As of early this year, only 9 out of 158 cooperatives in Khanh Hoa province have received bank loans with outstanding loans of over VND63.7 billion. Cooperatives are facing many difficulties in accessing credit, mainly due to lack of collateral.
Not eligible for loan
Recently, Ngoc Quang rice products of Ninh Quang Agricultural Cooperative 1 (Ninh Hoa town) have gradually been accepted by the market, contributing to bringing profits to the cooperative members. To meet the increasing demand of the market, the cooperative has considered expanding the scale of high-quality rice seed production and purchasing and storing rice from members. However, according to Mr. Luong Cong Van - Director of Ninh Quang Agricultural Cooperative 1, this is a difficult problem for the cooperative in the current situation, because the capital contributed by members is very little, not enough to meet production and business activities. Meanwhile, the cooperative cannot access bank loans because it does not have collateral.
 Representative of Ninh Quang Agricultural Cooperative 1 (4th from right) introduces Ngoc Quang rice products. Photo: C.Dinh |
Many cooperatives in the province also have a need to borrow but cannot access credit capital. According to a report by the State Bank of Vietnam, Khanh Hoa Branch, as of early 2023, there were 158 cooperatives and cooperative unions operating in the fields of rural agriculture, salt, fishery, construction, transportation, handicrafts, etc. However, only 9 cooperatives were able to borrow capital from banks with a loan turnover of VND 406.63 billion, outstanding loans of VND 63.7 billion, accounting for 0.05% of the total outstanding loans in the province. The biggest reason for this situation is that cooperatives do not have collateral. Cooperatives lack charter capital, while members join cooperatives and contribute capital with assets but in the form of self-management, use, self-production and consumption. The land of cooperatives allocated by the State does not collect land use fees, so it cannot be used as collateral. Most of the contributed capital is the personal property of the board members or cooperative members, but these individuals do not accept to guarantee loans for cooperatives. A few cooperatives have developed business plans, but they are not feasible or effective; accounting books are unclear, and do not meet the conditions for loans without collateral as prescribed. Therefore, banks are not bold enough to lend.
Insurance organization involvement required
Mr. Do Trong Thao - Deputy Director in charge of the State Bank of Vietnam, Khanh Hoa Branch, said that currently, the outstanding loans for cooperatives are still too low. Cooperatives that are eligible for loans and have effective production and business plans are all approved for loans by the bank. The cases where banks refuse to lend are mainly due to customers not meeting the conditions, investment projects, production and business plans are not feasible and effective... Recently, the State Bank of Vietnam, Khanh Hoa Branch, has issued many plans and documents directing credit institution branches to proactively approach and lend to the agricultural sector. In addition, the unit has advised the Provincial People's Committee to direct relevant departments and branches to guide and create conditions for cooperatives to lease land and pay a one-time fee for the entire lease term to meet the requirements for collateral when borrowing needs arise. The unit also organized a conference connecting banks and enterprises to promote the implementation of the interest rate support program according to Decree No. 31 of the Government on interest rate support from the State budget for loans of enterprises, cooperatives, and business households. As a result, 4 banks signed a commitment to provide capital to 9 enterprises, households, and cooperatives with a total amount of nearly 20 billion VND.
According to representatives of some banks, in order for cooperatives to have more favorable access to credit loans, the participation of agricultural insurance organizations is needed. In fact, the Government has issued Decree No. 55/2015 on credit policies for agricultural and rural development, which encourages customers to borrow capital to buy insurance for agricultural production. However, in the province, there is no insurance organization selling insurance to agricultural production customers, because this is a market that is susceptible to risks due to fluctuations in weather, natural disasters, epidemics, and low agricultural insurance premiums, while natural disasters occur frequently. Therefore, to develop the insurance market, encourage insurance organizations to participate in the agricultural sector, and help farmers feel secure in investing in stable and long-term production, the Government needs to have solutions to support insurance businesses, such as: Tax reduction, support for risk insurance premiums for farmers, etc. In addition, cooperatives need to build and develop models of linkage between enterprises, cooperatives and farmers in chain production, linking production with processing and consumption of agricultural products through economic contracts; strengthen management and inspection of the organization and operation, especially the financial activities of cooperatives to meet the conditions for unsecured loans as prescribed.
MAI HOANG
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