The banking sector in HCM City will likely achieve a credit growth rate of 14 per cent in 2014.— Photo vtv

HCM CITY (Biz Hub)— The banking sector in HCM City will likely achieve a credit growth rate of 14 per cent in 2014, the State Bank of Viet Nam Governor told the city's People's Committee last week.

Nguyen Van Binh said the city's target was feasible given that many programmes were being implemented to strengthen cooperation between local banks and enterprises.

"The city's 14 per cent credit growth rate next year will make an important contribution to increasing the entire banking sector's growth rate to between 12 and 14 per cent," Binh said.

To realise the 14 per cent credit growth target, according to the municipal People's Committee, the city will work with the State Bank to implement monetary, credit and interest rate policies in ways that will ensure the stability of financial markets and operations of local banks.

Under these policies, several programmes will be carried out along with the city's key projects. They include links between banks and enterprises, social housing loans and investment stimulation.

The city will also help small- and medium-sized enterprises as well as the support industry to modernise and improve capacity for sustainable development.

In addition to its plans, city leaders have also proposed that the central bank reduce the lending interest rate of loans to priority sectors.

This would create conditions for eligible enterprises to further invest in their competitive ability.

In regard to social housing loans, the People's Committee suggested that the central bank coordinate with ministries and branches to perfect a legal framework for notary procedures and mortgage transactions. This would give banks collateral for loans.

The People's Committee has also asked the central bank to lower the interest rate of loans used to buy houses and lengthen the duration of housing loans from the current 10 years to 15-20 years for those who buy social housing.

In reply to the proposal, Governor Binh said that the central bank would work with agencies and make proposals to the Government to perfect credit policies in ways that would be more open and convenient for the banking sector's credit growth and business development.

"In the coming time, credit institutions will be given more rights to decide their lending activities," Binh said.

To increase the disbursement of the VND30 trillion housing-stimulus programme, the central bank will asked the Government to have a more open policy, thus creating conditions for civil servants and people involved in armed forces to get easier access to bank loans to buy houses.

Positive performance

In her report on the local banking sector's operations in 2013, the People's Committee vice chairwoman Nguyen Thi Hong said that total loans of banks in HCM City were VND 952.55 trillion (US$45.14 billion), a rise of 9 per cent compared to late last year.

Loans at an interest rate below 9 per cent, given to five priority sectors, accounted for 83 per cent, or VND 37.3 trillion, 64 per cent of which were offered to small and medium-sized enterprises, Hong said.

She also said that the local banking sector's bad debts stood at a high level and suggested that the central bank develop effective measures to effectively settle bad debts and make the sector's activities more transparent, safe and effective.

"Bank cross-ownership and group benefits need to be terminated soon," Hong said. — VNS