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VietNamNews

City looks to promote credit growth

Update: February, 10/2014 - 09:15

Customers conduct transactions at a Vietinbank branch in HCM City. The city's banking sector has strengthened links between banks and companies in order to improve credit growth. — VNA/VNS Photo Thanh Vu

HCM CITY (VNS) — The banking sector in HCM City is developing measures to increase credit growth to 12 -14 per cent by strengthening links between banks and companies, according to an official from the State Bank of Viet Nam.

The HCM City branch deputy director, Nguyen Hoang Minh, said the local sector would likely double the credit line for enterprises to between VND25 trillion and VND30 trillion.

In addition to priority sectors such as agricultural and rural areas, exports, small- and medium-sized enterprises and the support industry, local banks will also expand lending to many other sectors, particularly to enterprises that use high technology, he said.

The central bank has also given the green light to local commercial banks to create favourable conditions that would allow companies to use their receivables as mortgages in order to qualify for bank loans.

The city's People's Committee has proposed that the central bank provide updated information on its new policies so that implementation by the city can proceed effectively.

To create better conditions for enterprises to promote their competitive advantages, the committee has also suggested that the central bank reduce the lending interest rate for priority sectors.

The central bank, the committee said, should also develop measures to settle bad debts to ensure that the entire banking sector's operations are transparent, safe and effective.

These measures would help terminate "cross-ownership and group benefits" between banks, it said.

The committee also proposed that the central bank adjust its Official Dispatch No.7558/NHNN-TD which includes solutions on how to handle difficulties faced by credit institutions and customers.

This action would make it a legal document and would give more time to credit institutions and enterprises to implement the policy.

State Bank Governor Nguyen Van Binh said the central bank would consider HCM City's credit-growth promotion measures and work with ministries and branches to offer proposals to the Government that would improve credit policies.

Such action would result in more open and favourable conditions for banks' credit growth and enterprises' business activities, he said.

Benefits of cooperation

Last year, thanks to close links between local banks and credit institutions, 533 enterprises, 68 household-production establishments and two cooperatives in 2013 in HCM City received bank loans totalling VND14 trillion (US$633.50 million).

These were offered with the interest rate of under 9 per cent per year for short-term loans and 12 per cent for medium- and long-term loans, according to the State Bank of Viet Nam branch in HCM City.

These preferential interest rates were applied to businesses in priority sectors as well as companies in many other sectors.

According to the city's People's Committee, total bank loans reached VND952 trillion (US$45.2b) in 2013, a rise of 9 per cent compared to the previous year.

Loans at an interest rate of below 9 per cent given to five priority sectors accounted for 83 per cent of the total. Sixty-four per cent of these were offered to small- and medium-sized enterprises. — VNS



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