Promoting capital flow for production and business

VTV.vn - Many banks said they will expand preferential credit packages to support businesses and people to restore production and business.

Credit promotes year-end production and business

The State Bank has just issued a document directing credit institutions to increase the scale of the preferential loan program for the agriculture, forestry and fishery sector to 185,000 billion VND. This is the fourth time this package has been increased in scale, from the initial level of 15,000 billion VND. Notably, the disbursement progress of this loan package is quite fast, exceeding the set limit within just a few months, showing that agriculture, forestry and fishery is a sector with quite good capital absorption capacity.

According to the State Bank of Vietnam (SBV), agricultural and rural credit accounts for about 22.7% of total outstanding credit. Meanwhile, other sectors such as credit for small and medium enterprises account for over 19% of outstanding credit. Many other sectors also have higher capital needs this year. And especially, with only more than 3 months left until the end of the year, many businesses are in need of capital to prepare for the peak production period at the end of the year.

With long-term credit capital, food processing enterprises have recently completed automatic production lines to welcome the peak season at the end of the year, improving productivity and quality for some key products.

Mr. Phi Ngoc Son - Sales Director, TrungThanh Foods Company shared: "Instead of making it manually, we now take advantage of the automatic production line, improving the process of completing quality products, specifically in the last 4 months of the year. Including two main products: white vinegar and satay to serve the winter as well as the New Year holidays".

According to a report from the State Bank of Vietnam, small and medium enterprises are still the group with the largest outstanding debt. In particular, the two priority sectors with the highest credit growth are supporting industries, up more than 18%, and high-tech enterprises, up nearly 21% in the first 7 months of the year.

Ms. Trinh Thi Ngan - Head of Advisory Board, Hanoi Association of Small and Medium Enterprises said: "Regarding credit, we see it as relatively positive compared to previous years. Lower interest rates and State guidance, support solutions from banks help businesses more conveniently. Currently, businesses do not have to wait for banks, but banks come to businesses."

There are banks that have only disbursed half of their allocated credit room so far, but it is expected that they will run out of room within the next two months.

Mr. Dao Minh Tuan - Deputy Director of Small and Medium Enterprise Customer Division, ABBank commented: "From micro customers to large customers, the Corporations are all in great need of capital to boost production and business activities. Especially, in the last 4 months of the year, we are focusing very much on promoting public investment. I consider this a very important time for credit growth to achieve the country's growth target".

Under the new regulations, business households that have recently transformed into micro-enterprises have also become a segment targeted by banks. Demand for loans has increased sharply, but the system still ensures supply.

Mr. Nguyen Hung - General Director of TPBank said: "Credit demand from now until the end of the year is still quite high and banks are still able to meet it. Not only credit, banks also mobilize quite abundant capital, stable system liquidity and interest rates are at a fairly low and comfortable level".

Recently, the State Bank of Vietnam requested credit institutions to continue to cut costs, increase operational efficiency and be willing to share profits, striving to reduce lending interest rates. Many banks said they would expand preferential credit packages to support businesses and people to restore production and business.

Credit promotes year-end production and business

Promoting capital flow for production and business

There is a need for capital, and banks have many policies to support loans for production and business. However, the State Bank's report also shows that real estate credit is growing at a higher rate than the industry average.

By the end of July, capital for real estate had increased by nearly 17%. Nearly half of that was credit for real estate business. This figure shows that policies to remove difficulties for real estate projects have begun to take effect, many projects are being implemented.

But besides that, it is also a warning signal for the banking system about risks if the real estate lending rate continues to increase. Because capital for real estate is medium and long term, while the capital mobilized by banks is mainly short term. Therefore, solutions are needed to direct capital flow in the right direction, flowing more into production and business.

To prevent excessive capital flow into real estate, experts say the State Bank can regulate by monitoring capital safety ratios, such as the risk coefficient when lending to real estate will have to be higher than other sectors. At the same time, the interest rate policy for lending to real estate speculation and for real home buyers must also be different.

Mr. Pham The Anh - Head of the Faculty of Economics, National Economics University shared: "We can have a policy to differentiate interest rates for different areas. For example, loans for production and business enjoy different interest rates, loans related to asset speculation must bear different interest rates, borrowers for one house can enjoy different interest rates from borrowers for a second or third house must bear different interest rates".

In addition, the State Bank can also direct capital flows through the refinancing mechanism, which means it can support low interest rates for commercial banks to lend more for production and business and vice versa.

Ms. Hoang Thi Minh Huyen - Macroeconomic expert, Bao Viet Securities Company (BVSC) commented: "It is possible to apply more preferential credit packages for some purposes such as credit for purchasing machinery or credit for R&D... Those factors may help direct capital flow into production and business activities rather than focusing on real estate projects".

Experts also recommend the need to develop a diversified capital market. When the stock and bond markets develop, they will be an effective channel to provide medium and long-term capital for businesses, avoiding dependence on bank loans.

The Prime Minister has asked the State Bank to urgently develop a roadmap and pilot the removal of credit limits from 2026, in order to increase healthy competition between banks, create incentives to reduce lending interest rates, thereby supporting the economy. But clearly, when removing the management tool, the State Bank will have to strengthen management, have mechanisms to direct capital flows into production and business and economic growth drivers.

Source: https://vtv.vn/thuc-day-dong-von-cho-san-xuat-kinh-doanh-100250925225017079.htm