In addition to sharply reducing lending rates, banks also found ways to bring cheap capital to businesses. However, not because of those could businesses easily borrow money.
Discussing the socio-economic situation at the 9th session of the XIV National Assembly last weekend, Nguyen Nhu So, vice Chair of Vietnam Farmers Association, delegates of Bac Ninh province, worried the fact that enterprises went bankrupt before being able to access the capital.
Notably, the difficulty in boosting credit was also the worry of banks. The data showed that banks found it quite tricky in lending. The target of 14 percent credit growth in 2020 seemed not to be complete when Nguyen Quoc Hung, director of Credit Department of Economic Sectors, the State Bank of Vietnam (SBV), said, as of June 3, balance increased by 1.9%, while which in the same period of 2019 increased by more than 5.7%.
Nguyen Tu Anh, director of the Department of general Economics, Central Economic Board, said that interbank offered rate as of March 20 was around 3.8 percent per year, then dropped to over one percent per year. Also, over 100 trillion dong were marketed via T-bills channel, proving very abundant liquidity.
Banks themselves wanted to lend because this was a selling activity, so the more they sold, the better they would gain. However, banks borrowed money to lend, so it had to recover the money, Tu Anh said.
In fact, banks also found many ways to bring cheap capital to businesses, especially small and medium enterprises (SME). For example, in the signing of an indirect lending framework contract between the SME Development Fund (SMEDF) under the Ministry of Planning and Investment and some banks, including Military Commercial Joint Stock Bank (MB), Saigon Hanoi Commercial Joint Stock Bank (SHB), Bac A Commercial Joint Stock Bank (Bac A Bank), SMEDF had lent directly or indirectly through the allocation of capital to innovative start-up SME banks, joining industry clusters and value chains that met the loan conditions.
It was well-known that the loan was applied a low interest rate, only 4.16 percent per year for short terms and six percent per year for medium and long terms to attract domestic and foreign resources. So that financial institutions, investment funds, and banks would all pay attention to the SME sector.
In particular, businesses had the right to pay debt ahead of schedule without having to pay any amount or fee of early repayment.
Or as SHB and Vietnam Association of Small and Medium Enterprises (VINASME) signed a comprehensive cooperation agreement aimed at supporting VINASME members to improve their competitiveness, access to capital and useful loans.
Talking to the Securities Investment Review, the general director of a joint-stock bank said that the bank was a money trading enterprise, had good customers, what were the reasons for not lending? Banks could not hold money without lending them.
Sharing more, Ta Thi Tue Anh, director of HSBC Vietnam Hanoi Branch, said that Vietnamese businesses characterised by dealing with many banks, so credit history was very complicated. While to accompany, companies need to create long-term trust with the bank.
When an enterprise asked for a loan, bank staff came to appraise the project and found out that the business had used capital at another bank, which made the loan process difficult, Tue Anh to speak.
Vu Tuan Anh, Acting director of SHB’s Banking and Enterprises Division, said it was not taking into account that many businesses had not paid much attention to investment in technology and management. Thus, there were enormous operating costs, causing banks to be afraid of risk.
In essence, the financial reporting system of Vietnamese enterprises had low reliability, so it was difficult to convince banks. Enterprises needed to be more professional to go long distances with banks. In fact, the liquidity of the banking system was not lacking. The problem was that enterprises lacked the market due to low demand. Therefore, it was necessary to review between lowering interest rates or boosting credit, which was more important, Nguyen Tu Anh pressed.
Nguyen Van Than, Chair of VINASME, also acknowledged businesses who wanted to borrow bank capital must show ‘a good health,’ must improve their management, capacity, structure, and so on.
According to Vo Tri Thanh, an economist, when it came to infinite sources of money, it was undoubtedly not bank capital, but equitised capital, which was the most significant way to raise capital. Small and medium-sized enterprises had to choose to either maintain the family business style or to equitise to open this long-term and endless mobilisation.
