Hai Duong Banking Industry: Deploying Solutions to Support Businesses

4:04:22 PM | 3/9/2015

During the tough economic context affecting the production and business activities of enterprises in recent time, the State Bank of Vietnam – Hai Duong branch (SBV Hai Duong) and credit institutions (CIs) in the locality have implemented strong measures to support businesses to overcome difficulties. To learn more about these activities, Vietnam Business Forum interviewed Ms Nguyen Thi Bai, Director of SBV Hai Duong. Vu Thuy reports.
What do you think about credit activities of Hai Duong province in the past period?
In recent years, the banking industry in Hai Duong province has been operating actively, contributing to the socio-economic development of the locality. There are 98 CIs including 23 commercial banks, one branch of Bank for Social Policies, the Development Bank, one micro-financial -organisation, one branch of cooperative bank and 71 people’s credit funds with over 500 transaction points throughout the province, creating favourable conditions for credit institutions in the province to easily access all customers, fully deploy, and diversify products and services, meeting businesses’ needs and fully serving local people. As for June 30, 2015, the mobilized capital reached VND53,197 billion, up 20.3 percent compared to the same period last year and 9.9 percent compared to the end of 2014; total outstanding loans was VND41,039 billion, up 17.0 percent from the same period last year and 5.5 percent compared to the end of 2014; bad debts accounted for 1.24 percent of total loans.
With instructions of the Government, the State Bank of Vietnam, and the Provincial People’s Committee, the SBV Hai Duong has drastically steered CIs to simultaneously perform solutions to mobilise idle capital resources; expand credit growth efficiently and rationally; investing credit capital in business and production, and key projects, especially the priority areas (agriculture, rural areas, supporting industrial, exports, etc); to ensure that credit quality is always under control, bad debts are of less than 2 percent; foreign exchange market and gold market remain stable; lending interest rates fall; and to support the development of production, business, significantly contributing to the province's economic growth, ensuring social security.
So, what have the SBV and credit institutions in the province done to support enterprises in their production and business?
Sticking to directions of the Governor of the SBV, in the last years the central bank and credit institutions in Hai Duong province always accompanied customers and businesses to overcome difficulties, particularly: simplifying procedures for granting credit, helping businesses to easily access bank credit with reasonable interest rates, contributing to increase the confidence of the market, investors and businesses. Up to now, more than 3,000 local enterprises lent capital from banks with loans of up to VND19,322 billion (of which loans for SMEs accounting for over 50 percent of total loans); up 4.2 percent compared with the end of 2014.
Efforts to lower the lending rate have become a leading concern of the banking industry and are done step-by-step according to the schedule. By the end of 2014, lending interest rates fell by 2 percent / year compared to the end of 2013. As the first 6 months of this year, the interest rate continued to fall 0.2-0.5 percent/year, contributing to unplug difficulties for businesses. In the future, banks will continuously strive to reduce interest rates for long-term loans by 1 percent/year to support businesses.
A good sign is that, up to now, most of enterprises in the province having access to bank credits are now operating very well with transparent finance, effective governance, and clear business strategies. On the other hand, some companies overcome problems of policy mechanisms thanks to the help of the banking sector in collaboration with provincial agencies.
Hai Duong banking sector is ready to serve as a bridge between banks and businesses, banks and farms, cooperatives and farmers, pouring capital from banks to proper address and all economic sectors, contributing to the socio-economic development of the province, thereby contributing to fulfilling the overall objectives of the banking sector. Specifically, in 2014, the programme connecting banks-business has committed to lending over VND2,760 billion, and disbursed nearly VND1,950 billion. 133 customers have benefited from this programme, including 130 new customers with loans of VND1,277 billion, 3 customers have enjoyed debt restructuring, debt rescheduling with the amount of VND690 billion.
Recently, Hai Duong SBV has advised the province how to improve the business investment climate and competitiveness ability in the province?
In recent years, the banking industry in Hai Duong has been very active in proposing measures to improve the investment environment and attract investment such as: Proactively advise the PPC (twice per year in average) to held meetings, dialogues, exchanges, seminars with businesses, investors, associations and unions to grasp and timely handle difficulties and problems of business when loaning or paying through banks; positively reform administrative procedures, applying ISO standards, increase labour productivity; strengthen measures to improve the quality and efficiency of the inspection, examination and settlement of complaints and denunciations of citizens; continue to accompany with customers and enterprises, serving as a bridge, to cope with difficulties (lower interest rates, simplify procedures and shorten the time, without causing trouble, appropriate serving attitudes, creating confidence to customers, support customers in transactions with red book, real estate’s register with departments, agencies).
Provincial Competitiveness Index (PCI) ranking results from the past few years clearly show the efforts of the provincial leadership and committees in taking drastic and synchronous measures to improve the investment environment of the province, bringing the quality of economic governance and creating conditions for the development of enterprises. However, some component indicators are still at a very low level, such as access to land, dynamics, fair competition, legal institutions or supporting business. To further enhance the competitiveness index of the province, these indicators must be boosted. The province needs to be more firm in directing the reform of administrative procedures, raising awareness, responsibility, innovative style, the style of work, and discipline of civil servants in agencies. Managing officials have been very aggressive; however, responsibilities of the implementing agencies also play an important role in reforms to completely overcome their shortcomings. Businesses themselves must be more innovative in thinking, improve competitiveness, governance capacity, transparency of information, and follow the regime of accounting as prescribed by law. This is the "key" to increase the competitiveness index of the province.