Binh Dinh Banking Industry: Contributing to Socio-economic Development

The banking network in Binh Dinh has 23 level one branches, 12 level two branches, 86 trading offices, deposit agencies and 27 credit funds. With a widespread network, the banking system in Binh Dinh not only meets the savings deposit demand of the local people, but provides modern banking services and satisfies capital demand for commercial and business activities of the customers in general and companies in particular. As of July 31, 2012, the accumulated capital of local banks in Binh Dinh amounted to VND37,451 billion, up 12.6 percent compared to early 2012. Out of the accumulated capital, capital attracted locally alone reached VND21,868 billion, up 24.5 percent compared to the beginning of 2012 and representing 58.4 percent of total available capital (deposits in VND have a 29.3 percent growth rate. Outstanding debt was VND29,986 billion, up 5.8 percent this year, in which 66.7 percent of the total is loaned to businesses. In the first seven months, credit mechanism has seen a notable shift with bank capital available for businesses representing 93.2 percent.

 

Banks have focused their lending activities on core industries in the province such as processing, agriculture and forestry, and aquaculture, and also attempt to boost the retail credit and personal loan sectors. In addition, credit for social causes is also paid special attention, such as soft loans for students in need, clean water and environment programmes, loans to poor regions and housing loans for poor households.

 

Regarding support for businesses, especially the ease of access to capital for small and medium sized enterprises (SMEs) and their efficient use of the loaned capital, Mr Phan Phu Hai, Director of the Binh Dinh Branch of the State Bank of Vietnam (SBV) said that despite access to many other sources of capital, it would still be a challenge for local SMEs to maintain and even improve production capacity if not for the bank’s capital. However, local SMEs still encounter numerous obstacles in accessing bank capital, due mainly due to their failure to meet the loan requirements. In compliance with Resolution 11 issued by the Government and Instruction 1 issued by the Governor of SBV, local banks in Binh Dinh implement credit tightening policies on non-production sectors. Production sectors and SMEs still have easier access to capital, provided they meet the lending requirements.

 

At the moment and in the near future, Binh Dinh Branch of SBV will instruct local banks to focus their capital on production sectors such as agriculture and rural development; supporting industry, exporting industry, loans to SMEs and efficiently-operated projects, shouldering the burden with businesses by initiating loans with acceptable interest rates. Currently, local state-owned commercial banks have reduced the lending rate for SMEs to 17-17.9 percent per year, with an even lower rate for import-export businesses. Several private commercial banks are already taking steps to lower the lending rate further in the near future.

 

Also according to Mr Hai, in order to attract more capital and expand its network, the banking industry in Binh Dinh will install additional ATM and POS machines in rural areas to comply with guidelines from the Government and SBV regarding loans to develop agriculture in rural areas. The number of branches catering to rural areas will be increased in line with the regulations. In addition, in order to attract more capital, apart from diversifying products to meet customers’ demand, the local banking industry also implements lending rates in compliance with Instruction 02/CT-NHNN issued by the Chairman of SBV, to create a transparent and healthy business environment and supply funds to help develop the local economy.