Credit and access to credit: A problem for banks and businesses

VCN - Since the beginning of the year until now, the Prime Minister, the Government and the State Bank (SBV) have continuously issued instructions to promote credit, but the situation of banks having excess cash and businesses lacking capital is still a concern of the economy.
Credit is expected to grow better but it depends on many factors. Photo: ST
Credit is expected to grow better but it depends on many factors. Photo: ST

Having trouble with procedures and no need for a loan

According to data from the State Bank, in January 2024, credit across the system decreased by 0.6% compared to the end of 2023. A representative of the State Bank shared that in fact liquidity is very abundant but credit growth is slow compared to the same period of the previous year, mainly due to seasonal factors and the world economy has not really prospered. Therefore, the State Bank has implemented many solutions to promote credit growth, directing banks to reduce costs to strive to reduce lending interest rates.

A recent report sent to the Prime Minister by the Private Economic Development Research Board (Division IV, under the Prime Minister's Administrative Procedure Reform Advisory Council) has raised concerns about the increase in orders but businesses have run out of capital, no collateral to borrow more, and the recurring difficulty is not having money to produce.

According to businesses, the problem of accessing loans no longer lies in interest rates but in procedures. Many small and medium-sized businesses said that banks still appraise and evaluate loans using collateral instead of evaluating the effectiveness and feasibility of business plans.

According to Dr. Mac Quoc Anh, Vice President, General Secretary of Hanoi Association of Small and Medium Enterprises, currently the unsecured loan rate is only 15-20% while businesses want unsecured loans up to 35%, the remaining assets are collateral. At the same time, it is necessary to reduce loan conditions, banks can reduce the number of loan conditions by up to 50%, retaining only basic lending conditions.

Also on this issue, Mr. Nguyen Quoc Hung, General Secretary of the Vietnam Banks Association, said that the credit growth limit (room) in 2024 is no longer a problem because it has been fully granted by the State Bank of Vietnam to banks from the beginning of the year, there is a lot of lending space, so it is important that banks find good customers to lend to, especially in the context of bad debts tending to increase, so banks must strengthen control of credit quality risks.

In addition, banks also admitted that the credit situation was low, but the reason was also due to the economy's low demand and capital absorption capacity. At a recent credit conference, Vietcombank leaders said that credit decreased due to some sectors such as retail and real estate being quiet. Besides, the outstanding balance of international payment loans for trade finance in the first months of the year is still low, customers often tend to repay debt at the end of the year, etc so businesses have not borrowed much.

Deeply reduce interest rates, digitize loans

Vietnam's economy is recording some positive signals such as businesses increasing import of raw materials for production, trade surplus as well as high FDI inflows, etc helping orders increase again, leading to consumer demand and loans. Therefore, many forecasts say that credit can recover from March.

In order to promote credit, the Government has issued many instructions to the banking sector. The most recent of which is Official Dispatch No. 18/CD-TTg dated March 5, 2024 of Prime Minister Pham Minh Chinh on managing credit growth in 2024. The Prime Minister requested the State Bank to direct credit institutions continue to reduce lending interest rates, especially the average lending interest rates must be publicly announced so that people and businesses can conveniently access credit and choose banks to borrow capital. Along with that, banks must promote the effective implementation of appropriate preferential credit packages, directing credit capital to production and business areas, priority areas and traditional growth drivers such as consumption, investment, export, digital transformation, etc; Continue to strictly control credit in potentially risky area, etc.

Therefore, the banking system has been implementing many solutions synchronously, both lowering interest rates and offering preferential credit programs. For example, many commercial banks have deeply adjusted deposit interest rates, helping the average lending interest rate of new and old outstanding loans to be at 8.1-10.2%/year. The strategic report of SSI Securities Company recently stated that the State Bank still has room to implement another policy interest rate cut in 2024.

Regarding preferential credit programs, from the beginning of 2024, Vietcombank offers an interest rate policy of only 5.3%/year for short-term production and business loans and interest rates from only 6.5%/year for medium and long-term loans for individual customers and small and medium-sized businesses. SHB is implementing a preferential interest rate program for businesses with a scale of 11,000 billion VND, preferential interest rates in USD for FDI enterprises and businesses with export activities of 50 million USD with the applicable interest rate of 6.63%/year, etc.

In addition, banks also promote digitalization of the lending process to shorten loan procedures and create convenience for customers. Typically, BIDV has applied technology from receiving loan needs to initiating, implementing and managing loans for institutional and retail customers; MSB is also completing the straight loan stream (STP) project, moving towards touchless lending with corporate customers, helping customers receive loan approval within 4 hours, etc.

By Huong Diu/ Phuong Linh

Related News

A “picture” of bank profits in the first nine months of 2024

A “picture” of bank profits in the first nine months of 2024

VCN - Pre-tax profits for banks during the first nine months of 2024 remained positive, exceeding 200 trillion VND, solidifying the sector's position as a market leader.
Stipulate implementation of centralized bilateral payments of the State Treasury at banks

Stipulate implementation of centralized bilateral payments of the State Treasury at banks

VCN - The Ministry of Finance (MOF) gathers feedback on the draft Circular regulating the management and use of accounts of the State Treasury opened at the State Bank of Vietnam (SBV) and commercial banks.
The biggest challenges businesses are facing

The biggest challenges businesses are facing

VCN - Orders, cash flow, market information, loan approach... are still the difficulties when the Private Sector Development Research Board (abbreviated as IV Board) surveyed the business situation.
How does the Fed

How does the Fed's interest rate cut affect Vietnam?

VCN - In the latest meeting of the Federal Open Market Committee (FOMC), the Fed decided to cut interest rates by 50 basis points to a range of 4.75%-5%. Analysts have given different perspectives on this decision.

Latest News

Revising the title of a draft of 1 Law amending seven finance-related laws

Revising the title of a draft of 1 Law amending seven finance-related laws

VCN - On November 19, 2024, the Standing Committee of the National Assembly (SCNA) discussed amendments and refinements to the draft of a law revising seven existing finance-related laws. Concluding the session, Vice Chairman of the National Assembly Nguyen Duc Hai emphasized the need for the Government to direct the drafting body and relevant agencies to collaborate closely to finalize a persuasive and widely supported report, ensuring the quality of the draft law for the National Assembly's consideration and decision.
Transparency evates the standing of listed companies

Transparency evates the standing of listed companies

VCN - According to the Hanoi Stock Exchange (HNX), the number of companies placed under warning, control, or restricted trading on the listed and registered markets has increased over the past two years compared to 2022.
State-owned securities company trails competitors

State-owned securities company trails competitors

Contrary to the outstanding performances in the banking sector, the securities subsidiaries of major banks have yet to fully leverage their potential, despite numerous inherent advantages.
Strengthening the financial “health” of state-owned enterprises

Strengthening the financial “health” of state-owned enterprises

VCN - The state economy plays a key role in the socio-economic development process, but it is necessary to strengthen the financial health and competitiveness of state-owned enterprises (SOEs).

More News

U.S. Treasury continues to affirm Vietnam does not manipulate currency

U.S. Treasury continues to affirm Vietnam does not manipulate currency

VCN - In its latest report, the U.S. Department of the Treasury has positively assessed Vietnam's monetary policy, reaffirming that Vietnam does not engage in currency manipulation.
Exchange rate fluctuations bring huge profits to many banks

Exchange rate fluctuations bring huge profits to many banks

Net profits from the foreign exchange trading segment of many banks have gained positive results thanks to a strong USD/VNĐ exchange rate fluctuations this year.
Many challenges in restructuring public finance

Many challenges in restructuring public finance

VCN - Restructuring public finance is an important step to improve state financial management, ensure resources are allocated reasonably and effectively, contributing to the country's sustainable development. In addition to the achieved results, the process of accelerating public finance restructuring also faces many pressures.
Tax declaration and payment by e-commerce platforms reduces declaration points and compliance costs

Tax declaration and payment by e-commerce platforms reduces declaration points and compliance costs

VCN - E-commerce platforms that declare and pay taxes on behalf of traders not only help to reduce the number of tax declaration points but also reduce the cost of compliance with administrative procedures for the whole society because only one point as the e-commerce trading platform implements tax deduction, payment and declaration on behalf of tens, hundreds of thousands of individuals and business households on the platform.
Disbursement of public investment must be accelerated: Deputy PM

Disbursement of public investment must be accelerated: Deputy PM

Deputy Prime Minister Ho Duc Phoc has called on ministries, agencies, and localities to accelerate the disbursement of public investment from now until the year-end and further tighten investment management.
HCMC: Domestic revenue rises, revenue from import-export activities begins to increase

HCMC: Domestic revenue rises, revenue from import-export activities begins to increase

VCN - The results of State budget revenue in HCMC in the first 10 months of 2024 are estimated to increase by 10% over the same period last year, of which the highlight is that revenue from import-export activities has begun to increase.
Effectively control fiscal and monetary policy : Deputy Prime Minister and Minister Ho Duc Phoc

Effectively control fiscal and monetary policy : Deputy Prime Minister and Minister Ho Duc Phoc

VCN - Monetary policy and fiscal policy are the driving force for economic development, so that there has been effective coordination, Deputy Prime Minister and Minister of Finance Ho Duc Phoc.
Seaport stocks surge amid positive sector outlook

Seaport stocks surge amid positive sector outlook

During the trading session on 12 November, while the VN-Index fell for the fourth consecutive session to 1,244 points, several seaport and shipping stocks such as MVN (VIMC), VOS (Vietnam Shipping), and GMD (Gemadept) maintained upward momentum.
Striving for revenue to rise by over 15% compared to assigned estimate

Striving for revenue to rise by over 15% compared to assigned estimate

VCN – At meeting on summarizing in financial budget October and deploying work program in November held by the Ministry of Finance on November 11, Deputy Minister of Finance Cao Anh Tuan requested to speed ​​up review budget work and quickly remove financial institutional bottlenecks.
Read More

Your care

Latest Most read
Revising the title of a draft of 1 Law amending seven finance-related laws

Revising the title of a draft of 1 Law amending seven finance-related laws

On November 19, 2024, the Standing Committee of the National Assembly (SCNA) discussed amendments and refinements to the draft of a law revising seven existing finance-related laws.
Transparency evates the standing of listed companies

Transparency evates the standing of listed companies

According to the Hanoi Stock Exchange (HNX), the number of companies placed under warning, control, or restricted trading on the listed and registered markets has increased over the past two years compared to 2022.
State-owned securities company trails competitors

State-owned securities company trails competitors

Contrary to the outstanding performances in the banking sector, the securities subsidiaries of major banks have yet to fully leverage their potential, despite numerous inherent advantages.
Strengthening the financial “health” of state-owned enterprises

Strengthening the financial “health” of state-owned enterprises

VCN - According to the State Capital Management Committee at Enterprises, to date, the country has six hundreds and seventy one SOEs including 6 economic groups, 53 state-owned corporations and 19 LLCs operating under the parent-subsidiary model.
U.S. Treasury continues to affirm Vietnam does not manipulate currency

U.S. Treasury continues to affirm Vietnam does not manipulate currency

In its latest report, the U.S. Department of the Treasury has positively assessed Vietnam's monetary policy, reaffirming that Vietnam does not engage in currency manipulation.
Mobile Version