Banks lend firms $4.6 billion under gov’t loan subsidy program

Commercial banks have lent a combined VND80 trillion (US$4.6 billion) to businesses in three weeks since the government launched a loan subsidy program to boost a slowing economy.

The ultimate goal of the loan subsidy is to help lower production cost and create jobs, State Bank of Vietnam Governor Nguyen Van Giau said

in a statement on the central bank’s website on Wednesday. But, for the sake of system safety, it warned commercial banks against loosening conditions.

The economy grew 6.2 percent last year, below a government target and the least since 1999, as lending restrictions hurt businesses. The government said January 16 it would use VND17 trillion for loan subsidies to entice banks to lend to certain companies at lower interest rates.

The State Bank of Vietnam said Tuesday it would cut the amount of dong that commercial banks must set aside as reserves to 3 percent from 5 percent next month to help boost lending.

Bloomberg

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