Why has investment credit for businesses decreased sharply?

Implementing solutions to remove difficulties in capital sources for enterprises, the State Bank of Ha Nam Branch has directed credit institutions to balance capital, maintain stable mobilization interest rates according to regulations, and promptly disburse capital sources to support production and business enterprises. However, recently, the sharp decrease in capital demand of enterprises in the province has affected credit growth of commercial banks.

According to the synthesis of the State Bank of Ha Nam Province Branch, it is estimated that by the end of August 2023, the total outstanding credit balance of the province will reach about 66,200 billion VND, of which loans to enterprises will be 33,375 billion VND, down 11.7% compared to the beginning of the year. In the total outstanding loans to enterprises, the outstanding loans to small and medium enterprises will be 14,040 billion VND, down 12.39% compared to the beginning of the year, with 1,356 enterprises still having outstanding loans. According to the explanation of many enterprises, in difficult times like now, investing in expanding production and business, if not calculated carefully, will result in losses. Therefore, many enterprises have limited bank loans; some enterprises have even reduced production to pay banks.

Mr. An Quoc Huy, manager at Minh Hieu Company Limited (Nguyen Ly Commune, Ly Nhan) - a company specializing in producing tunnel bricks, said: In 2023, production and business enterprises will face many difficulties. If in the same period in previous years, during the dry season, people built a lot of houses, and bricks were not sluggish, this year, the economy is in recession, workers in industrial parks have reduced working hours, people's lives are facing many difficulties, and the number of households building houses has decreased sharply, leading to slow consumption of products produced by the enterprise. Faced with the above difficulties, the company has had to reduce production, with two lines, only allowing one line to operate to maintain jobs for workers and withdraw capital to pay off bank loans. The enterprise has not yet considered expanding production in the near future when the economy is still in recession.

Why investment credit for businesses has decreased sharply? — ***Customers transact at Agribank Dong Van Branch.*** Photo: Tran Thoan

For commercial banks today, they want to disburse capital to businesses but face many difficulties due to economic recession, production and business stagnation, despite lowering lending interest rates. Many banks have invited reputable businesses in the area to borrow capital, but the demand for credit capital from customers is also limited. On the contrary, many businesses are in dire need of loans but branches do not dare to disburse because they do not have collateral, do not have a feasible production and business plan or the production and business plan has many potential risks.

Mr. Hoang Xuan Hoi, Deputy Director of Agribank Ha Nam Branch, said: In 2023, the branch has directed its affiliated units to closely follow the operations of businesses and promptly disburse capital to customers who need loans to invest in production and business development. For businesses that have used bank capital and are facing difficulties in production and business, the unit also considers restructuring the repayment period for each item, waiving part of the interest rate to ease difficulties for customers. Up to now, about 65% of the branch's capital is for lending to household economic development, the remaining nearly 35% is for lending to businesses. In the first 3 quarters of 2023, credit growth was lower than many previous years due to the economic recession. For many businesses that have been close customers of the branch for many years, they have still used large amounts of capital, but this year they have invested sparingly, and some businesses have even reduced production.

Like Agribank Ha Nam Branch, during this period, many commercial banks in the province are facing difficulties in disbursing capital to businesses. To remove difficulties in capital sources for businesses, since the beginning of 2022, a number of large credit institutions have adjusted their lending interest rates down by 0.2 - 0.5%/year. At Agribank Ha Nam Branch, Joint Stock Commercial Bank for Industry and Trade Ha Nam, Joint Stock Commercial Bank for Investment and Development Ha Nam Branch, ACB Bank Ha Nam Branch, Foreign Trade Bank Ha Nam Branch... have prioritized expanding investment capital sources for manufacturing enterprises to exploit local potential advantages and stimulate consumption in society.

To increase investment capital, the Provincial State Bank Branch directed credit institutions to focus on: surveying and understanding the credit loan needs of enterprises; implementing the Bank - Enterprise Connection Program; proactively coordinating with the Provincial Business Association to grasp information on credit needs of enterprises to remove difficulties for production and business as well as consider and resolve customer requests. At the same time, commercial banks also regularly review each enterprise loan, rebalance capital, support customers facing difficulties in restructuring debt repayment periods, reducing interest rates, and promoting production and business development.

Tran Huu

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