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Ask-and-give mechanism needs to be removed between banks and enterprises
Van Nam
Monday,  Jun 19, 2017,21:38 (GMT+7)

Ask-and-give mechanism needs to be removed between banks and enterprises

Van Nam

Clients transact with VietinBank. Small enterprises still find it difficult to access bank credit due to the lack of assets as collateral - PHOTO: TL

HCMC – There should be no “ask-and-give” mechanism between commercial banks and enterprises in credit relations, heard a bank and enterprise matching conference in HCMC last Friday.

Nguyen Phuoc Thanh, deputy governor of the State Bank of Vietnam, said the program was initially launched in HCMC, and since then, has been introduced to other parts of the country. It has offered capital for enterprises to finance their production and business activities in a timely manner, thereby promoting the country’s economic growth.

Data of HCMC shows loans under the program have amounted to around VND124.3 trillion over the past five years.

However, a representative of the HCMC Business Association said a majority of small and medium enterprises has yet to enjoy as strong benefits from the program as major companies, as they lack collateral, thus having a hard time accessing credit.

Therefore, the deputy governor proposed banks should streamline their procedures, reduce costs, and enhance their appraisal abilities. The aim is to make enterprises, especially small and medium-sized ones, have easier access to loans.

Besides, they should eliminate the lamentable ‘ask-and-give’ mechanism. “This is a fair business relationship… Banks need customers, and enterprises also need banks,” he said.

In addition, he stressed, it is necessary for small and medium enterprises to make their financial resources transparent to create peace of mind for banks when appraising their borrowing requests from businesses. This has been a major problem over the past time.

Notably, he also asked the HCMC government to make suitable master plans for the manufacturing sector, especially towards supporting, high-tech, and clean industries. In doing so, enterprises will have access to banking services in a more transparent and risk-averse manner.

“It is vital for municipal authorities to strictly handle those abusing capital support policy,” he stressed.

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