At the meeting with socio-political organisations organised by the State Bank of Vietnam (SBV) on April 9, assessing the results of coordination between the banking industry and socio-political organisations in the implementation of solutions to expand credit, contributing to limit shadow banking and implementing coordination orientation in the near future, SBV deputy Governor Dao Minh Tu emphasized the important role of the socio-political organisations in supporting people to access credit capital for production and business and limiting people to seek shadow banking.
However, SBV suggested that socio-political organisations continued to care and coordinate with the banking sector to carry out solutions to expand credit for production, business and consumption, which contributes to preventing and repelling shadow banking.
Tran Van Tan, deputy director of the Credit Department for SBV said, in order to improve the ability to access capital for business and production, to meet the consumption needs of people, especially the poor and low-income people in rural areas, SBV had issued many positive policies and solutions in its scope and functions.
Specifically, SBV has issued a system of legal documents on lending activities of credit institutions and branches of foreign banks in accordance with reality; issued Decree 41/2010/ ND-CP dated April 12, 2010, followed by Decree 55/2015/ ND-CP dated June 9, 2015 and most recently Decree 116/2018/ ND-CP on September 7, 2018, amending and supplementing Decree No. 55/2015/ ND-CP on credit for agriculture and rural areas with many preferential and breakthrough mechanisms.
Besides, SBV has also implemented many credit programmes such as interest rate support loans to enhance mechanisation and reduce losses in agriculture; lending to encourage the development of high-tech agricultural applications and clean agriculture; loans for housing support; lending to policy credit programmes at Social Policy Bank of Vietnam (VBSP).
At the same time, SBV also instructed credit institutions to promote administrative reforms, simplifying procedures for borrowing capital, publicly posting up and fully guiding people when borrowing and diversifying credit products suitable for production and consumption activities.
“The banking industry has basically met the capital demand for production and business, and the legitimate living needs of the people. Specifically, as of March 27, 2019, credit balance for the economy reached 7.39 quadrillion dong, up 2.5 percent compared to the end of 2018; in which, loans for agriculture and rural development reached 1.82 quadrillion dong, up 2 percent compared to the end of 2018″, Tan said.
Besides, in the past time, banks such as Vietnam Bank for Agriculture and Rural Development (Agribank) and VBSP have cooperated closely with socio-political organisations in implementing communication programmes, policies and credit programmes to support the development of agriculture and rural areas in all villages and regions the country, becoming an effective capital channel to help farmers gradually eradicate hunger and poverty, improving life.
Up to now, Agribank has provided loans to 68,871 groups with total outstanding of 122.203 trillion dong. The VBSP has lent through 180,967 savings and loan groups with a total debt of 193.314 trillion dong.
Tiet Van Thanh, general director of Agribank, said that as of April 5, 2019, the Bank’s total outstanding loans and investments reached 1.224 quadrillion dong, of which the proportion for rural agriculture loans accounted for over 70 percent, creating conditions for the development of rural industry.
Currently, Agribank provides capital for four million farm households and individuals with outstanding loans of 724 trillion dong, of which 31.1 percent (225 trillion dong) for consumer loans to limit shadow banking.
According to Nguyen Van Ly, deputy general director of VBSP Information, as of March 31, 2019, the total outstanding loans of social policy credit programmes managed by the bank reached 194.187 trillion dong, an increase of 6.395 trillion dong compared to the beginning of the year (growth rate of 3.4 percent). In particular, outstanding loans made by the method of entrusting some work contents for socio-political organisations are 193.314 trillion dong, accounting for 99.55 percent of the bank’s total outstanding loans.
“As of March 31, 2015, total overdue debt and frozen debt at the bank was 1.491 trillion dong, accounting for 0.77 percent of total outstanding loans. In which, overdue debt was 807 billion dong (0.42 percent) and frozen debts of 684 billion dong (0.35 percent). For entrust transactions, overdue debt was 779 billion dong, accounting for 0.4 percent of total outstanding loans, ” Ly said.
Deputy Governor Dao Minh Tu said that in order to achieve the highest results in preventing and repelling shadow banking under the direction of the government and the prime minister, banking solutions were not enough, but needed to participate in the synchronisation of socio-political organisations.
In this view, Thanh commented: “Repelling shadow banking is not only the responsibility of the banking industry, but also the leadership of the party committees, local authorities and the cooperation of all the levels, departments and socio-political organisations “.
Participating in the meeting were representatives of the Central Association of Vietnam Farmers, Central Vietnam Women’s Union, Central Association of Veterans, Vietnam Fatherland Front Central Committee and Central Communist Youth Union In HCM City, the Vietnam general Confederation of Labour contributed ideas on banking sector coordination to help people access credit from credit institutions as well as propaganda and warning of the harmful effects of shadow banking on people.
According to Tu, socio-political organisations have had a closer coordination with Agribank and the VBSP in accepting a number of stages of the lending process.
The entrustment of lending and debt collection of banks to members also contributes to making the activities of the associations more diverse and richer.
At the same time, outstanding loans through the programme in coordination with local socio-political organisations achieved good results, creating conditions for many members to access capital at an appropriate and effective cost (the bad debt rate is below one percent).
Besides, the fact that credit institutions provide loans through loan and savings groups managed by socio-political organisations has many advantages, helping to save costs of credit institutions in managing loans, creating conditions for customers to reduce loan interest; assisting credit institutions in assessing and evaluating customers as well as in recovering debts, especially in non-concentrated distribution areas with difficult traffic and communication conditions.
“These results have played an important role in supporting people (especially people in rural and remote areas) in accessing capital for production and business, improving living standards, eradicating poverty and limiting people to seek shadow banking credit. However, SBV proposed socio-political organisations to continue to pay attention to and coordinate with the banking sector to carry out solutions to expand credit for production, business and consumption, contributing to preventing and pushing shadow banking back, ” Tu said.
