Vietcombank Chairman Nguyen Thanh Tung said the bank is committed to reducing lending interest rates by at least 2% from now until the end of the year to support businesses.
The above information was shared by Mr. Nguyen Thanh Tung at the afternoon group discussion session on October 17 on the draft Law on Small and Medium Enterprise Development.
According to the Chairman of Vietcombank’s Board of Directors, small and medium-sized enterprises (SMEs) currently account for about 98% of the total number of businesses in Vietnam. However, this group only accounts for about 20% of total credit balance. “This shows that the support needs of the SME business sector are very large, while the State’s support resources are limited,” Mr. Tung stated.
He said that if we build a support mechanism that applies simultaneously to all small and medium-sized enterprises, it will easily lead to a spread situation, making it difficult to ensure effectiveness. Therefore, delegates recommended clearly identifying priority subjects and goals, focusing resources on industries, fields and business groups with development potential, capable of linking with large enterprises, participating in production and supply chains.
To support businesses in accessing capital, Vietcombank Chairman also said that the bank is committed to reducing lending interest rates by at least 2% from now until the end of the year.
Vietcombank Chairman Nguyen Thanh Tung spoke at the group discussion on the afternoon of October 17. Image: National Assembly Electronic Information Portal
Previously, at a meeting on monetary policy management on October 16, Deputy Prime Minister Nguyen Van Thang requested to reduce lending interest rates by 1.5-2% for production, business and priority sectors. According to him, lending interest rates are still high, affecting capital costs, production and business activities and the ability of businesses and people to access credit.
Tonight, BIDV Bank also announced a reduction in lending interest rates by up to 2% per year. The program was deployed throughout the system from October 15, applying to short-term loans in VND. BIDV’s policies focus on industries and fields consistent with the Government’s priority orientation on the basis of meeting the program’s conditions and the bank’s credit granting regulations.
State Bank data shows that the average lending interest rate in August was 10.7%, 0.2 percentage points higher than the previous month. This is an increase of about 3 percentage points compared to the interest rate of loans disbursed a year ago.
Chairman of the Association of Small and Medium Enterprises (SME) Nguyen Van Than stated that the difficulty in capital for SME enterprises and business households is increasing while the need for investment, technological innovation and expansion of production and business is continuously increasing.
Mr. Than proposed that there should be a fundamental solution to resolve the conflict between the requirement to reduce lending interest rates for businesses and ensure the rights of depositors, instead of just relying on administrative measures.
The Chairman of the SME Business Association suggested promoting the application of financial technology and implementing a controlled testing mechanism (sandbox). At the same time, he also proposed research to allow piloting one to two independent digital banking models. “This model can help reduce operating costs, thereby creating conditions for reducing lending interest rates and expanding unsecured loans for small and medium-sized enterprises and business households,” the delegate stated.
Regarding this issue, Vietcombank Chairman said that the independent digital banking model in some countries has the advantage of reducing operating costs thanks to the application of technology and automation. However, according to Mr. Tung, this does not mean that digital banks always have cheaper mobilized capital than traditional banks. “The prerequisite for this model to operate effectively is to have a complete, standardized and smoothly shared data system to serve customer assessment and risk management,” Mr. Tung shared.
In the Hai Phong group, Ms. Tran Lan Phuong, Member of the National Assembly’s Culture and Society Committee, said she highly appreciated the current direction set by the draft law. It is oriented to encourage credit granting based on cash flow and data, transaction data, revenues and other legal assets, reducing too much dependence on traditional collateral assets of banks.
However, Ms. Phuong believes that the reason why SME businesses have difficulty accessing capital in recent times is not necessarily due to lack of capital from banks. “In practice, many businesses have a need to borrow capital and have business opportunities, but the accounting system and financial reports are not transparent and the cash flow is not fully reflected, and the production and business plan is not enough basis to evaluate the ability to repay debt,” the delegate stated.
Meanwhile, according to her, in addition to collateral assets, banks pay more attention to the feasibility of the business’s business plan and cash flow to ensure its ability to repay debt. Therefore, delegates recommended improving the ability of businesses to meet loan conditions, while creating conditions for credit institutions to have enough information and tools to control risks.
National Assembly Chairman Tran Thanh Man also acknowledged that SME businesses have limitations in information transparency and financial management capacity. “The financial reports of many businesses are not standardized and there is no clear separation between personal finances and corporate finances, making it difficult for banks to accurately assess debt repayment ability,” he said.
According to the Chairman of the National Assembly, the capital absorption capacity of businesses is also limited. Even when accessing loan capital, some businesses still do not have a clear business plan and weak management capacity, increasing risks and making banks cautious when deciding to lend.
He said that these restrictions create a “vicious cycle” – lack of capital prevents businesses from expanding production, investing in technology, improving competitiveness and participating deeper in the value chain.
National Assembly Chairman Tran Thanh Man commented at the group discussion on the afternoon of October 17. Image: National Assembly Electronic Information Portal
From the above reality, the Chairman of the National Assembly proposed a strong shift from lending based on collateral to lending based on cash flow, transaction data, output contracts and the business’s position in the supply chain. He added that this issue has been directed by the Prime Minister and the Governor of the State Bank, but needs to continue to be specified with highly feasible solutions.
“If this bottleneck cannot be removed, other support policies on taxes, production space, technology, and markets will also be difficult to maximize their effectiveness,” he noted.