Central bank secures capital for prioritized sectors amidst tight credit

The banking sector has pledged to meet the capital demand for production and business, especially in five prioritized sectors whilst taking over measures aimed to curb inflation and keep on tight credit.
central bank secures capital for prioritized sectors amidst tight credit

Dao Minh Tu, Deputy Governor of the State Bank of Vietnam speaks at the conference.

Dao Minh Tu, Deputy Governor of the State Bank of Vietnam (SBV) made the statement at a conference held to enhance networking between enterprises and commercial banks in Hanoi on April 16.

Tu elaborated the five beneficiary sectors include agriculture and rural development, export, supporting industries, small and medium-sized enterprises (SMEs), and high-tech applications.

Credit is tightened in the sectors that potentially pose high risks, Tu stressed.

The SBV official noted that the banking sector has made concerted efforts to leverage firms’ access to loans in recent years through handling relevant difficulties and simplifying lending procedures.

He further said the central bank would continue its flexible monetary policy in order to curb inflation and sustain macroeconomic stability, thus looking to build up a more favorable business climate.

Tran Van Tan, deputy director of the SBV’s Credit Department, said that outstanding loans grew by around 2.8 per cent in the first quarter of 2019 compared to late 2018, adding that the credit flow into the prioritized sectors went up.

Of note, credit for supporting industries upped 3.63 per cent while that for enterprises which applied high technologies into production soared by 7.25 per cent, and export firms by 3.5 per cent.

Local banks have hosted a total of more than 1,500 meetings with business owners since 2014, thereby reviewing and removing difficulties for 195,000 firms.

Outstanding loans under the support programs advocated by commercial banks aggregated VND2.5 quadrillion (US$107.6 billion) at the interest rates of 6-9 per cent for short-term loans and 9-11 per cent for medium- and long-term loans.

In Hanoi, VND120 trillion (US$5.18 billion) in loans were disbursed for 10,310 firms in 2018, with the lending rates of 6-6.5 per cent per year for short-term loans and 8-9 per cent for medium- and long-term loans.

Tan asserted that there have been various difficulties in carrying out lending programs for enterprises.

A slew of local firms have yet to satisfy borrowing conditions due to their limited financial power, a lack of counterpart capital, unfeasible business plans, and others, he explained, while adding most of the local SMEs have been seen with limitations in realizing a methodical business and production strategy.

Source: VOV

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