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City encourages banks to loosen credit
A major conference will be held soon in which banks will describe their lending conditions, including preferential measures, to enterprises that need access to bank loans, according to HCM City People's Committee vice chairwoman, Nguyen Thi Hong.
Hong made the announcement last Saturday at a People's Committee meeting to discuss Government Resolution No13, which deals with helping businesses overcome difficulties.
In recent months, the committee has been working with the State Bank of Viet Nam's (SBV) branch in HCM City, districts, associations and industry sectors to set up meetings between banks and enterprises.
As a result, within one month, about 4,200 enterprises involved in four priority sectors received bank loans worth a total of VND21 trillion (US$1.08 billion) at the interest rate of 13 per cent.
Hong, however, said this figure was modest compared with the real demand from businesses.
The Saturday conference also heard a report on city-based bank operations in the first six months of the year.
Nguyen Ngoc Thang, deputy director of the SBV branch in the city, said the local banking sector's bad debts continued to rise over the last six months, accounting for 6.3 per cent of total outstanding loans.
Profits of commercial banks also fell sharply, with some of their branches even incurring losses.
Thang said that some local banks had not implemented the central bank's interest-rate policies designed to help enterprises overcome difficulties.
These credit institutions have been intentionally delaying the adjustment of the interest rate of old loans.
Meanwhile, the number of loans injected into the city's four priority sectors was still low, with the lending interest rate still not cut significantly, according to Thang.
Some banks have shown signs of violating the central bank's interest-rate cap by offering higher deposit interest rates to attract or keep customers.
Pham Xuan Hoe, deputy director of the SBV's Department of Monetary Policies, said commercial banks should cut the lending interest rate of old credit contracts.
The banks' credit activities would be able to develop sustainably after companies overcome their difficulties, Thang said.
Hong of the People's Committee said that difficulties in the business community were spreading to the banks.
She said the central bank's branch should have close control over the local banks' implementation of the central bank's regulations, particularly those relating to debt restructuring.
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She urged local banks to share the burden and adjust their lending interest rates for companies that need loans.
Bank officials said the central bank should create clear guidelines on policies as well as regulations to ensure that they are implemented uniformly among all banks.
However, SBV Deputy Governor Tran Minh Tuan said the central bank had already issued documents that guided commercial banks in their adjustment of interest rates. However, the latter had not carried out these guidelines seriously, he added.
Consequently, both deposit and lending interest rates were still high, thus preventing enterprises from accessing bank loans, according to Tuan.
He asked the city's People's Committee and the SBV branch in HCM City to work with local districts to create opportunities for enterprises to access bank loans.
He said that each bank could be responsible for loans to a selected group of enterprises
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