Vietnam must classify firms to selectively provide loans

Banks should apply different credit policies for different groups of firms, classified by their core productions, said Cao Sy Kiem, Member of the National Advisory Council for Financial and Monetary Policies.

Although banks are allowed to lend VND238 trillion in the last 5 months of 2011 (VND47 trillion/month) as regulated in Decree No. 11 but the credit growth rate reached 11% as of August 31 compared with 15-17% target growth for 2011, implying limited credit growth from now to the year-end and not all firms are qualified for loans in the remaining months.

Firms operating in sectors with surplus supply such as textile, drinks, animal feeds, footwear or steel are expected to free their inventory and should be granted no loans or only short-term ones while those with supply deficit such as sugar, bricks, ceramics, etc. should be able to access more credit.

It is estimated that Vietnam’s 500 listed companies have VND130 trillion worth of inventory, up 32% YoY and nearly 20% from the beginning of 2011, CafeF.vn data showed.

Moreover, rich cash banks with low bad debt ratio should be permitted to provide higher credit growth than other small, weak banks.

Source Sophie/ News Writer/ StoxPlus

Tags: Vietnam banking industry, Vietnam finance, Vietnam financial

Posted by VBN on Oct 4 2011. Filed under Banking-Finance. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry