Banks have 'excess money', some businesses still want to pay back loans

Banks are eager to lend more

In the first 6 months of the year, the State Bank of Vietnam (SBV) adjusted down the operating interest rate 4 times and said that lending interest rates will continue to decrease.

According to Deputy Governor of the State Bank of Vietnam Dao Minh Tu, from the business perspective, everyone wants lending interest rates to decrease. Banks themselves also want this.

However, to solve the problem harmoniously, to create a balance between the supply and demand of capital for the economy , to create a balance between the lending capacity of banks and the capital absorption capacity of enterprises, there must be balance points.

“Some businesses are expecting even more from the banking industry, we really want to solve this better and consider it an urgent task,” said Deputy Governor Dao Minh Tu.

However, the reality is that credit growth is still limited. As of June 15, outstanding credit in the entire economy reached about VND 12.32 trillion, up 3.36% compared to the end of 2022, up 8.94% compared to the same period last year.

“The State Bank of Vietnam really wants to increase credit growth, but not by lowering credit standards. Credit growth must still ensure credit quality and efficiency,” said the Deputy Governor, adding that boosting credit growth in the coming time is still an important task for the banking industry.

The Deputy Governor affirmed that the liquidity of the banking system is very abundant, which means that there is no shortage of counterpart capital for the economy. Projects and businesses that need capital, ensure efficiency and the ability to repay debts will certainly be granted credit.

From the beginning of the year, the State Bank of Vietnam has assigned credit targets to banks with a target of 14-15% for the whole year, depending on actual conditions. If inflation is controlled, the actual capital demand may increase.

On the contrary, if there are signs of the need to control inflation, the index may be lower. With current conditions, it can be said that the credit room of 14-15% is still the number determined to continue within the scope of management this year.

The limit for continued lending by commercial banks is still very large when credit growth has only reached 3.36%. This figure shows that the bank's ability to supply capital is adequate and ready. The problem is why capital absorption by enterprises is still low, which is due to objective and subjective factors. It is necessary to find common ground but must ensure safety for the system. The safety of commercial banks is also the safety of the national financial system.

"There are businesses that even demand to pay back the money they borrowed"

Speaking further about the reasons for low credit growth, the Deputy Governor said that there are objective and subjective reasons from both banks and businesses, as well as the impact of the world economy.

In the context of general difficulties, investment, production and business demand and consumer demand decreased, leading to a decrease in credit demand.

Besides, some customer groups have needs but do not meet loan conditions or are still stuck with legal procedures.

Access to credit capital for small and medium enterprises and cooperatives in the current context is even more difficult because these customers are small in scale, have limited financial capacity, management and operation capacity, lack feasible business plans; and outstanding debt has not met expectations.

Therefore, despite many support policies, businesses do not meet the minimum requirements, so even though banks want to lend, they do not dare to take risks.

“Ensuring credit safety is an immutable principle. I myself have not only approached bank leaders but also contacted credit officers of banks. Someone (credit officer - PV) told me: “I tell you the truth, I have visited every business assigned to me to manage, because if I cannot disburse, my KPI this year will be very low. Many businesses told me that not only did they not borrow, but they also demanded their money back, because they did not have a business plan,” said the Deputy Governor.

With about 12.32 million billion VND in loans to the entire economy in the past 6 months, the credit structure continues to focus capital on production and business sectors, priority sectors according to the Government 's policy, contributing positively to the country's GDP growth.

Credit to potentially risky sectors is controlled. The Deputy Governor affirmed that the State Bank only controls credit to potentially risky sectors.

Deputy Governor: New deposit and lending interest rates tend to decrease gradually. With the management and direction measures of the State Bank, up to now, the interest rate level has basically stabilized, new deposit and lending interest rates tend to decrease gradually.

Source