Business
Banks warned about risks of lending to large-scale enterprises
  • By Bich Diep | dtinews.vn | May 21, 2013 10:13 AM
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While banks often hunt for or prioritise large-scale businesses for lending, one expert said they should be more careful to prevent possible risks.

 

SME sare less dependent on bank loans due to the obstacles they face in accessing finance

Pham Thi Thu Hang, General Secretary of the Vietnam Chamber of Commerce and Industry (VCCI) said at a seminar on the issue on May 20 that the rates of equity on loans at many enterprises were rather high.

According to her, while the standard rate is a half of equity on a half of loans, equity often accounted for just a third of the value of loans for over the past decade. This figure underlies the heavy dependence on bank loans among some enterprises.

“Larger enterprises tend to more heavily depend on bank loans as they have more chance to get access to funding. Small and medium-sized enterprises (SMEs) find it harder to borrow from banks, so they have tried to mange by themselves,” she noted.

Dang Bao Khanh, General Director of SeABank, agreed, saying that several big enterprises have loans that are 10 times higher than their equity as they borrow from different banks.

Hang said that the rates of bad debts among such big enterprises was also higher.

“More attention should be paid to business size during the restructuring process. While business sizes have been becoming smaller, the scale of capital seems to have increased, which could be an uneven development trend,” she said.

She added that banks should pay more attention to SMEs for safe and sustainable operations.

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