Commercial banks can offer loans at preferential interest rate of less than 7 per cent per year for high-tech agriculture projects.

Deputy Governor of the State Bank of Viet Nam (SBV) Dao Minh Tu on Monday said several commercial banks have positively responded and are pledging to set aside some VND100 trillion (US$4.4 billion) loans for high-tech agriculture at a preferential rate of less than 7 per cent depending on the financial status of each bank.

Tu said commercial banks were very interested in high-tech agriculture.

Following the Prime Minister’s instruction on supporting high-tech agriculture development late last year, SBV has, so far, instructed the banks to apply preferential loans to high-tech and clean agricultural projects.

Director of SBV’s Credit Department Nguyen Quoc Hung also said the central bank is working with the Ministry of Agriculture and Rural Development and other relevant agencies to establish specific criteria to classify agricultural firms that apply high-tech and produce clean agricultural products to be able to offer the preferential lending programme.

According to Hung, under the preferential lending programme on agricultural and rural development, the central bank will provide credit institutions refinancing programmes.

Besides this, the central bank will also support credit institutions by reducing their reserve requirement ratio. The reserve requirement ratio applicable for credit institutions whose outstanding loans for agriculture and rural development accounting for 40-70 per cent of their total outstanding loans will be equal to one fifth of the normal ratio set by the central bank. The ratio will be reduced to one twentieth for institutions whose outstanding loans for agriculture and rural development are more than 70 per cent of their total outstanding loans.

According to SBV’s statistics, last year, the country’s total outstanding loans rose 14.93 per cent against the previous year to more than VND5.35 quadrillion, of which agriculture, forestry and fishery industries reported a rise of some 16 per cent.

Late last year, the Government pledged to offer preferential policies on land, financing and technology to farmers and localities engaged in high-tech agriculture. Prime Minister Nguyen Xuan Phuc said the five largest commercial banks “must create the best conditions to serve farmers, organisations and localities wanting to develop high-tech agriculture.”

In Viet Nam, 70 per cent of the population works as farmers, but agricultural production contributes only 20 per cent to GDP. In developed nations, only 2-4 per cent of the population work as farmers, but they contribute up to 40 per cent of GDP. — VNS