Interest rates key to bolstering bank - business ties

Deputy director of the Ho Chi Minh City branch of the State Bank Nguyen Hong Minh spoke with Thoi bao Ngan hang (Banking Times) newspaper about connecting commercial banks and enterprises.
Deputy director of the Ho Chi Minh City branch of the State Bank Nguyen Hong Minh spoke with Thoi bao Ngan hang (Banking Times) newspaper about connecting commercial banks and enterprises.

* The programme for connecting borrowers and banks was initiated by the city' State Bank from a dialogue on monetary policies since July 2012. What has turned a dialogue into a real programme?

It's true! One year ago, we started to implement monetary measures for tackling enterprise's difficulties, supporting the market and handling bad debt following the Government and State Bank's direction. We worked with the city's departments and sectors to survey information on shortcomings in banking policies.

We reviewed the real demand of capital in enterprise from questions relating to the banking field sent by people to the city's e-information portal. However, many shortcomings occurred during the primary period of the programme's implementation. Enterprises have separate difficulties requiring different measures for handling.

From that moment, the city gave us permission for expanding the model in 24 districts with real measures on the monetary market. Through the programme, crediting was heightened from dialogue to a higher step.

* It was a fact that some enterprises did not receive preferential interest rates in the programme. What is your opinion?

At present, enterprises, co-operatives, production and trading households, not necessarily working in priority fields, are given loans with a maximum interest rate equal to the rate for five priority fields.

Short-term loans with support of preferential interest rates would be disbursed following commitments, excepting cases of customers using capital for inappropriate purposes or not having a need for a loan anymore.

However, it was a fact that some enterprises haven't satisfied conditions for borrowing loans due to problems with overdue debts or problems with their financial condition.
After a period of the programme's implementation, the State Bank representative in Ho Chi Minh City 's instruction and operation have been changed from collecting public opinion for proposing measures, to directly connecting banks and enterprises on capital and interest rates. The pilot connection model that was started since the end of last year showed sharp effect in supporting enterprises.
During the first period, outstanding accounts for supporting enterprises was still modest, at 92 billion VND (4.34 million USD) per connection. However, though, it paved a new and effective way for accessing and handling enterprises' difficulties.

Last September, total credit loan commitments had been increased to around 1 trillion VND (47.6 million USD) in a connection day. The number of commercial banks joining in connection day was increased dramatically compared to previous periods.

* You've just made mention of the programme's direct connection model. How was it implemented?

First, we collaborated with relevant authorities to review the difficulties of enterprises relating to the banking sector.

Secondly, we checked and evaluated the real demand of loans from information relating to enterprise's difficulties, capital demand or interest rates provided from the State Bank.

Thirdly, we asked commercial banks to actively find and provide loans for certain loan demands in districts.

In the programme, commercial banks will increase loan limits or reduce loan interest for customers in a list given by the city's State Bank office. They also looked for connecting prestigious customers or those with effective production and business with the programme.

We also collaborated with district People's Committees to hold events for enterprises and banks meeting directly to sign preferential loan commitments.

There are 95 commercial banks participating in the programme in the city over the past year. A total 365 enterprises and 67 production and trading households in 19 districts of the city benefited from the programme with total loans of 10 trillion VND during the past nine months.

We are speeding up the connection model's expansion in efforts to cover all of the city's 24 districts by mid of October 2013.-VNA

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