Removing obstacles for businesses to access loan capital.

Việt Nam•12/11/2023

Recently, due to the impact of the COVID-19 pandemic and the effects of the global situation, many businesses have experienced a decline in orders, facing difficulties in sales, and high costs of raw materials and fuel. Most businesses need capital to recover production; however, accessing capital remains challenging. To support businesses, the State Bank of Vietnam's Ninh Thuan branch has implemented various solutions to facilitate access to loans with the best possible preferential interest rates.

According to the State Bank of Vietnam's provincial branch, by the end of October 2023, the total outstanding credit balance in the province reached VND 41,150 billion, an increase of VND 223 billion compared to the previous month, and an increase of VND 4,018 billion compared to the same period last year, equivalent to 99.84% of the 2023 plan. Of this, the outstanding loan balance supporting small and medium-sized enterprises (SMEs) is estimated at VND 7,060 billion, accounting for 17.2% of the total outstanding credit balance.

Despite achieving many positive results, businesses still face a capital shortage, and the relationship between businesses and banks remains challenging. On the banking side, it is estimated that by the end of October 2023, mobilized capital reached VND 22,145 billion. However, this represents a slower growth in mobilized capital compared to outstanding loans. Mobilized capital in the province only meets approximately 50% of the total outstanding loans of banks and credit institutions, especially long-term capital, which accounts for only about 20% of total mobilized capital. The need to utilize other supplementary capital sources with higher costs than self-mobilized capital also creates financial difficulties for banks and credit institutions in the province.

Some businesses stated that the reason they have difficulty accessing bank loans is because collateral is required. Meanwhile, small and medium-sized enterprises (SMEs) often have fixed assets already pledged as collateral for loans, while some small-scale businesses with few employees lack collateral. Furthermore, businesses face difficulties due to the relatively long time required to complete the procedures, which are often insufficient given the seasonal nature of production. The collateral process itself is also a significant obstacle.

Faced with the capital difficulties of businesses, the State Bank of Vietnam (SBV) in the province has been implementing solutions to alleviate these difficulties and support businesses in accessing capital. Mr. Nguyen Anh Tuan, Deputy Director of the SBV in the province, said: In the past period, the sector has also implemented credit programs and policies to alleviate difficulties and support the recovery and development of the socio-economic sector . Accordingly, credit institutions in the province have restructured the repayment period and maintained the same debt classification as stipulated in Circular No. 02/2023/TT-NHNN. As of September 30, 2023, the repayment period and debt classification have been restructured for 37 customers with a total debt value of VND 613 billion, of which VND 405 billion is for businesses. The outstanding debt, including principal and interest, that has been restructured is VND 462 billion, of which VND 380 billion is for businesses.

Customers conducting transactions at VietinBank Ninh Thuan branch. Photo: Hong Nguyet

For borrowers in manufacturing and export sectors, priority sectors of the Government, with transparent and sound financial situations, banks apply short-term VND interest rates of 4%/year; medium and long-term rates of 6.8%/year; and general rates of 9.1-11.2%/year. Short-term US dollar loans are offered at 4.4-5.5%/year; medium and long-term rates of 5.9-7.6%. In addition, the banking sector is promoting the 2% interest rate support program under Government Decree No. 31/2022/NDCP and Circular No. 03/2022/TT-NHNN of the State Bank of Vietnam.

Along with interest rate support, the State Bank of Vietnam (SBV) also directed credit institutions in the province to support and resolve difficulties in accessing capital. In particular, the SBV provincial branch recently organized a meeting and dialogue between banks and businesses, and a conference to connect banks with cooperatives in 2023 in the province. This aimed to facilitate direct dialogue between banks and customers, providing information on credit programs, products, and banking services being implemented by credit institutions. It also aimed to identify difficulties and obstacles related to accessing bank loans in order to promptly address and resolve issues in credit relationships, creating favorable conditions for customers to access bank credit in accordance with the law.

According to Mr. Nguyen Anh Tuan, in addition to the above solutions, in the coming time, the banking sector will continue to direct credit institutions to strengthen credit operations, promptly meeting the demand for credit capital, especially in production and business sectors, priority sectors and growth drivers of the province, creating favorable conditions for people and businesses to access capital, ensuring compliance with legal regulations, and contributing to limiting "illegal lending". The sector will continue to reduce costs, enhance the application of information technology and other solutions to create conditions for further reducing lending interest rates, striving to reduce them by 1.5-2% for both new loans and existing loans to support businesses and people in recovering production and business, and increasing the economy's capacity to absorb capital.

Hong Nguyet

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