Business
Banks pave the way for enterprises to access capitals
The request to reduce interest rates of the State Bank of Vietnam (SBV) has been welcomed by commercial banks, despite a lower profit.
Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank) and Vietcombank have issued official notices on the reduction of interest rates by 0.5% per year after the decision of the SBV. Before that, LienVietPostBank, VPBank, BIDV, and Agribank all decide to reduce the interest rates starting from July 10. Even Saigon Commercial Bank (SCB) has also reduced the interest rates by 0.5 percentage point for all loans instead of reducing interest rates for prioritizing fields.
Waiting for transparency from enterprises
As a small business in the plastic industrial sector in Hanoi, Ms. Mai Phuong (Tay Ho) has to reserve working capital to ensure the business activities of her company. She approaches Vietnam Prosperity Join-Stock Commercial Bank (VPBank) to get access to unsecured loans. After five days preparing all documents according to the requirements and five hours waiting, she was able to loan out an amount of over one billion VND.
Mr. Thanh Tung, the Chairman of Hai Trang Import-Export Company (Soc Son, Hanoi), states that in comparison to previous periods, the bank loan procedures have become easier. Enterprises, small and medium ones in particular, have approached credits in a more convenient manner. In reality, every bank has its own programs for small and medium enterprises in terms of loans to support their activities. However, not many enterprises can get access easily to credit packages. Many loans are only applied to VIP or long-term customers of specific banks.
Ms. Nguyen Kim Oanh, the Chairman of the Viet Phu Commerce and Production company shares that enterprises have difficulties in getting loans because of the differences between reality and regulations. She has invited many banks to her production site, but they decline her offer with tons of reasons.
With the same problem, Mr. The Hung, the owner of a screw production business, says that currently, banks require enterprises to mortgage. However, without the land ownership certificate, his enterprise cannot get a loan from any bank. Meanwhile, Mr. Minh, the Chairman of a software company in Le Thanh Nghi suggests that businesses should not only be able to mortgage with lands but also patent rights or other intangible assets, a worth considering pilot model.
Credit tailored made for each sector
According to representative from a bank in Lang Ha Street, most of commercial banks have good customer services, in which customer with high number of transactions or large transactions will become VIP customer for better services. Moreover, they tend to receive more preferential treatments, such as lower interest rate, cheaper service fees, easier and time-saving procedures, etc.
According to requirements of VP Bank, enterprises have to meet the following standards: Operating for over two years, no debt in Category 2, revenue on tax report amounting to at least 5 billion VND, etc. in order to loan 500 million VND (10% revenue) in 12 months. The maximum loan that enterprise can take is 5 billion VND. On the other hand, for Maritime Bank, enterprises have to operate over 2 years and have revenue of over 20 billion VND to loan out 10% of their revenues. The maximum loan amount is 4 billion VND. During the loaning process, enterprises that maintain good credit history will be able to loan out up to 100 billion VND.
However, super small enterprises can still loan working capital but with low disbursement rate and slightly higher interest rates due to risk factors. In particular, for smaller targets, besides the mentioned products, banks also introduce credit cards. This product is often a small loan suitable for the funding demand of small enterprises. According to the representative of VPBank, for banks to best support enterprises, enterprises themselves have to establish a serious and strong relationship with banks, similar to how they act towards important suppliers. Enterprises need to report regularly to banks about their production and commercial plans and financial situations so that the banks can have supporting solutions for enterprises when difficulties come.
According to Mr. Quang Hung Hiep, the Vice Chairman of the Bank for Investment and Development of Vietnam JSC (BIDV), how banks can best support enterprises is a matter to be discussed. In underdeveloped markets, banks often refuse to lend to businesses because of the difficulties in valuing mortgages. When it comes to secured loans, banks have to assess carefully many aspects of enterprises’ activities. “In particular, banks support businesses not only in terms of capital and interest rates but also with regard to technological plans and financial solutions,” Mr. Hiep emphasizes.
As stated in the report on economic performance on the first 6 months of 2017 issued by the National Financial Supervision Commission, in order to maintain the current interest rate, it is required to keep the exchange rate between VND and USD at an appropriate level: With the inflation rate targeted at 4%, exchange rate is estimated to raise 2-4%. At the same time, commercial banks will reduce its operational expense to support the interest rate stability scheme of the Government. Priority sectors with growth rate of 12-14% are expected to continue growing.
