The State Bank of Việt Nam (SBV) plans to create new, more open credit mechanisms that will inject more money into the Mekong Delta  to address its infrastructural shortcomings and contribute to its poverty reduction efforts.

The State Bank of Việt Nam (SBV) plans to create new, more open credit mechanisms that will inject more money into the Mekong Delta  to address its infrastructural shortcomings and contribute to its poverty reduction efforts.

SBV Governor Nguyễn Văn Bình said at a recent press conference that agriculture and rural development, particularly food and fisheries sectors in the Mekong Delta had achieved several impressive results in recent years.

This could be seen in the past when the Delta only ensured supplies of rice and fisheries products for consumption on the spot, but now it has developed into a large-scaled commercial commodity production area capable of ensuring sufficient supplies for both domestic and overseas markets, Governor Bình said.

However, infrastructure in the Delta was very poor and local people still had low living standards, he said.

The Governor said that the Dealta has, for many years, received financial support from a few credit institutions, mainly the Agriculture and Rural Development Joint-stock Commercial Bank (Agribank) and the Bank for Investment and Development of Việt Nam (BIDV).

However, this has not been enough, and to enable the region to upgrade its local infrastructure systems, the central bank would cooperate with the Ministry of Agriculture and Rural Development, the Southweastern Regional Steering Committee and local authorities to establish new credit mechanisms that would be more open and flexible.

The current credit activities and services in the region will be kept un-changed, but the central bank will ask commercial banks to provide new loans for key projects such as construction of rice silos and frozen storage facilities, production of export-oriented rice, and enhancement of seafood processing capacity.

These infrastructure facilities would held add value to the Delta’s export-oriented agricultural and fisheries products, and reduce speculative practices so as to generate more profits for farmers.

Major banks, in fact, have already been asked to step up the disbursement of capital for rural and agricultural development projects, particularly in the Mekong Delta, Governor Bình said.

Next year, Agribank, while retaining its main role in providing credit for rural and agricultural projects, will increase credit for these sectors from the current 60% to 80% of its leanding.

The central bank would also require other banks to set aside 20% of their total loans to rural and agricultural projects, he said.

Those that were not able to directly grant loans for rural and agricultural projects in provinces would have to transfer capital equivalent to 20% of their loans to Agribank, he added.

Governor Bình said that in the last ten months, the entire banking sector’s credit growth had not yet reached 10%, but credit growth in rural and agricultural areas had climbed to 32%, making it possible for localities to create more commodities and generate employment./.