Proactively Helping Businesses Deal with Capital Shortage

From the start of last year, the economic slowdown has caused adverse impact on operations of enterprises. Many companies have had to shrink production and business scales, suspended operations, shifted operations or sold part of corporate assets and equity to survive. And, certainly, some have gone bankrupt. For the time being, inflation has slowed down but it remained high. This is a woe to all companies, particularly medium and small enterprises.

 

Mr Bui Van Nu, Director of State Bank of Vietnam (SBV) - Binh Duong Province Branch , said: Sharing and solving difficulties for businesses, especially small and medium-sized enterprises, is a tough problem that requires the concerted support of the Party, State organs, business associations, and enterprises themselves to be troubleshot successfully. The banking sector has introduced a number of measures and solutions to support businesses like lowering interest rates, increasing loans for manufacturing sectors, boosting transparency of policies applied to borrowers, and easing access to credit sources for enterprises. To supervise the compliance to the Government’s instructions, the State Bank of Vietnam (SBV), the Binh Duong Provincial Party Committee and the Binh Duong Provincial People's Committee, the SBV - Binh Duong Branch has adopted strict measures to control operations of credit institutions in the spirit of the Resolution 11 of the Government, and the Circular 01 of the Governor of the State Bank of Vietnam. The credit growth in the province was below 20 percent in 2011 and a majority of credits was channelled to manufacturing areas, agriculture, rural areas, export and supporting industries, small and medium enterprises. The banking sector, in the meantime, cut credits for non-productive areas, particularly real estate sector.

 

In implementing measures directed by higher authorities, SBV Binh Duong has surveyed nine bank branches holding 51 percent of the credit market share in the province. Commercial banks agreed to strictly follow the State Bank’s instructions in an effort to bring lending interest rates down to 17-19 percent per annum in order to support enterprises in the tough time. Checked branches reduced interest rates for 6,041 borrowers with a total loan of VND5,090 billion, accounting for 31 percent of outstanding loans.

 

To facilitate corporate and personal borrowers to access bank loans, SBV Binh Duong has directed commercial banks to take initiative and flexible approach to capital supplementation, debt rescheduling, rate cut and other activities to support enterprises to operate effectively and repay loans. It has also coordinated with local governments to meet and contact professional associations in the province like the Vietnam Textile and Apparel Association (Vitas) and Vietnam Wood Association, etc to learn more about difficulties facing enterprises to have appropriate solutions.

 

Together with the cooperation with local authorities to spur social and economic development and the active support for businesses, the banking sector has constantly improved its capacity and expanded operations. At present, Binh Duong province has 63 branches of credit institutions, 101 credit transaction offices and 469 ATMs. The province-wide banking network mobilised VND52,420 billion and lent VND46,504 billion in the first nine months of 2011. To bring monetary policies of the banking sector into full play, SBV Binh Duong has cooperated with local authorities to set up interdisciplinary inspection teams to probe foreign exchange and gold markets. The branch also worked with relevant bodies to boost noncash payment.

 

In addition to stimulating economic potentials of the northern region of the province, especially rural areas, SBV Binh Duong has directed, encouraged and supported branches of credit institutions to develop the banking network. At present, 19 transaction offices and 47 ATMs were opened in Dau Tieng, Phu Giao and Tan Uyen districts. These units have attracted a large amount of unemployed capital from local people, thus helping fund other economic activities.

 

To play a greater part in enterprise development, economic restructuring, industrialisation and modernisation process, in the 2010 - 2015 period, the banking sector of Binh Duong province will continue collaborating with local authorities to implement socio-economic development objectives, prioritise capital for manufacturing sectors, particularly agriculture, rural areas, export and supporting industries.

 

It will improve credit quality, maintain annual credit growth of 20-25 percent, and keep deposit growth of 25-28 percent. It will cooperate with all-tier authorities and professional associations to orientate local businesses to increase their own capital and reduce reliance on credit loans like now. Besides, it will simplify banking procedures and enhance the transparency of monetary policies to facilitate companies and individuals to access banking products and services more easily.