Bank out of credit room?

Individuals and businesses cannot borrow.

High interest rates and difficulty in borrowing are still common stories for many individuals and businesses today, regardless of the field.

Mr. Minh Kien (residing in Binh Thanh District, Ho Chi Minh City) said that he applied for a loan at Lienviet Postbank since the end of 2022, but the application has not been completed yet and he has not received the loan. Although the bank has a fairly low valuation and only lends 50% of the valuation value, with a loan amount of more than 2 billion VND, the application has been pending for a long time but he still cannot borrow. In early April, when he contacted a credit officer at another bank, he was told that the application should be processed quickly for approval because the room is almost full, but the lending interest rate is up to nearly 15%/year.

Businesses still have difficulty borrowing capital, will banks run out of credit room?

"The bank still offers loans, but the conditions are much more difficult. If before, they offered loans to pay for that land, now they don't. In addition, the loan conditions are stricter and the loan amount is also less while the loan interest rate is too high. However, even if you accept and overcome the above conditions, the disbursement is not easy. For example, in my case, it has been several months and it is still not done and I almost cannot borrow when the bank announced that there is no more room," said Mr. Minh Kien.

According to the leader of a company specializing in manufacturing aluminum doors in Ho Chi Minh City, since the end of March, he was informed by a credit officer that Lienviet Postbank had announced that the system had stopped granting new loans. Business units disburse, issue guarantees, open L/Cs and commit to pay... up to the amount of principal collected and must not exceed the total outstanding credit balance of the business unit on March 24, 2023 (excluding overdraft, card, online mortgage, interest added to principal). Other banks that the company has been working with for a long time now only accept collateral in Ho Chi Minh City and Binh Duong, not in other provinces, so the company is completely unable to borrow capital.

Mr. Nguyen Tri Cong, Chairman of Dong Nai Livestock Association, said frankly that the number of members receiving new loans since the beginning of the year is very limited, even though it is also in the priority agricultural sector.

"According to the bank's explanation, farm owners who are losing money cannot borrow new loans. However, there are pig farming cooperatives that have mortgaged assets, profitable operations with full financial reports and documents to prove it, but after submitting their applications for several months, they have not been approved and are still being told to wait. Lacking money to maintain operations and keep barns, they have to borrow money from outside to buy feed for pigs and chickens, or even to pay off the loan to the bank to avoid being transferred to the bad debt group and having their farms handled...", Mr. Cong was upset.

Previously, this association sent a distress call to the State Bank of Vietnam (SBV) because "it is almost impossible to access banks, many times seeing the livestock starving, having to borrow money to buy feed, the difficulties are compounded". In a recent response, SBV said that 60 customers have received interest rate support loans. Responding to this issue, Mr. Cong said: "Our association has about more than 1,000 members, but according to SBV's response, by the end of February 2022, only 60 members will enjoy the interest rate support policy, which is too little - like a drop in the ocean".

More importantly, according to Mr. Cong, the association is also reviewing who these 60 people are, whether they are eligible for preferential interest rates according to regulations...

Mr. Tran Van Duc, Chairman of Ben Tre Business Association, informed that some enterprises in the association have to borrow at interest rates of 11 - 13%/year. But more tragically, some companies cannot access bank loans so they have to borrow from outside to manage with interest rates of up to 17 - 20%/year.

Similarly, Mr. Lu Nguyen Xuan Vu, General Director of Xuan Nguyen Group Corporation, bitterly said that agriculture is a priority sector but accessing credit is not easy. Banks in Ho Chi Minh City do not accept mortgages of agricultural land outside the province as before. His company can only borrow about 10 billion VND with an interest rate of 10.5%/year while the capital demand is much higher. Therefore, individuals in the company have to borrow from banks with an interest rate of 13-14%/year, causing the company's financial costs to increase even more.

"Cash flow is like blood, if blood doesn't flow, you die"

The recent situation of businesses having difficulty borrowing has been explained by banks for many different reasons, from not meeting the prescribed conditions to businesses not needing to borrow much. But in reality, in addition to the conditions being tightened, many banks are now almost out of credit room - similar to the second half of 2022. Specifically, in some banks that the writer surveyed wanted to borrow capital last weekend, credit consultants admitted that credit room is being controlled again and is about to run out.

At an MSB branch, a credit officer named T., after consulting on loan applications, advised to complete the procedures early to avoid the possibility of the credit limit running out like in 2022. Similarly, a TPBank credit officer named D. also said that the bank has started to control credit growth again when the growth rate in the first quarter of 2023 is quite high. It will depend on when the application is approved, but if the credit room is exhausted, it will be difficult to disburse.

When we wondered why the information said that the bank could not lend while the credit limit was almost exhausted, D. explained: "In addition to lending, a part of the current credit limit is used to handle bonds according to regulations."

Most of the enterprises that banks have committed to buy back bonds or provide large credit limits are the banks' backyard, so the credit growth rate can only increase so quickly in the first few months of the year. Moreover, in the second quarter of 2023, a large volume of corporate bonds will mature, so banks may have to set aside credit limits to handle this amount of bonds.

Dr. Nguyen Huu Huan

At the end of February, after announcing the credit growth target for 2023 from 14 - 15%, the State Bank also officially allocated credit limits to each bank. At that time, the banking industry report of VNDirect Securities Company listed a series of commercial banks that were granted specific room such as HDBank at 11%, ACB at 9.8%, Vietcombank at 9.6%, TPBank at 9.1%, VPBank and MBBank were both granted at 9%, BIDV at 8.3%, MSB was granted the highest credit room in this first review, up to 13.5%... In fact, in just the first 3 months of the year, the credit growth rate of some banks increased rapidly such as MSB increased by 13%, Techcombank increased by nearly 10.7%, HDBank increased by 9%, 3 banks are TPBank, Nam A Bank and VietABank increased by 7%... Thus, some banks have almost reached the credit room ceiling allocated in the first phase of this year.

But whether this capital is pumped into the economy or not is still a question mark, because in reality, it is very difficult for businesses to access capital. Mr. Nguyen Huu Huan, Head of the Finance Department - Ho Chi Minh City University of Economics, explained that some banks have recently traded a lot of corporate bonds, including commitments to buy back, so now they have to leave a credit limit to do so. With the current high credit growth of some banks, plus the problem of handling corporate bonds, it is possible that some banks will fall into a situation of running out of credit room like in 2022.

At the meeting of the National Assembly Standing Committee on the morning of May 9, Minister of Planning and Investment Nguyen Chi Dung commented that businesses are facing too many difficulties. In addition to market psychology, social trust and avoidance and fear of responsibility of officials at all levels, the tight monetary policy has made it difficult for many businesses to access capital. Credit growth in recent times has been too low compared to normal. The Minister said that it is necessary to loosen credit room for the economy because "cash flow is like blood vessels, if blood does not flow, it stops and dies".

Source link: https://thanhnien.vn/lai-suat-giam-nhung-ai-duoc-vay-ngan-hang-het-room-tin-dung-185230515211956906.htm