In order to support agricultural producers and traders, particularly those with no collateral assets, the Government has issued Decree 116/2018/NÐ-CP on amending and supplementing a number of articles of Decree No.55/2015/ND-CP on credit policies for agricultural and rural development.
Under the new provision, the credit institution can provide loans at a maximum of VND100 million for those who have no collateral assets, reside outside the rural areas and engage in agricultural production or business activities (it was VND50 million under the old provision). Meanwhile, individuals and households residing in rural areas will be provided with the maximum loan amount of VND200 million (previously VND100 million).
Regarding credit policies that encourage high-tech agricultural production and projects, credit institutions can provide a loan worth 70% of the value of projects and plans. The new credit policy also stipulates that enterprises which have not yet been granted hi-tech agricultural enterprise certificates but have hi-tech production and business projects and plans shall also be considered for loans.
In fact, although there have been many regulations on credit for agricultural production, farmers still face many difficulties in accessing loans. In order to maintain agricultural production, many farmers have had to borrow “black credit” with interest rates much higher than bank interest rates. Therefore, in addition to synchronous policies, it is necessary to mobilise the effective coordination of different sectors and levels to support farmers in accessing capital, as well as incentives for interest rates.
On the part of banks, the biggest difficulty now is that many farmers' loan applications, through the appraisal, do not meet the regulations on credit lending, including reasons for information transparency. Because in fact, there are many borrowers not using capital effectively or use it for the wrong purpose. This is the reason leading to bad debt, so banks have to tighten their lending rules.
With the issuance of Decree 116/2018/NĐ-CP, together with other preferential policies, the policy of promoting credit in agriculture is being applied effectively. It is expected that farmers will be able to access preferential loans in a more convenient manner, thus, contributing to promoting sustainable agricultural development, as well as preventing illegal credit activities that are causing negative consequences in rural areas.
