Banks expect over 6 trillion kip in loans next fiscal year

Banks expect over 6 trillion kip in loans next fiscal year

The total banking sector expects to issue well over 6 trillion kip in loans for the 2014-15 fiscal year, benefitting many businesses across all sectors of the economy.

According to a report from the Ministry of Planning and Investment, in the next fiscal year the banking sector expects to issue about 6.595 trillion kip, accounting for 21 percent of total funds invested with the banks.

The loans will be issued for projects that are able to repay both capital and interest to the banks in a timely manner across a variety of small and medium enterprises (SMEs) and larger businesses for both exports and domestic sales.

In March this year, the ministry observed that total deposited funds in the banking sector have risen by 5.556 trillion kip, or 15.55 percent compared to September last year, from 35.728 trillion kip to 41.284 trillion kip.

That figure is equivalent to some 45.08 percent of national gross domestic product (GDP).
Loans from the total banking system rose by 4.761 trillion kip, or 12.45 percent compared to September 2013, from 38.229 trillion kip to 42.990 trillion kip accounting for 46.94 percent of GDP.

Meanwhile, in the first six months of the current 2013-14 year, Nayoby Bank played an important role in social economic development by issuing a total of 177.47 billion kip in special loans, including some 151.98 billion kip to 68 targeted poor districts, 14.22 billion kip to 64 focal areas of the government and local authorities, as well as 11.27 billion kip to targeted villages of the Three-Builds (Sam Sang) initiatives.

For the 2014-15 fiscal year, Nayoby Bank plans to help issue 997 billion kip in loans to help solve poverty in poor districts, as well as to aid the government’s focal development areas and Three-Builds initiatives.

To achieve the ministry’s plan the banking sector needs to pay attention to researching and developing policy, improving credit management mechanisms in the banking system and creating conditions for using funds effectively.

The sector should enact regulations to tightly oversee the issuing of loans and investment in property and aim to increase the overall effectiveness of lending.

Alongside that, the sector should continue to improve bank branches and credit service units so that they can supply funds to various targets such as for the production of goods, exports, processing, SMEs, poverty reduction, and encouraging commercial banks and financial institutions to raise deposit funds while delivering faster and more modern service.

In addition, the policy bank needs to improve its credit system to be more effective in order to achieve the goals of focal area development set by government.

vientiane times