Banks lending big to keep agriculture sector ticking

According to the State Bank of Vietnam’s department of credit for economic sectors, as of April credit injected into rural and agricultural development had reached 2.3 quadrillion VND (100 billion USD), or 24.6 percent of the banking sector’s total loans.
Banks lending big to keep agriculture sector ticking ảnh 1Banks have prioritised agricultural projects that are involved in value chains and adopt high technologies for lending. (Photo courtesy of Agribank)
Hanoi (VNS/VNA) - According to the State Bank of Vietnam’s department ofcredit for economic sectors, as of April credit injected into rural andagricultural development had reached 2.3 quadrillion VND (100 billion USD), or24.6 percent of the banking sector’s total loans.

Banks have prioritised agricultural projects that are involved in value chainsand adopt high technologies for lending.

Analysts said loans given to such projects are worth hundreds of thousands ofbillions, mainly by State-owned lenders.

Agribank leads in this regard, providing credit to 29 hi-tech agriculturalparks licensed by the Government and 20 technology-based farm companies.

The state-owned bank has also lent thousands of billions of dong to companies and farms in valuechains to expand production.

Vietcombank is another major lender to the agricultural sector

For instance, this state-owned bank has lent 550 billion VND (24 million USD)to the Dabaco Group, which specialises in identifying and restoring domesticchicken breeds and runs research centres having a modern, closed circle usingadvanced AI technology, 575 billion VND for Hoa Phat Group’s agriculturalproject and 46 billion VND to the Da Lat Flower Forest BiotechnologyCorporation.

Another State-owned bank, BIDV, has lent thousands of billions of dong to agricultural companies’ valuechains.

Among the beneficiaries are Hoang Anh Gia Lai Agricultural Joint Stock Company,which grows orchards (721 billion VND) and the Agricultural Technology JointStock Company (11.3 billion VND).

Analysts said banks keen to lend to enterprises in agricultural value chainsthis is because it has enabled them to reduce risks thanks to effective cashflow management.

Though the risk of bad debts is not completely eliminated, non-performingloans in this area are quite low, they said.

Moreover, Government policies require them to support the development of theagricultural sector, they pointed out.

Dr Can Van Luc, a member of the National Monetary and Financial AdvisoryCouncil, said developing hi-tech agriculture is an inevitable trend since ithas created a new impetus for the sector amid the context of climate change,industry 4.0 and international integration.

To sustain this, the Government has issued a number of mechanisms and policiesto encourage the flow of capital and technologies into rural and agriculturaldevelopment, and this has already begun to show results, he said.

Analysts suggested however that the Government should soon issue regulationsgoverning implementation of agreements along agricultural value chains withclear sanctions for violations to minimise risks and ensure their stability./.
VNA

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