Banks to give priority to agriculture

The State Bank of Vietnam’s Governor Nguyen Van Binh on August 16 instructed commercial banks to restructure capital and boost credit at reliable interest rates for agricultural production, in a bid to ensure sufficient food supply and stabilise market prices.

Banks were told to prioritise capital for effective agricultural producers, projects and high-capital-demand livestock units that produce and distribute food to cities and large residential areas.

Creditors have to strictly supervise capital distribution and investment in order to handle rising problems.

If agricultural production becomes badly affected by natural calamities or diseases, banks will have to restructure loans and create favourable conditions for farmers to borrow capital to remain in operation.

The central bank’s move was made as food and foodstuff prices rose higher, putting Vietnamese officials in a bind as they tried to beat back soaring inflation.

Last month’s CPI hike surged again after two months of decline, mostly due to a high increase in foodstuff prices by 3.02 percent, restaurant and dining services by 2.12 percent, after 1.79 percent in June.

On the other hand, the State Bank’s decision was released when popular borrowing costs remained high, around 22-24 percent yearly, threatening many companies and households.

The newly named governor has vowed to force commercial banks to slash lending interest rates to 17-19 percent per year.

Over the last two weeks, Asia Commercial Bank, HD Bank, Vietinbank, BIDV and Vietcombank have lowered lending interest by 1-2 percentage points to 20 percent annually for individuals and households. – VNA

Tags: Vietnam banking industry, Vietnam finance, Vietnam financial