Banks have “surplus” money, businesses lack capital: Where is the bottleneck?

While businesses complain about difficulty in accessing capital and high interest costs, banks say they are holding large amounts of capital and are ready to lend to businesses, but must be cautious in reviewing loan applications due to increasing bad debt.

Personal loan package to support business

Ms. Bui Thi Le Thuy, Director of a travel company in Hanoi, shared that the tourism industry is mostly small and medium-sized enterprises, so the requirement of having collateral to borrow from banks is extremely difficult. According to Ms. Le Thuy, mortgage loans are difficult, unsecured loans are almost impossible because banks require businesses to prove their financial capacity through business results.

"Our cash flow is very good but we still have almost no access to bank loans. For the past two years, I have had to mortgage personal assets and borrow personal loans to support the business," said Ms. Thuy.

Mr. Le Tien Truong, Chairman of the Board of Directors of Vietnam Textile and Garment Group (Vinatex), an industry with more than 70% female employees, shared that currently, interest rates have decreased but access to disbursement is very difficult. Interest rates in other countries are at 3.5%, while Vinatex enterprises are having to borrow at an average interest rate of about 7% - 9%.

Access to credit is even more difficult for the fiber industry. Currently, all banks have cut lending limits for fiber companies, or require 100% collateral for short-term loans in 2024.

The Chairman of Vinatex emphasized that each year, the fiber industry is paying about 300 million USD in bank loans. If the bank reduces the credit limit in the context of the fiber industry's difficulties, it may be safe for short-term capital but in fact it is unsafe for long-term capital because without production, there is no money to pay long-term loans.

According to the February 2024 business situation report of the Ho Chi Minh City Business Association, banks have a lot of capital but small and medium enterprises cannot access it because they do not meet the collateral requirements or do not meet the loan conditions. Currently, 41% of enterprises do not have enough legal collateral to borrow capital.

Meanwhile, the White Book on Women-Owned Small and Medium Enterprises published in January 2024 shows that in Vietnam today, most women-owned businesses are micro and small in scale; the number of large-scale businesses with the capacity to lead supply chains is still small. Many businesses face difficulties in accessing resources, including capital.

Concerns about increasing bad debt lead to low disbursement

According to data from the State Bank, as of the end of February 2024, credit decreased by 0.72% compared to the end of 2023, while the amount of money deposited in banks is still very large, about 14 million billion VND, meaning there is a lot of money but capital cannot enter the economy.

Explaining this, Deputy Governor of the State Bank Dao Minh Tu said that, besides businesses having no need to borrow capital, people increasing provisions and reducing spending loans... there are still groups of customers who do not meet the conditions for borrowing capital.

Especially small and medium enterprises due to small scale, limited capacity, lack of feasible business plans. However, the State Bank leader also admitted that the subjective reason is that some banks are still cautious in granting credit and approving loans due to concerns about increasing bad debt, leading to low disbursement.

At the Conference on implementing the tasks of monetary policy management in 2024, focusing on removing difficulties for production and business, promoting growth, and stabilizing the macro economy, held recently, many commercial bank leaders also admitted that banks are holding a very large amount of capital and are ready to lend to businesses, but "need necessary and sufficient conditions" as well as being constrained by many factors.

Proposal to expand sources of access to capital

Mr. Nguyen Van Than, Chairman of the Association of Small and Medium Enterprises, shared that although there have been many meetings to find solutions, up to now, the situation of banks having excess money but not being able to lend continues. Meanwhile, businesses, especially small and medium enterprises, wanting to borrow cannot borrow.

According to Mr. Than, banks are not the only places that can lend to businesses. We have many sources. For example, our current fiscal policy has 1% loan packages.

Representatives of the Association of Small and Medium Enterprises suggested that the Government conduct research to maximize the effectiveness of these packages. Only then will businesses have more sources to access capital.

To increase businesses' access to capital, Deputy Governor of the State Bank Dao Minh Tu said that the agency will amend and supplement regulations and operations in the direction of reducing interest rates, encouraging banks to reduce costs and publicly announce average lending interest rates.

The State Bank also proposed that ministries, branches and localities have solutions to increase credit access for businesses. Businesses also need to restructure and make their financial situation transparent.

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