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Last updated: Monday, November 19, 2018


Rural and Agricultural Credit Rises

Posted: Tuesday, November 21, 2017

Agriculture and rural area is one of five sectors that the banking sector of Vietnam in general and of An Giang province in particular give priority to credit access in accordance with the Government's Resolution 14/NQ-CP dated March 5, 2014, on pilot agricultural development lending programme and Government Decree 55/2015/ND-CP dated June 9, 2015 on credit policies for agricultural and rural development in replacement of Decree 41/2010/ND-CP. With Resolution 14 and Decree 55, many enterprises, farmer households and farming cooperatives in An Giang province were able to benefit from the Government-backed credit policy and they create breakthroughs in agricultural and rural development.

Decree 55: Opening credit flows
Mr Le Trong Nghia, Director of the State Bank of Vietnam - An Giang Branch, said, Decree 55 has many new contents compared to Decree 41, enabling customers to have easy access to bank loans by simplifying procedures, reducing hard-to-meet conditions for customers; has incentive policies for high-tech agricultural production; and supports farmers to borrow money. For example, the scope of borrowers has been extended to urban people working in the agricultural sector. Or, non-collateralised loan limit is 1.5 - 2 times higher than that in Decree 41.

According to statistics from SBV An Giang, after more than two years of implementation, as of the second quarter of 2017, outstanding policy-based credit for agriculture and rural areas in An Giang province, based on Decree 55, was VND30,359 billion, an increase of 11.16 per cent over December 31, 2016 and 2.6 times higher than 2010, accounting for 53.09 per cent of total outstanding loans in the province with over 127,166 individuals and households and 661 enterprises and cooperatives.

The credit growth for agriculture and rural areas was 12.71 per cent a year on average in the period from 2010 to June 2017. The credit growth has augmented year after year, especially since August 2015 (when Decree 55 was effective), the growth was over 120.9 per cent, thus contributing positively to local economic development and marking the positive effect of Decree 55 on credit policy for agricultural and rural development of the Government.

Resolution 14: Launching agricultural production chains
On May 28, 2014, the State Bank of Vietnam (SBV) issued Decision 1050/QD-NHNN on pilot lending programme for agricultural development under Resolution 14 to encourage value-added chain and apply high technology to agricultural production with many special lending mechanisms. An Giang is one of the pilot provinces with two models: Antesco vegetable production and consumption chains and Tatishco catfish value chains. Mr Nghia said the value chains in An Giang are very effective. In particular, the chains do not use cash, but work with money affairs via banks.

With the deployment in An Giang province, the pilot lending programme for agricultural development under Resolution 14 also partly confirms the inevitability and correctness of the implementation of agricultural restructuring towards raising the value sustaining the development. In that chain, bank loans are very important. Banks bring benefits to all stakeholders while they can develop other banking services when they lend according to the pilot programme. 

Agricultural production restructuring will not be successful without proper agricultural and rural credit policies to provide positive support. Conversely, without a feasible scheme for agricultural restructuring, credit flows into this sector will be difficult to go up once saturation point is reached. "Therefore, the banking sector of An Giang is ready to lead credit sources into agricultural restructuring based on high tech and value chains. The remaining matter depends on how to carry out the scheme with feasible projects," Mr Nghia said.


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