'Banks have not changed their lending conditions for the past 25 years'

Agricultural enterprises worry about missing opportunities due to lack of capital

At the Central Highlands Banking - Business Connection Conference organized by the State Bank on the afternoon of October 20, Mr. Lai Duc Hung, Vice Chairman of the Lam Dong Flower Association, said that in 2023, due to the difficult economic situation, flower prices will drop. Meanwhile, input prices such as fertilizers and agricultural materials have increased sharply.

The above situation causes many difficulties for businesses and flower growers.

Besides, due to seasonal factors, businesses need bank loans to solve immediate credit needs, but because of loan procedures, disbursement is slow, causing businesses to miss opportunities.

Ms. Tran Thi Lan Anh, Director of Vinh Hiep Gia Lai Coffee Export Company, reflected that her business has been operating in the coffee export sector for 25 years, but over the past 25 years, there has been no change in the conditions and policies for credit granting products, with only one option of having additional real estate as collateral to increase the limit.

“It is really not suitable for a business that borrows capital for production and export business. Our business cannot compete with foreign businesses with this form of lending,” said Ms. Lan Anh, and at the same time recommended that banks implement loan products based on production and business plans including contracts, receivables, cash flow, and goods, so that businesses can access unsecured loans to create conditions for businesses to be proactive in capital.

*Coffee processing enterprises propose flexible seasonal credit packages.*

Another business in the coffee sector, Mr. Ta Quang Phu, Director of Quang Trieu One Member Co., Ltd. (Dak Nong), said that 2023 is the year of a sudden increase in coffee prices. Currently, coffee prices are at their highest level in the past 30 years, so the capital demand for this industry has also increased.

Although Quang Trieu Company Limited is always accompanied by local banks, sharing and creating conditions to access loans, meeting the highest possible level of capital needs, and even receiving interest rate support from 1-2%. However, Mr. Phu said that to access incentives from banks, businesses must meet a number of high standards, so not many companies can meet them.

Mr. Phu suggested that the State Bank coordinate with commercial banks to have direct dialogue with businesses, so that businesses can better understand the state's policies, thereby helping them access loans under the above programs and policies.

Will be more open in unsecured lending

On the commercial bank side, Mr. Tran Phuong - Deputy General Director of BIDV - stated that although the bank has implemented many solutions to support businesses, due to the general difficult situation, capital absorption is still weak.

Mr. Tran Phuong suggested that businesses focus on implementing measures to restructure businesses, cut down on ineffective business activities, and ensure finances to serve the core business activities of the business.

According to Ms. Phung Thi Binh, Deputy General Director of Agribank - in addition to solutions and policies from the banking sector, there needs to be synchronous coordination between ministries, sectors and localities to contribute to removing difficulties for production and business, supporting and promoting growth drivers, and stimulating aggregate demand.

In addition, businesses also need to increase financial transparency so that banks can access, evaluate, and grant credit.

“Enterprises need to proactively develop feasible production and business plans, strengthen cash flow management, financial transparency, proactively approach and propose so that banks have a basis for appraisal, new loans or to remove difficulties for businesses,” said Ms. Phung Thi Binh.

*Deputy Governor Dao Minh Tu speaks at the Conference.*

Concluding the conference, Deputy Governor of the State Bank of Vietnam Dao Minh Tu said that in the coming time, the State Bank of Vietnam will direct commercial banks to be more bold in unsecured lending and reduce procedures for real estate collateral.

"Of course, lending must ensure safety and cannot be "reckless" and then not be able to recover the principal and interest later," the Deputy Governor noted.

Regarding the opinion that lending in the agricultural sector depends on seasonality, the Deputy Governor said that seasonal products need capital very quickly. Therefore, banks must grasp the trend, efficiency and evaluate the success of the season to see if there is a good harvest and good price, closely following the capital needs of businesses as well as the sector and industry in general.

Regarding interest rates, Deputy Governor Dao Minh Tu said that in the relationship between businesses and banks, businesses often say that interest rates are still high, while many banks say that interest rates have dropped. However, it must be admitted that there are still banks that lend at high interest rates because they have previously mobilized high deposits.

Many banks have not reduced interest rates for customers before the debt payment deadline, some have reduced a lot, some have reduced a little. But the reality is that some banks have been slow in reducing interest rates, so businesses have reported having to borrow at an interest rate of 11-12%/year.

“The State Bank cannot decide on lending interest rates because that is the sole authority of commercial banks, but interest rates must be consistent with the general level and banks must demonstrate their responsibility to the community. The direction of the Government and the State Bank is to reduce lending interest rates in many forms,” said the Deputy Governor.

The Deputy Governor also “reassured” banks about concerns about criminalizing civil relations. Accordingly, if customers cannot pay their debts for objective reasons, the general policy is not to criminalize civil relations.

“Criminal cases are only brought when violations are discovered, such as two parties colluding to withdraw money from the bank to misuse the capital. If the loan is given to the right person, with the right authority, within the right scope, and within the right limit, no one will prosecute it criminally,” said the Deputy Governor.

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