15:19 | 27/03/2019 Finance - Banking
(VEN) - The capital raised through the bank-business connection program has experienced high growth and contributed to the sustainable development of many enterprises. The program was launched in Ho Chi Minh City in 2012 to provide loans at preferential rates to designated firms and individuals.
Implementation of the bank-business connection program in Hanoi has been one of the highest in the country, with credit institution capital contributing significantly to the development of enterprises in particular and the city’s economic growth in general. According to the State Bank of Vietnam’s (SBV) Hanoi branch, since the program was launched, credit institutions have committed to providing businesses with loans totaling almost VND538.13 trillion and have already offered loans worth more than VND505.6 trillion at an annual interest rate of 6-6.5 percent for short-term loans and 8-9 percent for medium to long-term loans. A number of companies in prioritized industries, which have good credit ratings and borrow capital from leading commercial banks, can enjoy interest rates that are more preferential.
In the northern mountainous province of Lao Cai, the program’s outstanding loan balance reached almost VND15.6 trillion as of late 2018, an increase of VND1.81 trillion over December 31, 2017 and accounting for 60 percent of all banks loans to businesses. The Rural Technology Development Joint Stock Company (RTD) leadership said the program has become a “lifebuoy” for the company.
In the northern province of Ha Nam, credit institutions lent businesses more than VND18.17 trillion through the program in 2018, representing 55.56 percent of the province’s total outstanding loan balance and up 23.85 percent from early 2018.
Apart from meeting enterprises’ capital demand, credit institutions did a good job of prioritizing borrowers in support industries, import and export activities, agriculture and rural development, startup projects, and small and medium-sized enterprises in accordance with government instructions. In many localities, commercial banks evaluated and classified businesses, adopting appropriate policies for specific borrowers and providing loans to cooperatives as well as other enterprises.
The banks will be expanding the program in 2019 to reach the credit growth target set by the SBV.
The SBV’s Lao Cai branch said that in 2019, the branch would instruct credit institutions in the province to strengthen the program and improve the credit quality.
A representative of the Hanoi banking industry said that in 2019, credit institutions in the city would continue to implement Hanoi People’s Committee and SBV’s joint Regulation 02/UBND-NHNN dated June 4, 2016 on easing the way for business and the city’s socioeconomic development. They will work with city authorities to provide loans at reasonable interest rates.
Nguyen Quoc Hung, Director of the State Bank of Vietnam’s Credit Department of Economic Sectors said that in
2019, the banking sector will strengthen coordination with localities to promote the bank-business connection program
in order to facilitate individuals’ and business access to bank capital.