According to Deputy Governor Dao Minh Tu, the State Bank of Vietnam has given lending institutions room and liquidity since the start of 2023 to improve enterprises' access to capital.
This information was stated by Mr. Dao Minh Tu – Deputy Governor of the State Bank of Vietnam (SBV) – at the regular Government press conference in September 2023.
Mr. Tu said that while credit has grown recently, the rise over the previous year was still modest. Numerous objective causes are to blame, such as economic challenges, effects of foreign policy, and challenges faced by domestic enterprises.
This State Bank official said that according to the latest data, the average reduction in loans, especially new loans, is from 1 to 1.3%.
In particular, the average lending interest rate for short-term loans is from 5.5 to 5.7%/year, for medium- and short-term loans is from 5.8 to 10%/year. According to calculations by the SBV, the current delay is about 9 to 12%/year for interest rates on outstanding debts that have not yet reached their repayment period and interest payment time. This is because of prior mobilization from commercial banks, which caused a very high delay, even from 10 to 12%.
“Thanks to the assertiveness, looking back over the past 9 months, monetary policy management has been very strong, monetary policy has been loosened since the beginning of the year; the management has been flexible, effective and appropriate," Mr. Tu emphasized.
Deputy Governor of the SBV Dao Minh Tu spoke at the regular Government press conference in September 2023 (Photo: VGP)
11 major solutions for credit expansion
The State Bank of Vietnam's deputy governor stated that policy administrators have encouraged increasing support resources for struggling enterprises, closed enterprises, and dissolved enterprises to help them quickly regain economic viability, especially after two years of fighting the pandemic and the dual effects of the global and domestic economies. Accordingly, SBV has raised the matter of credit expansion through 11 major solutions
Firstly, right from the beginning of the year, the SBV has provided liquidity and room for credit institutions. There is no shortage of credit room, and commercial banks have access to ample lending resources. Banks utilize instruments to generate resources and cut interest rates, so that business inputs are reduced.
Second, lowering operating interest rates comes next. The message and direction of the SBV to credit institutions is to lower lending interest rates. Positive changes have been made, especially in the past month.
The third solution is to review legal documents (a typical example is Circular 06) to create legal space for credit institutions to provide new products, create more competition, more lending conditions, and also create more conditions forcing commercial banks to consider customer retention and lower interest rates.
Fourth, the solution is to restructure debts and interest due if there are still difficulties. Specifically, with Circular 42 from the beginning of the year, up to now more than 120 trillion VND has been implemented.
Fifth, the Government's thematic credit package as well as the bank's package such as the 40 trillion VND budget package is used to support 2% interest rates. The 120 trillion VND package is used to support social housing, the 15 trillion VND package is for seafood business as well as wood export (currently nearly 6 trillion VND has been loaned). "If this 15 trillion VND package is used up, we will instruct commercial banks to be ready to provide supplies to solve the immediate difficulties for these two areas," Mr. Tu said.
Sixth are solutions to reform administrative procedures and reduce fees to facilitate enterprises; organize dialogue conferences with enterprises and economic sectors to remove problems right at the grassroots level; coordinate with local authorities, industries, associations on policy mechanisms, etc.
The next solutions are communication, then coordination with local authorities, industry associations, enterprises, etc. to identify with local authorities what mechanisms and policies are still problematic so they can be resolved. In addition, it is necessary to continue to strengthen credit, strengthen social policies and consumer policies, consumer credit, etc.
The final solution is to support the corporate bond market. Banks continue to issue bonds if they meet safety conditions, and also participate as investors in corporate bonds.
“Hopefully, credit practices will pick up quickly in the next three months. In cooperation with localities, the Bank will take drastic measures to remove obstacles for enterprises to thrive in the challenging economic circumstances”, said Mr. Tu./.
