That is the opinion of Dr. Nguyen Quoc Hung - Vice Chairman and General Secretary of Vietnam Banks Association in Workshop on “ The role of credit rating in credit risk management ” organized by Vietnam Banking Association in collaboration with S&P Global Ratings and FiinRatings Joint Stock Company today (October 25).
According to Dr. Nguyen Quoc Hung, credit ratings for credit institutions (CIs) as well as enterprises play a very important role in banking and financial activities and production and business. If a reputable organization gives a high credit rating, it will help banks have many advantages such as: Capital mobilization, business activities, lending, or borrowing capital at low interest rates from domestic and international organizations. For enterprises with good credit ratings, they will access bank capital easily, quickly, with more preferential interest rates.
However, Dr. Nguyen Quoc Hung said that in Vietnam, credit rating is still limited and has not become a mandatory regulation like independent auditing.
Dr. Nguyen Quoc Hung said that in the world , credit rating services have been developed for decades. In Vietnam, since Decree No. 88/2014/ND-CP was issued regulating the licensing and operation of credit rating organizations, it has created conditions for the formation of an official credit rating market in Vietnam. To date, there are only 3 licensed credit rating units in Vietnam: FiinRatings, VIS Rating and Saigon Ratings and the operations of these companies are still relatively limited. On the other hand, the very low rate of enterprises using credit ratings shows that enterprises, including banks, are not interested in this issue, while there are no regulations requiring mandatory credit ratings as well as methods to manage credit rating companies, and investors do not consider it an important factor affecting their investment decisions.
Therefore, Dr. Nguyen Quoc Hung hopes that the workshop will provide more knowledge about the role and benefits of credit rating activities for businesses, with practical and useful content from a number of perspectives such as: Helping credit institutions understand the role of credit rating activities in credit risk management in Vietnam from international practices and Vietnamese reality; experience and effectiveness from implementation in other countries, thereby helping Vietnamese credit institutions better manage risks in credit granting activities; Providing information on the application of credit rating for corporate bonds in Vietnam, contributing to encouraging long-term investment channels in Vietnam; At the same time, this is also a good opportunity for relevant parties to discuss the ability to meet the requirements for corporate bond credit ratings from the beginning of 2024 for some cases of private bond issuance according to the provisions of Decree No. 08, Decree No. 65 (on private bonds) and Decree No. 155 (on public bonds); Provide information and discuss the capacity of current credit rating organizations and their ability to meet the needs of the market and investors as well as policy changes to build credit rating practices in Vietnam.
At the workshop, Mr. Ritesh Maheshwari - Managing Director (Southeast Asia, S&P Global Ratings) emphasized that bond market development is an important factor for effective capital allocation and requires a diverse investor base and good liquidity. Credit ratings and strict assessment of issuers help investors assess the reliability of payment capacity and enhance transparency.
Sharing at the workshop, Mr. Nguyen Quang Thuan - General Director of FiinRatings said that market members need to join hands to take the first steps, even when there are no mandatory regulations on credit ratings. Vietnam currently lacks conditions for people to invest long-term, people's money mainly "flows" to banks. Insurance companies also mainly deposit money in banks and government bonds, with very low interest rates that cannot ensure maximum profits for customers.
However, according to Mr. Thuan, credit rating is not a “magic wand”, for the market to develop, there must be trust. Enterprises need to build a transparent profile in the capital market so as not to depend too much on bank loans.
Currently, more than 90% of Vietnam's enterprises are small and medium-sized enterprises. Small and medium-sized enterprises also need credit rating services, but what they need more is access to capital.
To develop financial infrastructure services, the State's support is needed. The State directly supports the costs paid to credit rating agencies so that businesses with credit ratings can access capital better.
Putting credit risk rating and measurement into practice, Mr. Pham Quang Canh - Senior Director (Risk Analysis Center, Risk Management Division) of Techcombank said that the role of credit rating in credit decisions is extremely important. Credit rating and behavioral models play an important role in business decisions and enhance customer experience from the beginning, the initiation process to customer management and finally debt collection and settlement.
At the workshop, speakers discussed how classifying bonds with different credit rating levels will support investors in managing their investment portfolios according to the credit rating level depending on the safety level and operating model of the investment institution.
Experts also discussed the capacity of current credit rating organizations and their ability to meet the needs of the market and investors as well as policy changes to develop credit rating practices in Vietnam. The workshop provided a multi-dimensional perspective on independent credit rating from international practices, practice in Vietnam; experience and implementation effectiveness in other countries./.
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