Bank credit focuses on supporting businesses

18-Sep-2020 Intellasia | Thoi bao Ngan hang | 6:02 AM Print This Post

Statistics of the State Bank of Vietnam (SBV), Hochiminh City branch, showed that in the first months of this year, the money management agency in Hochiminh City cooperated with the Department of Industry and Trade to actively connect to remove difficulties and support businesses to recover the production and business development after the Covid-19 epidemic with a total capital of over 87.8 trillion dong from credit institutions.

At the banking-business connection activities organised by the district government, banks in the area also signed to lend 2.747 trillion dong to many enterprises. In comparison, the credit package of commercial banks committing to loan at the beginning of 2020 until then had disbursed over 208 trillion dong. generally, in these activities, nearly 300 trillion dong of loans with low interest rates had been offered to the market.

Besides, commercial banks in Hochiminh City had supported enterprises affected by the Covid-19 epidemic, according to Circular 01/2020/TT-NHNN, with 583.157 trillion dong for 240,407 customers. In which the loan balance, which was rescheduled for the repayment period, was 142 trillion dong, the outstanding balance of loan interest exemption or reduction was more than 53 trillion dong, new accumulated loans (from January 23 to the end of July 2020) reaching over 387 trillion dong.

The outbreak of the Covid-19 epidemic had caused production and business activities to stall, pushing many businesses to difficulties. In mid-August 2020, the Hochiminh City Business Association quickly surveyed 105 small businesses that employed 50 workers to 100 workers, trade, service, food processing, construction and construction materials, mechanics, chemicals. The results showed that the number of enterprises having common difficulties accounted for 84%. The rate of enterprises having specific difficulties such as the narrowed market was the highest with 88%, which of labour cuts took more than half (52%), lack of business capital (40%), the supply chain of raw materials breaking (14%), the pressure to breach the contract (11%).

The survey report of the Hochiminh City Business Association also predicted that, in the near future, 64 percent of businesses would have to work hard, 64 percent of which would think of cutting costs to survive, 37 percent of them had to narrow their business scale and 11 percent of them would have to suspend operations. As reflected by businesses, the bank interest rates had decreased slightly in recent years, but to access credit, businesses must meet the conditions given by banks.

Nguyen Duc Vinh, general director of Vietnam Prosperity Joint-Stock Commercial Bank (VPBank), said earlier this year that many small businesses were still in the category of bank loans. However, by the middle of the year, the complicated Covid-19 epidemic had made the health of businesses significantly eroded. This led to the same entities that were ineligible for bank credit. In particular, the sectors of restaurants, hotels, restaurants, and transportation fell into crisis due to the decline in revenue from business activities, as the social gap had narrowed the market impact.

SBV of Hochiminh City Branch assessed that, over the past time, the banking system had had many solutions to support businesses. Through statistics, many manufacturing companies had started to reconnect the supply of raw materials, most notably several food processing industries, agriculture, forestry, and seafood that were less affected by the disease due to the purchasing power of the domestic market that dragged the export market down. Accordingly, banks had increased their short-term loans in dong to businesses to reorganise production and business.

According to Nguyen Phuoc Hung vice Chair of Hochiminh City Association of Enterprises, the city government needed to support enterprises to improve their ability to consume products on the domestic market and export activities. At the same time, it was recommended that SBV soon amend Circular No.01 in the direction of expanding the number of enterprises enjoying the debt extension policy, reducing the conditions of the procedures for enterprises to restructure debts without changing groups. In particular, SBV should increase the rate of lending by appraising business plans and cash flow management with the revenues of enterprises.

Currently, the policy of lending to pay employees was very meaningful to enterprises in retaining workers, especially technical workers, to wait for production to recover. Accordingly, businesses that wanted the policy of lending to pay for employees to be more open to create conditions for businesses to access this capital.

 


Category: Finance, Vietnam

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