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Agricultural firms gain access to cheaper credit

Update: May, 29/2014 - 09:29

HA NOI (VNS)  — Agricultural manufacturers, integrated agricultural production—distribution projects, technology-applied models—can now have access to more loans at cheaper costs, the State Bank of Viet Nam (SBV) announced yesterday.

In Decision No 1050/QD-NHNN of May 28 that took effect immediately, eligible subjects are set to those that involve contracts to produce, process and distribute agricultural products, those that are granted certificates of technology-applied production by the Ministry of Agriculture and Rural Development and households.

Highest annual borrowing interest rates at commercial banks are 7 per cent for short terms, 10 per cent for medium terms and 10.5 per cent for long terms.

Short-term loans will be granted to meet the growing demand of fertiliser, seedlings and varieties of poultry and animals, as well as agriculture equipments, while medium- to long-term loans will support investment in infrastructure and equipments to develop technology-applied models.

This pilot lending programme will expire in two years.

The SBV has strengthened cooperation with related authorities, agencies and the banking system to develop better financial programmes for the field.

SBV has coordinated with the Ministry of Agriculture and Rural Development and the Ministry of Science and Technology to develop suitable mechanisms to help credit institutions expand investment in the sector, especially for agricultural production operations with strong application of advanced technologies. Given the approximately 70 per cent of Viet Nam's population living in rural areas, agricultural production has made tremendous contributions to national socioeconomic development.

In rural areas, underdeveloped agricultural credit insurance has seriously affected farmers' ability to repay, as it does not cover large variations in price due to natural disasters or epidemics. For that reason, banks only lend moderate amounts of capital.

Stimulating banks to maintain a minimum ratio of 20 per cent of their capital for agriculture and rural development is considered a practical measure that could facilitate credit activities in the field, as banks are still the major providers of loans to the sector.

Central bank officials said the bank had made efforts to regulate the monetary policy in a flexible manner to support credit institution liquidity and stabilise the currency market by boosting foreign currency reserves. — VNS

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