Banks look for transparency

During a seminar last week between commercial banks and businesses in Ho Chi Minh City, banks claimed that enterprises needed to play straight in return for loans.

The leader of electronic commerce company Song Tam said that it needed funds to expand investment, sales and production. However, ACB and Eximbank refused to cough up loans as the e-commerce sector was considered to be risky.

OCB deputy director Pham Linh said: “In this situation, businesses need to obtain guarantees provided by credit funds.”

A Young Business Association Ho Chi Minh City representative opined that small businesses no longer had collateral assets to borrow new funds for investment and production and could not turn capital into profits to repay outstanding loans.

“That is the biggest problem for small-scale enterprises. Hence banks need to lend unsecured loans and help them by offering specific and practical credit schemes,” he said.

However, DongA Bank deputy director Luong Ngoc Quy said to minimise bad debt risks, banks needed to control credit quality.

“Therefore, banks should only provide capital support if they know the financial status of businesses,” said Quy.

DongA Bank currently cooperates with the Ho Chi Minh City Young Business Association to provide loans to enterprises, including unsecured loans, but the budget is only $4.8 millions, which is not enough to meet firms’ needs.

Nguyen Van Dung, deputy director of the State Bank Ho Chi Minh City branch office, said that the central bank encouraged commercial banks to actively participate in meetings designed to find the common voice between banks and enterprises.

“Through these events, they can come to an agreement to provide credit and sign credit contracts,” Dung said.

Dung said that not only businesses, but also banks were now struggling because of rising bad debts.

“Therefore, banks and businesses need to understand each other and work closely together, to overcome this difficult time,” said Dung.