Enterprises should be more transparent and honest, and have more realistic business plans in order to access bank loans, banking experts said.
They noted that while currently high interest rates are still a major obstacle to accessing credit, banks remained hesitant to lend in the current circumstance due to risk.
According to the Asia Commercial Bank (ACB)’s recent survey, between 30 percent and 35 percent of small and medium-sized enterprises (SMEs) have accessed bank loans while 30 percent of them find it difficult to borrow from banks, and around 30 percent have been outright refused bank loans.
Le Xuan Hai, ACB general director, said the survey was aimed at finding the reasons why firms found it so difficult to access bank loans.
The survey showed that 70 percent of questioned enterprises said cumbersome procedures were the main obstacle to credit. 50 percent of them found it difficult to meet requirements for collateral and 50 percent could not demonstrate their capacity to repay their debts, Hai shared.
Due to high interest rates, competent firms or tSTC with realistic projects have opted to delay their plans to get bank loans in light of falling demand.
Hai attributed the situation to the fact that many banks have poor quality staff which has been prolonging the processing of loans to eligible clients.
However, a majority of SMEs have failed to meet credit requirements due to their poor management. Many companies don’t have sufficiently well developed investment plans when seeking credit, he noted.
Hai added, in order deal with difficulties related to collateral, borrowers needed to improve their credit rating while banks should enhance their business assessment capacity.
Huynh Buu Quang, deputy general director of HSBC said enterprises should improve their exchange of information with banks as well as display their goodwill in order to get extended debt repayments and access new loans.
According to Quang, most businesses simply hide from banks when they have outstanding loans, negatively affecting banks and unsurprisingly making them less willing to offer credit.
Dr Cao Sy Kiem, former Governor of the State Bank of Vietnam (SBV), who is currently a member of DongA Bank’s Board of directors, said that high interest rates have been the major barrier for SMEs to get bank loans.
In order to deal with the problem, it was vital to further lower the ceiling for deposit interest rates, which would pave the way for decreases in lending rates, he noted.
“The cap on lending rates is an effective solution for the current situation. However, in the long-term, it would be a good idea to remove the cap and float interest rates. Measures must be worked out to help production firms survive. SMEs face their most challenging period. If they can overcome these current difficulties, it will help boost the national economy. When interest rates fall, enterprises will have more chance to access capital and this will help stir up demand,” he added.