Banks won't lend on goods

Banks won't lend on goods

According to a State Bank of Viet Nam regulation, enterprises have been allowed to mortgage their goods to borrow capital from banks, but most bankers have not been willing to do so despite their abundance of capital.

Bankers said they still accepted collateral of goods, but they were afraid of mortgage of products like coffee, rice, cement and steel because of the high risk of unstable prices.

Some products like coffee and rice do not have a long-term expiry date, they said.

In addition, when accepting this kind of collateral, banks have to pay more costs for storehouse rental, watchmen, management and asset assessments.

Vo Tri Thanh, deputy head of the Central Institute for Economic Management, agreed with bankers, saying that using goods as a collateral, especially farm produce, contains high risk.

In addition, banks may incur bad debts if management of warehouses is not implemented well. Long-term inventory of these goods also leads to bad debt at banks.

However, amid the current economic climate, many enterprises do not have property for collateral, and have to use their goods to mortgage.

According to Vietcombank and ACB, the number of businesses using their goods as mortgage for bank loans is increasing.

Banks must carefully check the quality and value of these goods before deciding to provide loans or not.

Currently, banks provide loans with a maximum limit of 30-50 per cent of the value of mortgaged assets to healthy businesses, with good capital rotation and good prestige.

Bui Kien Thanh, an economist, said the Government should exempt value-added tax to help enterprises cut production costs and solve their inventories.

In addition, because inventories are also enterprises' assets, banks should accept mortgages of this kind of asset to provide capital for enterprises, he noted.

A banking expert said the Government's Resolution 13 with measures to ease difficulties faced by enterprises, including adjusting lending interest rate with a difference of three per cent compared to deposit interest rate, had not helped to solve all of enterprises' difficulties.

The State Bank of Viet Nam should have measures to deal with procedures involving mortgage of inventory goods to support enterprises, he said.

With abundant capital, banks have invested in different sectors, including buying bonds issued by the Government and enterprises.

Bankers said, by buying bonds when they need capital or liquidity, they can use these bonds to mortgage at the central bank or sell the bonds, but they are unable to sell mortgaged goods right away.

For this reason, many banks still opt to invest in bonds

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