Agribank - Finance for Development of Agriculture and Rural Areas

TIN LIÊN QUAN
	APEC Viet Nam 2017: Fostering a shared future in a changing world
	Improving Labor’s Skills - The key to success

Investments in agriculture and rural development face significant challenges because of the high operating costs resulting from small loan size, vast servicing areas, and high risks caused by climate change, commodity consumption market, low lending rates under preferential interest rate policy, environment incidents, hazardous production conditions...

Challenges in agriculture and rural credit activities

The highly competitive agricultural value chain, large-scale agricultural production areas in Viet Nam have yet to come into existence. Moreover, the application of cutting-edge production technology remains uncommon, leading to high production costs, hard-to-compete products, thus affecting the Bank's solvency. Additionally, the regional and sub-regional planning of the projects and the lending plans in several areas remains unstable and impractical. There is still a lack of synchronous coordination among the value chain and high-tech application in agriculture. The processing, preservation and distribution of products are facing with numerous challenges, and pricing pressure on agricultural products are affecting borrowers’ source of repayment; the control of inputs (i.e. seeds, feed, pesticides, etc.) is also confronting with many difficulties.

Throughout nearly 30 years of development with a pivotal role in the rural finance market, Viet Nam bank for Agriculture and rural development (Agribank) has steadfastly pursued the goal of sustainable development in agriculture, rural areas and farmers. To date, Agribank's investment share in agriculture and rural areas amounted to 73.9% of total outstanding loans, constituting 53% of credit market share of the banking industry investing in this sector. Great strides have been made in "paving the way" for the development of clean agriculture through offering a minimum credit package of 50 trillion VND for investment in large-scale safe agriculture production.

Agribank pursues the goal of sustainable development in agriculture, rural areas and farmers. (Source: Agribank)

The Bank has promulgated mechanisms and policies for agriculture and rural areas; implemented dozens of interest rate reduction loan to facilitate customers in "clean agriculture" production, in large-scale agriculture production and high technology application. Agribank also prioritized reasonable fund sources to ensure sustainable credit growth; offered preferential loan interest rates for under-developed districts, offer loans for pilot projects in developing linkage models in production chain, trading of agricultural products, as well as model of high technology application in agricultural production...

Regarding areas affected by climate change and natural disasters, Agribank has taken an active role in cooperation with authorities at every levels and accounts to review and assess the extent of credit-related losses. The Bank also adopted measures to assist customers in surmounting difficulties, namely restructuring repayment period in line with business cycle and  customers’ solvency, granting interest rate reduction and exemption, further offering new loans to facilitate customers in restoring production and stabilizing business operation; developing preferential policies in agriculture, especially in mountainous, remote, ethnic minority areas.

Apart in 2016 and during the beginning of 2017, with the aim in supporting customers to overcome difficulties, restore and develop production and business activities, Agribank executed 12 interest rate cut-downs, deployed five credit packages with preferential interest rates nationwide at  0.5-1.5% per annum, lower than the normal lending rates. Most recently, following the direction by the State Bank on the implementation of interest rate solutions and assisting customers in efficient business operations, further steering capital flows into production and business, making contribution to promote the economic growth, Agribank has taken pioneering role in lowering the lending rates for customers. Particularly, in order to mitigate risks for borrowers and ensure debt collection for the Bank, Agribank cooperated with ABIC Insurance Company to successfully deploy the credit insurance program for nearly 1.9 million farmer households with the average compensation amount recorded at over 300 billion VND per annum.

Green credit for Viet Nam's agriculture 

In the Strategic Business Plan for 2016-2020 period with a vision to 2030, Agribank has set out the target to further uphold the pivotal role in supporting the development of agriculture and rural areas, delivering financial services, and extending credit to these areas.

In order to achieve the set-forth targets, Agribank has comprehensively adopted solutions to boost credit growth, enhance credit quality, and ensure a safe and effective business operation. Accordingly, Agribank has stepped up its fund mobilization, concentrating capital on production and business, especially to fully and timely meet the demand for capital in prioritized fields namely agriculture, rural areas, export, supporting industries, small and medium-sized enterprises, high tech businesses and start-ups. Agribank continues to effectively deploy credit programs under the directions of the Government, the State Bank of Viet Nam... The Bank, concurrently, is further promoting the development of new products and services; improving procedures and methods of lending in order to mitigate its operating costs. Accordingly, it is lowering interest rates for borrowers with the aim of supporting and expanding credit investment in the development of agriculture, rural areas and farmers, contributing to the increase of access to capital for customers, and boosting capital flow in production and business.

Opportunities for agriculture  

Taking advantage of the supports, cooperation, and in order to increase the access to and implementation of the projects with ministries and international donors, especially in the field of agricultural finance, Agribank relentlessly expands its cooperation relations with domestic and foreign partners, and take initiatives in developing programs and projects to mobilize and attract foreign funds.

Step by step executing the guideline in developing cooperative relations with partners in international markets, Agribank continues to become widely known as an active member in multilateral cooperative relations through international forums held by prestigious international associations and organizations, namely APRACA, CICA, WSBI...

With the role of a leading financial institution, Agribank understands that comprehensive finance is the provision of appropriate and convenient financial services to all sectors of society, especially for people with disabilities, low income, the vulnerable, in order to increase access to finance, contribute to business opportunities, increase flow of investment and savings in society, thereby promoting economic growth.

Accordingly, Agribank aims to diversify its products and services in order to expand the scope of delivered services, make financial services accessible to various customer types, and boost the service quality. At present, Agribank is focusing on promoting research and development of new products and services based on high technology platform. Specifically, E-Banking project has been executed in order to build a complete multi-channel service platform, enabling customers to utilize banking services through a variety of channels, especially Internet Banking and Mobile Banking.

On the foundation of cutting-edge information technology platform, Agribank further expand electronic distribution channels; optimize its products and services to bring about convenience for users. The pursuit of these objectives become increasingly crucial as the intensive and extensive integration process are witnessing the introduction of numerous solutions as multi-channel bank with E-Banking module integrated on smart mobile devices with a view to meeting the requirements for the development of new distribution channels.

APEC 2017: RoK expert lauds Vietnam’s role in global integration Vietnam is a proactive member economy with a line-up of initiatives and significant contributions to regional and global cooperation mechanisms like the World Trade Organisation ...

APEC 2017: APEC Business Advisory Council convenes fourth meeting The fourth meeting of the APEC Business Advisory Council (ABAC) is taking place in the central city of Da Nang on November 4-6 with the ...

APEC 2017: Vietnam makes constructive contribution to regional development According to Mr. Vu Van Dzung, Ambassador of Vietnam to South Africa, through active, effective and constructive contributions in the bilateral and multilateral arena, Vietnam ...