2019 reached 10%, lower than that of previous years. Financial director of a joint stock commercial bank said that there were three main reasons.
Firstly, credit for real estate sector decreased because the State Bank of Vietnam (SBV) strongly adjusted credit structure of real estate loans, focusing on production and business.
Therefore, although credit growth as of November was only equal to that of September 2018, the growth of the economy remained stable.
Secondly, banks had to increase charter capital to meet the new regulations on capital adequacy ratio in Circular 41/2016/ TT-NHNN, but many banks faced difficulties in raising capital, especially for banks with state capital.
Meanwhile, this group of banks took about 50 percent of the credit market share of the whole system, if the charter capital could not be increased, banks must reduce the credit growth rate, affecting the rate of the whole system.
Thirdly, SBV assessed the health of banks that had just been approved the new credit limit and this issue was conducted very strictly.
Therefore, banks with inadequate financial safety ratios will be assigned a credit limit lower than demand.
“This is also a factor affecting the modest credit growth rate,” said the bank’s financial director.
Sharing with the Securities Investment Review reporter, Hoang Minh Hoan, deputy general director of Sai Gon Joint Stock Commercial Bank (SCB) stated: “The outstanding debt of the whole system is low, but the growth of the economy is still increasing, showing that the credit growth has been sustained and put into practice”.
Nguyen Tri Hieu, an economist, said that credit growth had slowed down because the real estate market had slowed down and capital had shifted to production and business groups, especially small businesses and currently accounted for 90 percent of the number of businesses across the country.
However, it is still difficult for small and medium-sized enterprises in general to access capital at credit institutions. According to calculations by Hieu, outstanding loans of small and medium-sized enterprises was estimated at 1.5 quadrillion dong, accounting for about 20 percent of the total loans of the whole banking system.
Le Xuan Nghia, an economist and financial expert, said that more actions were needed to bring capital from banks to small and medium-sized enterprises, which was also one solution to improve credit quality of the whole system.
Nguyen Quoc Hung, Head of SBV Credit Department of Economic sectors, said that in the near future, this agency would continue to carry out monetary and credit solutions to meet fully and promptly the borrowing needs of small and medium enterprises.
At the same time, coordinate with the concerned ministries and branches in synchronously implementing policies to support enterprises specified in the Law on Supporting Small and Medium Enterprises (SME), including policies to support access to capital through various types of funds such as the SME Development Fund, and the SME Credit Guarantee Fund.
According to Hung, in order to carry out the government’s mechanisms and policies to further promote the role of SME in economic development, creating jobs, requiring a system of synchronised policies to encourage and create conditions for businesses to develop.
In addition, there should be a smooth coordination between agencies, ministries, branches, associations and businesses themselves.
First of all, ministries and branches should soon complete documents guiding the Law on Supporting SME, ensuring that policies to support businesses are implemented synchronously and effectively in order to remove difficulties in accessing capital.
People’s Committees of provinces and cities actively carry out policies to support SME prescribed in the Law and guidance of central ministries and branches; closely coordinate with the banking industry in implementing the bank-enterprise connection programme to jointly solve difficulties in the fields of land, tax, and infrastructure when businesses access banking loans to develop production and business.
In addition, industry associations improve their role and influence to act as a bridge for SME to access credit institutions; act as a focal point in supporting businesses in market information, trade promotion activities, exhibitions and protecting the rights of member businesses.
In addition, organisations develop a process of collecting and exploiting information on credit rating and customer activities to improve the effectiveness of the appraisal and assess the creditworthiness of borrowers, thereby enhance the ability to lend without asset security; develop credit programmes and packages with reasonable interest rates for businesses, diversify banking products and services; and simplify administrative procedures to increase access of businesses to capital.
For SME, they must improve by themselves, comply with the provisions of law and actively provide full and truthful information to enhance their credit worthiness; participating in production and business activities along the product value chain, creating favourable conditions for credit institutions to control cash flow and financial status of enterprises in the process of borrowing capital.
It is known that, at the government’s regular meeting in November 2019, the prime minister asked the banking industry to meet the credit needs for promoting production and business development; promote allocation of capital for production and business of products with advantages, great prospects and potentials; ensure smooth money circulation and credit capital for the economy, especially at the end of the year and the beginning of the new year.
At the same time, ensure monetary security in the digital economy; functional ministries and agencies shall effectively carry out solutions to minimise shadow banking.
