On March 15, the State Bank of Vietnam (SBV), in coordination with Vietnam Association of Small and Medium Enterprises (VINASME), held a Conference on “Solutions to enhance accessibility to bank loans for SMEs for production and business recovery and development”. The Conference was organized virtually between the SBV headquarters and the SBV branches in 22 cities and provinces.
SBV Governor Nguyen Thi Hong delivers her opening speech
Conducting various measures to facilitate SME development
In her opening speech, Governor Nguyen Thi Hong emphasized that the private sector in general and the SMEs in particular play an extremely important role in the socio-economic renovation and development of the country. Therefore, the SBV has formulated several action plans of the banking sector, and has actively implemented various measures to help improve the business environment, strengthen the national competitiveness, create favorable conditions for the development of the private sector, including the SMEs.
Specifically, the SBV has managed the monetary and credit policies in a proactive, flexible and consistent manner in order to enable the businesses and the people to access bank loans for their production and business activities; improved the legal frameworks for the lending operations of the credit institutions toward strengthening the decision-making authority and the responsibilities of the credit institutions in providing loans to the businesses and the people in accordance with the Law on Credit institutions; directed the credit institutions to further reform their administrative procedures; regularly reviewed and improved the legal frameworks for banking operations; promptly formulated and issued guiding documents for the Law; created favorable conditions for the credit access, and removed the difficulties in accessing bank loans for all customers, including SMEs. Therefore, there have been encouraging results in the area of credit for SMEs.
An overview of the Conference
The credit institutions have been actively providing credit to SMEs
Speaking at the Conference, Ms. Ha Thu Giang, Director General of the Department of Credit for Economic Sectors of the SBV, shared that the SBV had issued and implemented various policies on the monetary, credit and banking operations in order to enable SMEs to access bank loans.
Accordingly, the SBV has managed the key interest rates in line with the market developments in order to stabilize the money market, control the inflation and support the economic growth at an appropriate level; regulated the interest rate cap applied to the VND short-term loans for priority sectors and areas (including SMEs), which is 1-2% p.a. lower than that applied to common loans.
Most recently, on March 14, 2023, the SBV had reduced this interest rate cap by 0.5% (currently at 5% p.a.)
In 2022, the SBV had decided to adjust the credit growth targets up by 1.5 to 2% for all of the credit institutions in order to provide more capital for the economy. In 2023, the SBV has set the credit growth targets at about 14 to 15% with appropriate adjustments in line with the actual developments and situations with a view to meeting the capital needs of the economy.
In the Directives on the organization and implementation of the key tasks of the banking sector and the guiding documents on the credit operations, the SBV has directed the credit institutions to concentrate lending resources on this economic sector. The SBV has also implemented specific credit programs with preferential mechanisms with SMEs as the key beneficiaries, and implemented synchronous solutions to remove the difficulties in accessing bank loans from SMEs. Furthermore, the SBV has actively cooperated with the international institutions (the ADB, JICA, the WB, etc.) to implement concessional loan programs focusing on the SMEs.
In addition, Vietnam Bank for Social Policies has also implemented many loan packages with preferential lending interest rates targeting SMEs.
Currently, most of the credit institutions have engaged in providing loans to SMEs. In the 2018-2022 period, the average credit outstanding to SMEs increased by 14.17% on a year-on-year basis, higher than the average credit growth of the whole economy. As of the end of 2022, the credit outstanding to SMEs increased by 8.28% as compared to that of the end of 2021, accounting for nearly 19% of the total credit outstanding of the whole economy.
Most of the credit outstanding to SMEs has been provided to trading and service sub-sector (accounting for 56.29%), industries and construction (40.85%). The state-owned commercial banks’ credit to SMEs accounts for 48.05%, while the joint stock commercial banks’ credit accounts for 47.43%, and the credit from the foreign banks, joint venture banks, finance companies and cooperative banks accounts for 4.52%.
SBV Deputy Governor Dao Minh Tu delivers his concluding remarks
Continuing to focus on measures to remove difficulties for SMEs
In his concluding remarks, SBV Deputy Governor Dao Minh Tu asserted that in order to effectively expand credit for SMEs, promptly meeting the SMEs’ capital demand, the banking sector needs to focus on managing the monetary policy in a proactive and flexible manner in order to maintain the macro-economic stability, control the inflation, maintain the stability of the exchange rates and the common lending interest rates, contributing to creating a stable business environment for the businesses and the people.
The SBV would continue to improve the legal frameworks and the credit policies, helping to remove the difficulties in accessing bank loans for SMEs; coordinate with the relevant Ministries and agencies to initiate policies in support of SMEs as stated in the Law on supporting SMEs, especially the policies on supporting SMEs to access bank loans through the SME Development Fund, the Guarantee Funds for the local SMEs.
The SBV would also accelerate the implementation of preferential credit programs as directed by the Government and the Prime Minister, including those targeting SMEs; direct the credit institutions to focus credit on the priority areas, including SMEs; continue to review and reform the lending and borrowing procedures, enhancing the loan appraisal capabilities of the banks.
The banking sector would continue to implement the Program on Economic Recovery and Development in line with Resolution No.43 of the National Assembly and Resolution No.11 of the Government; diversify the implementation forms of the Bank-Enterprise Connection Conferences in order to address any difficulties and obstacles for the SMEs.
The SBV Deputy Governor further requested the credit institutions to reform their administrative procedures in order to create favorable conditions for SMEs to access banks loans.
Deputy Governor Dao Minh Tu confirmed that the banking industry always stands ready to meet in full the capital demands for production and business operations. However, the SBV Deputy Governor also emphasized that any credit support policy should be developed with due consideration of the overall policies on supporting SMEs, therefore, it is necessary to have the close coordination from the relevant authorities, Ministries, agencies, associations and the businesses themselves.
Le Hang