Fifteen commercial banks were given approval to expand their credit growth limit by between 1 to 4 percentage points. Sacombank had its cap raised by 4 percentage points, Agribank by 3.5 percentage points, Military Bank by 3.2 percentage points and SHB by 3.2 percentage points, to name a few.

The move marked the first time that SBV has loosened its credit limits on a whole bunch of banks simultaneously. It was projected that over VND400 trillion of loans would add to the economy toward the year-end thanks to the expansionary stance.

SBV also announced in early September five beneficiaries to be prioritised for the supportive policy, which comprise the agriculture sector, export sector, supporting industries, high-tech industries, and small- and medium-sized firms.

Nguyen Thanh Tung, deputy general director of Vietcombank, asserted that his bank will continue to expand credit to the prioritised industries and sectors and, at the same time, keep credit risks and non-performing loans at low levels.

The bank will also maintain favourable deposit and lending interest rates to facilitate economic recovery and support firms' growth.

Sacombank followed suit by extending its loan repayment periods and offering favourable loans of VND20 billion each to help firms boost production.

The bank said the loans go with repayment periods of 60 months rather than 12 months as usual to ease firms' financial burden and early repayment is possible to help firms cut borrowing costs.

Firms expand production at the end of the year to keep themselves on target and they normally do so with their own resources.

However, recent unfavourable conditions have strained their finances, leaving them with no choice but to turn to bank loans to fund their activities.

Dang Tran Hoang Thuy, director of the Thien Trieu An Trading Production Company, revealed that his company had to put up its own products as collateral for bank loans.

He said taking out bank loans is not easy as borrowers are required to prepare sufficient documentation to be eligible for the loans. The documentation includes a plausible business plan and a transparent financial statement.

As the company has not paid off its old loans, its documentation for new loans has not obtained approval so far.

Pham Ngoc Hung, deputy chairman of the HCM City's Union of Business Associations, said bank loans are inaccessible to many firms on account of collateral.

He said collateral is out of question for the firms because during the pandemic, they, mostly small- and medium-sized, had to run at minimum capacity to stay afloat. Such low-capacity operation led to low profits, resulting in a lack of assets to put up as collateral.

He said low-capacity operation also led to repayment delays, and the delays disqualifed firms from borrowing new loans. The two feed each other in a vicious circle.

At his meeting with commercial banks on October 16, Prime Minister Pham Minh Chinh urged the banking system to meet the capital demand of the economy, especially in the prioritised sectors, and control the capital flows into high-risk sectors.

He said monetary policy should be implemented in coordination with fiscal policy and other policies to ensure low inflation, macro-economic stability and economic balance.

By late September, total credit to the economy topped VND11.5 quadrillion, up 10.8 per cent year-on-year. — VNS