Banking Industry: Striving to Improve Capital Flow

4:08:16 PM | 8/21/2014

For the past years, the relation between credit institutions and enterprises in Dong Nai province has become closer and closer. Banks have actively accompanied, supported and shared difficulties; at the same time created favourable conditions for enterprises to access capital.
Sharing the same boat with the whole country, in 2013 and at the beginning of 2014, enterprises in Dong Nai province have faced many challenges and difficulties in trading and doing business. To help enterprises dissolve difficulties, from the beginning of 2013, provincial branch of the State Bank of Vietnam and credit institutions in the area have cooperated with the Provincial Party, local authorities, departments, sectors and organisations in the province to organise 16 conferences and meetings and directly meet domestic and FDI enterprises. Especially, the Governor of SBV visited Dong Nai to organise conventions with the Provincial Party, People’s Committee, delegates of the National Assembly, departments, sectors, enterprises and Dong Nai branch of SBV (13 times in 2013, 6 times from the beginning of 2014). The conventions strived to solve enterprises’ obstacles like procedures for getting loans, repaying before due date, reducing credit interest rates, access to banking loans, handling with bad debts, informing credit support packages in banks to customers and enterprises for them to have access to low interest loans.
 
Since the beginning of April 2014, the provincial branch of SBV has implemented the programme of connecting enterprises and banks in Dinh Quan district, Tan Phu district and Long Khanh town, Thong Nhat district, Cam My district, Xuan Loc district; concentrated on supporting fields of agriculture and rural areas. Moreover, considering small and medium sized enterprises targeted customers of credit activities, banks actively grant loans and reduce credit interest rates in order to dissolve difficulties for enterprises. At the same time, they continuously offer attractive credit packages with practical, favourable conditions like credit packages based on chains from production to consumption to improve productivity and reduce costs of credit activities; or lending based on chains of breeders, purchasers and product processors.
 
Apart from efforts to help enterprises have access to capital, credit institutions in the area also adjust loan due time, prolong due time, through which dissolve difficulties in credit relationship with customers. In 2013, credit institutions in the area changed loan due time for 160 customers with adjusted capital of VND660 billion; prolonged loan due time for 364 customers with VND 5,159 billion; reduced interest rates for 180 customers with VND10.32 billion. From the beginning of 2014 to 31st May 2014, loan due time of 30 customers was adjusted with VND265 billion; loan interest rates of 101 customers were reduced with VND1.08 billion.
 
However, the recent problem of the banking system is “overflow of deposit, lack of credit”. Concerning this issue, Mr Tran Quoc Tuan, Director of Dong Nai branch of SBV, said that despite interest rate reduction and favourable conditions for enterprises, commercial banks in the province still have an overflow of capital. Mr Tuan explained that the capital consumption of enterprises was sharply reduced because they did not have demand of capital (due to high inventories, malfunctioned production, unsold goods and reduced demand).
 
To solve the problem, in the future, besides interest rate reduction, credit institutions in the area will enhance supporting enterprises more actively to have access to capital, advise them on how to exploit capital most effectively. Apart from interest rate issue, enterprises still face complicated procedures and other conditions for obtaining loans. In the current economic context, bad debts of enterprises and banks are still high, therefore to restrict risks, banks have to consider more strictly before granting new loans. Mr Tuan proposed that enterprises should upgrade management ability, especially they have to report their financial conditions publicly and transparently. Only then they are reviewed, analysed for obtaining loans with or without collateral.
 
Kien Tuong