Credit has been growing quite slowly, while many small and medium sized enterprises (SMEs) are in desperate need of capital to recover production and business after Covid-19. In the face of the above situation, many experts believe that the intermediaries between the State, banks and businesses are necessary to facilitate credit flows for businesses.
According to the Governor of the State Bank of Vietnam (SBV), Le Minh Hung, credit institutions (CIs) are currently facing many difficulties and challenges. Due to the pandemic, many businesses cannot repay their debts, leading to an increase in the ratio of bad debts, affecting the safety of the operation of the CI system. Along with that, many businesses have incurred overdue debts, which are ineligible for CIs to restructure the debt repayment term under Circular 01/2020/ NHNN-TT but continuously create pressure on CIs.
Compared to the industries directly affected by the Covid-19, the banking sector was initially assessed to suffer less damage. But in fact, the loss of this industry is not low when about 70 percent of total income of credit institutions still comes from interest income.
“It’s not true that banks do not want to boost credit growth targets, but they cannot loosen loan conditions. The lesson of solving bad debts after the 2008 financial crisis or the most recent one is the lesson of zero dong banks, for us, it is still hot until now,” said the general director of a bank. On the contrary, if credit is not pushed, banks will fall into double difficulties when lacking the main revenue to make up for shortfalls due to debt freezing, debt rescheduling and setting aside old and new debt risk provisions.
Vu Thanh Tu Anh, director of the Fulbright School of Public Policy and Management, said that if there was an intermediary connecting between the policy maker (the State), the policy implementer (the bank), and the party beneficiaries of policies (enterprises), helping parties to understand each other, the credit support package would have been promoted at a faster rate.
According to the international auditing organisations, such as EY and KPMG, there are often guides to businesses who want to borrow in the UK and USA. Vu Thanh Tu Anh said that if the intermediaries in Vietnam also began to do so, there would be no more scenes where many SMEs could not access the credit support package. “This manual should specify standards, conditions, requirements to note and implementation for business reference”, he emphasized.
This intermediary also includes the credit guarantee fund, which is expected by many businesses but has not yet been effective as expected by the business community.
Besides, does not mean lowering loan standards, but Vu Thanh Tu Anh said that, instead of just looking at collaterals or cash flows, the prospects of business projects, banks could base on data of human resource growth, the contribution of tax obligations, labour obligations and social security of businesses in the previous year to finance businesses.
In fact, in the common credit appraisal, most credit institutions do not have the above criteria. However, in the current difficult context, the addition of these new criteria is extremely necessary to support businesses and nurture their future revenues.
