Banking still needs to compete in lending policies

Share with us the story of borrowing during the fluctuating economy, the business director of a textile company said: It is true that the interest rate for loans has decreased significantly, but the number of new contracts has not yet recovered compared to before.

Difficulties are piling up

To reduce input costs, the company had to sell “losing” some pieces of land to maintain production and business activities instead of using bank loans.

“Currently, the company has hit rock bottom, but in the short term, we can only do as much as we can, as expanding investment in this period is very risky,” admitted the company representative.

Many businesses still face obstacles in terms of procedures when borrowing, even being imposed unfavorable credit conditions with complex and cumbersome loan procedures. Photo: THÙY LINH

A report from the Private Economic Development Research Committee (Committee IV, under the Prime Minister’s Advisory Council on Administrative Procedure Reform) sent to the Prime Minister in January 2024 clearly states that businesses are exhausted.

Accordingly, although the number of orders started to recover, the businesses have run out of capital, pledged assets for loans, and have no money to maintain production.

Sharing about this, Mr. Nguyen Thanh Tuan, CEO of Viet Au My Wood Joint Stock Company, said: “When the economy was stable, businesses were doing well with both unsecured loans and secured loans.”

But in 2023, when the company’s revenue decreased by 40%-50%, the bank required us to provide collateral for unsecured loans. Otherwise, the loan would be withdrawn.

At that time, we were already in difficulties, and the collateral asset planning could not be immediately met the bank’s requirements. Therefore, the sudden reduction in loan limits has put us in a difficult situation.

Recently, businesses have also benefited from the drastic instruction of the State Bank of Vietnam (SBV) in requiring commercial banks to reduce lending interest rates to support businesses. However, many businesses still face obstacles in terms of procedures when borrowing. Even being imposed unfavorable credit conditions with complex and cumbersome loan procedures.

Especially, small-scale businesses will face many difficulties in maintaining and developing production and business activities when they cannot access capital.

Competing in lending policies as well

“Many commercial banks only implement about 60%-70% of the SBV’s instructions,” said Nguyen Thanh Tuan.

“Although the interest rate reduction has supported businesses, the banks still retain the right to actively determine the interest rate for loans without any exchange or discussion between borrowers and lenders to find a common voice about the interest rate,” Tuan said.

Sharing the viewpoint on the obstacle from the lending policy, an export footwear business said: “Circular No. 02/2023 has created conditions for commercial banks to proactively restructure the repayment period to support customers.

But the message that credit staff sent to us is not like “If our business has any difficulties, the bank will discuss and restructure the loan repayment period according to the SBV’s guidance…”

Instead, the bank called us: “Please try not to be restructured in the loan repayment period! If the loan is restructured, the credit score will be reduced, and our staff will also be affected.”

Therefore, for businesses, as long as they still want to borrow from banks, they must strictly comply with the debt repayment on time and are not allowed to delay loan repayment, even just for a day.”

Sharing the difficulties of member businesses, a representative of the Ho Chi Minh City Business Association said: With the current difficult situation, businesses do not borrow because there is no contract or businesses borrow not only for new investment needs but also to repay old loans that have matured.

Therefore, the debt extension policy needs to be accompanied by a debt relief policy so that businesses are allowed to repay the rescheduled loan capital in the last year of the loan term.

Instead of having to repay immediately when the term ends, double the amount to be repaid in the following year, creating a double difficulty for businesses like the past time.

From the perspective of credit institutions, Mr. Nguyen Thanh Tung, a member of the Board of Directors cum CEO of Vietcombank, assessed: Currently, lending interest rates are at a very low level, lower than even before the COVID-19 pandemic, so the interest rate level is not a problem to impact the borrowing needs of individuals and businesses.

Therefore, the upcoming directive of Vietcombank is still focusing on credit growth in production and business activities, priority areas, currently accounting for 35% of Vietcombank’s total credit outstanding balance.

In addition, this bank will actively implement measures to resolve difficulties and obstacles in mechanisms and policies.

Specifically, “In addition to the NHNN-organized dialogues with customers, Vietcombank also proactively communicates with different customers to timely grasp and resolve difficulties and obstacles,” Tung said.

“In addition, Vietcombank will closely coordinate with customers to overcome difficulties and obstacles to accelerate disbursement progress for key projects with the role of promoting economic and social growth in localities and the whole country, focusing on projects in aviation, seaports, transportation, oil and gas energy, industrial real estate. At the same time, focusing on lending to domestic businesses and FDI enterprises in the global supply chain,” emphasized Tung.

THUY LINH