Chain Lending: Opening the Door for Businesses to Access Capital

The chain lending model is emerging as an optimal solution to help solve these difficulties, while opening up great opportunities for both banks and businesses. This model not only helps minimize credit risks but also improves business efficiency by supporting production, product consumption and creating a strong economic ecosystem. Mr. Nguyen Van Than, Chairman of the Vietnam Association of Small and Medium Enterprises, said that SMEs have no other choice but to join together.

In the agricultural sector, Master Tran Van Tan, Member of the Board of Directors of VietinBank, said that through research on 5 value chain lending models in 5 countries, it was shown that this form of lending helps improve transparency, cash flow management, while developing bank products and promoting the role of communities and cooperatives in rural areas. In addition, this model also helps SMEs easily access credit through guarantees or re-borrowing from leading enterprises in the chain.

However, the current outstanding loans under value chain linkages are still low, the main reason being the chain linkage issue. According to the sharing of the Standing Deputy Governor of the State Bank of Vietnam, Dao Minh Tu, not at this time but 13 years ago, 21 value chain linkage models were piloted, but most of them failed. According to the analysis of the Deputy Governor, to be successful, a value chain must ensure benefits for all participants. If the linkage is too loose, it will be difficult to achieve efficiency. "Bank lending according to the chain without requiring collateral can bring many benefits to the participants in the chain, businesses, the economy and commercial banks. However, the success of this model depends a lot on the close coordination of the components in the chain", the Deputy Governor emphasized.

The good news is that during the two-year pilot program of 1 million hectares of high-quality rice in the Mekong Delta, all parties involved in the chain have operated effectively. Bank chain lending has also brought positive results. “If this model is widely deployed in other areas, it will certainly bring many benefits to businesses. Therefore, the banking industry is eager to continue developing this model,” the Deputy Governor informed.

Currently, many banks have proactively implemented the chain lending model, typically Agribank, with a strategy of developing chain lending, especially for key agricultural product chains in localities. Ms. Phung Thi Binh, Deputy General Director of Agribank, said that the bank is ready to lend according to the chain, because this is an effective lending model, especially for small-scale SMEs whose management capacity is not yet adequate, and must link up and rely on each other to develop and expand production and business activities.

“Bank lending along the chain without requiring collateral can bring many benefits to the parties involved in the chain, businesses, the economy and commercial banks. However, the success of this model depends heavily on the close coordination of the components in the chain.”

Many opinions say that, to successfully develop the chain lending model, it is necessary to improve customers' access to capital, including reducing mortgage conditions and increasing the ability to lend on credit. Regarding this issue, a bank leader said that the bank is surveying the linked chains and is ready to reduce the conditions on mortgage assets for the parties participating in the chain.

On the side of the SME Association, Mr. Nguyen Van Than proposed that the Association will play a representative role, both introducing and acting as a bridge, connecting businesses with banks. Through reputable associations, banks will also feel more secure when lending in chains. In addition, it is necessary to research and propose methods to connect business associations with local units and industries so that the connection and support for businesses is more convenient and effective. "The process of borrowing capital according to the value chain is considered effective, but there still needs to be a flexible bridge between the parties. The Association is ready to cooperate with organizations such as accounting associations and banks to promote this form of lending," Mr. Than shared.

Source: https://thoibaonganhang.vn/cho-vay-theo-chuoi-rong-cua-cho-doanh-nghiep-tiep-can-von-162257.html