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VIETNAM SBV and Hanoi People’s Committee organize talks with commercial banks and enterprises

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VIETNAM SBV and Hanoi People’s Committee organize talks with commercial banks and enterprises

Post  1alaskan on Mon Jul 23, 2012 11:58 am

SBV and Hanoi People’s Committee organize talks with commercial banks and enterprises

In order to promote production and business in the second half of 2012, the State Bank of Vietnam (SBV) in cooperation with the Hanoi People's Committee organized a working meeting with commercial banks and enterprises on July 20, 2012.

The meeting was co-chaired by SBV Governor Nguyen Van Binh and Deputy Chairman Nguyen Huy Tuong of the Hanoi People's Committee. It was attended by several ministries, agencies, leaders of the SBV branch in Hanoi, and representatives of local credit institutions and over 100 enterprises.

The meeting aimed at identifying the difficulties and obstacles of enterprises in their relations with commercial banks, and exchanging views in order to find solutions to remove difficulties for enterprises to promote production and business while ensuring safe and sound banking operations.

The growth rate of Gross Domestic Product (GDP) of Hanoi in the first half of 2012 was lower than that of the previous years; the industrial production growth rate in Hanoi reached 8.1% (lower than the same period in the recent years). The production, business and financial condition of many enterprises slowed down, hence resulting in the weak demand for goods and services, which made inventory goods increase, negatively affecting production and business and consumption. Meanwhile, with the credit growth at a high level for many years (since 2010 and earlier), most enterprises have borrowed commercial banks with huge amount loans not being commensurate with their financial capability and capital absorptive capacity. As a result, the financial condition of these enterprises has become worse and worse...

According to several enterprises, over the past year, the SBV policies have been clear, transparent and predictable, but the lending interest rate (in spite of gradual reduction) remains high, and the implementation of the tight monetary policy to control inflation have made some enterprises, especially SMEs find it difficult to get access to bank loans. In addition, commercial banks have not fully met the needs of their medium and long-term loans. In addition, representatives of several enterprises said that some directors of commercial bank branches have neither really understood nor been willing to help businesses cope with inventory goods, or reschedule their loans.

Addressing the participants, SBV Governor Nguyen Van Binh said that in the first half of 2012, the SBV strictly directed the implementation of supportive measures in removing difficulties in production and business of enterprises , especially in terms of high interest rates and access to bank loans. He stated that the SBV requested commercial banks to start applying the maximum lending rate of 15% p.a on July 15, 2012 at the latest in order to share difficulties with businesses and households. He informed that only five days after the SBV request announcement, the majority of credit institutions have reduced the lending interest rate to below 15% p.a for the existing loans and applied the lending rate of 11-13% p.a for new loans for the priority sectors, and actively found solutions for credit growth. However, the SBV Governor said that many enterprises have taken advantage of the relatively flexible financial control for many years to borrow a large amount of money for improper purposes and in an ineffective way, and even certain enterprises have made losses and become insolvent. Therefore, he said that besides the immediate solutions to remove difficulties for businesses to contribute to economic growth, it is necessary to restructure both businesses and commercial banks. In regard to the wish for lower interest rates in VND, the SBV Governor asserted that the SBV would closely monitor economic developments in order to properly adjust monetary policies alongside with inflation control. He affirmed that the maximum lending rate of 15% p.a will remain for a long time.


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Remember as always, JMHO
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