Orient Commercial Bank (OCB) has successfully established 30 support centers for small and medium enterprises (SMEs) and is expected to have 35 centers at the end of 2017. Along with simplifying procedures, reducing time for disbursement and having flexible loan terms, OCB has frequently monitored the market to offer services tailored made for each kind of customers: loan, guarantee, international payment, etc. At SME support center, customer can discuss about the bank’s requirements with specialized staffs for better services. Similarly, Techcombank also offers credit packages for certain sectors to support their unique demands.
Waiting for transparency from enterprises
As a small business in the plastic industrial sector in Hanoi, Ms. Mai Phuong (Tay Ho) has to reserve working capital to ensure the business activities of her company. She approaches Vietnam Prosperity Join-Stock Commercial Bank (VPBank) to get access to unsecured loans. After five days preparing all documents according to the requirements and five hours waiting, she was able to loan out an amount of over one billion VND.
Operation at VP Bank Hanoi.
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Ms. Nguyen Kim Oanh, the Chairman of the Viet Phu Commerce and Production company shares that enterprises have difficulties in getting loans because of the differences between reality and regulations. She has invited many banks to her production site, but they decline her offer with tons of reasons.
With the same problem, Mr. The Hung, the owner of a screw production business, says that currently, banks require enterprises to mortgage. However, without the land ownership certificate, his enterprise cannot get a loan from any bank. Meanwhile, Mr. Minh, the Chairman of a software company in Le Thanh Nghi suggests that businesses should not only be able to mortgage with lands but also patent rights or other intangible assets, a worth considering pilot model.
Credit tailored made for each sector
According to representative from a bank in Lang Ha Street, most of commercial banks have good customer services, in which customer with high number of transactions or large transactions will become VIP customer for better services. Moreover, they tend to receive more preferential treatments, such as lower interest rate, cheaper service fees, easier and time-saving procedures, etc.
According to requirements of VP Bank, enterprises have to meet the following standards: Operating for over two years, no debt in Category 2, revenue on tax report amounting to at least 5 billion VND, etc. in order to loan 500 million VND (10% revenue) in 12 months. The maximum loan that enterprise can take is 5 billion VND. On the other hand, for Maritime Bank, enterprises have to operate over 2 years and have revenue of over 20 billion VND to loan out 10% of their revenues. The maximum loan amount is 4 billion VND. During the loaning process, enterprises that maintain good credit history will be able to loan out up to 100 billion VND.
However, super small enterprises can still loan working capital but with low disbursement rate and slightly higher interest rates due to risk factors. In particular, for smaller targets, besides the mentioned products, banks also introduce credit cards. This product is often a small loan suitable for the funding demand of small enterprises. According to the representative of VPBank, for banks to best support enterprises, enterprises themselves have to establish a serious and strong relationship with banks, similar to how they act towards important suppliers. Enterprises need to report regularly to banks about their production and commercial plans and financial situations so that the banks can have supporting solutions for enterprises when difficulties come.
According to Mr. Quang Hung Hiep, the Vice Chairman of the Bank for Investment and Development of Vietnam JSC (BIDV), how banks can best support enterprises is a matter to be discussed. In underdeveloped markets, banks often refuse to lend to businesses because of the difficulties in valuing mortgages. When it comes to secured loans, banks have to assess carefully many aspects of enterprises’ activities. “In particular, banks support businesses not only in terms of capital and interest rates but also with regard to technological plans and financial solutions,” Mr. Hiep emphasizes.
As stated in the report on economic performance on the first 6 months of 2017 issued by the National Financial Supervision Commission, in order to maintain the current interest rate, it is required to keep the exchange rate between VND and USD at an appropriate level: With the inflation rate targeted at 4%, exchange rate is estimated to raise 2-4%. At the same time, commercial banks will reduce its operational expense to support the interest rate stability scheme of the Government. Priority sectors with growth rate of 12-14% are expected to continue growing.
Orient Commercial Bank (OCB) has successfully established 30 support centers for small and medium enterprises (SMEs) and is expected to have 35 centers at the end of 2017. Along with simplifying procedures, reducing time for disbursement and having flexible loan terms, OCB has frequently monitored the market to offer services tailored made for each kind of customers: loan, guarantee, international payment, etc. At SME support center, customer can discuss about the bank’s requirements with specialized staffs for better services. Similarly, Techcombank also offers credit packages for certain sectors to support their unique demands.
