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Banking & Finance

ADB & BIDV to boost SME lending

Released at: 14:07, 13/12/2018

ADB & BIDV to boost SME lending

Photo: ADB

Two sign $300 million loan agreement to support growth and productivity of SMEs.

by Doanh Doanh

The Asian Development Bank (ADB) and the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), the country’s largest commercial bank by assets, signed a $300 million loan agreement on December 12 in Hanoi to support the growth and productivity of small and medium-sized enterprises (SMEs) in Vietnam.

The facility is comprised of a senior unsecured A loan of $200 million provided by the ADB and a B loan of $100 million provided by 12 commercial lenders and divided into a three-year tranche and a five-year tranche.

The agreement was signed by BIDV’s Senior Executive Vice President in charge of the Board of Management, Mr. Le Ngoc Lam.

“The ADB partnering with BIDV, the largest lender to the country’s SME sector, will boost lending to businesses that often find it challenging to gain access to finance,” said Director General of the ADB’s Private Sector Operations Department, Mr. Michael Barrow. “BIDV’s effort to make SME lending a key strategic priority is aligned with ongoing endeavors by the ADB and the Government of Vietnam to improve access to finance for SMEs, thereby contributing to inclusive economic growth.”

“The facility will support SMEs in Vietnam and also reaffirms our partnership with the ADB in achieving poverty reduction, economic growth, regional integration, and environmental protection,” said Mr. Phan Duc Tu, BIDV Chairman. “The loan symbolizes the long-term cooperation between the ADB and BIDV for sustainable development in Vietnam.”

SMEs account for most of Vietnam’s businesses and contribute around half of total employment and 40 per cent of GDP. Despite their significant contributions, however, they still encounter numerous obstacles that inhibit their economic potential, including a lack of access to the finance needed to expand.

In recent years, BIDV has increasingly served the SME segment with positive results. As at June 30, it had 250,000 SME customers, or almost 40 per cent of the total in Vietnam. Its lending portfolio to SMEs reached over VND240 trillion ($10.4 billion), giving it the largest share of SME lending among the country’s banks.

The loan will make the ADB the first development finance institution to provide long-term lending to BIDV. It will work with BIDV to maximize the positive social and environmental impacts of the assistance by implementing an environmental and social management system. Digital finance will be promoted through the introduction of new digital products to reach financially underserved populations in rural areas, including SMEs owned by women.

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