Unsecured loans still inaccessible to farmers

The government decree No.41 which allows farmers access to bank loans without collateral for agricultural production has failed to achieve results as most farmers still cannot borrow from this fund.

Under the decree issued in April last year, the government stipulated that the maximum loans farmers could borrow without collateral was VND50 million (US$2,500).

Borrowers are required to have guarantees from local organizations and associations to be eligible.

In fact, the loans are not accessible to most farmers, some of whom even don’t know such a policy exists.

Nguyen Van Doan, a farmer in the Mekong Delta province of Dong Thap’s Tan Cong Sinh Commune, said a local veteran association had issued the guarantee for him but the bank refused, saying the association’s financial condition is not good enough.

He said the only loan he could get was that of the veteran association and the sum came at just a couple of millions of dong.

“No one in my commune has ever been able to borrow VND50 million without collateral.”

Tran Van Thang, who runs a pig farm in the southern province of Dong Nai, said he had no idea of the unsecured loan.

“If I had known of such a fund, I would have borrowed it to revitalize my farm after the disease broke out last year,” he said.

Unlike Thang, Nguyen Thanh Tung, another farmer of Dong Nai, was informed of the fund but still could not access it.

He said the banks had told him they had received no instruction about the non-collateral credits, and thus could not lend him money.

“But the fact is because they did not want to provide lending to the agricultural sector,” he said. “For such a risky sector like agriculture production, banks are even hesitant to lend with collateral let alone without it.”

Even the local authorities also have little knowledge about the implementation of this policy.

Tran Van Khoan, deputy chairman of Dong Nai’s Vinh Cuu District People’s Committee, redirected Tuoi Tre to the provincial Bank for Agriculture and Rural Development for more information as he “did not know clearly about the policy.”

Source Tuoitrenews

Tags: Vietnam banking industry, Vietnam finance, Vietnam financial