The banking sector in Ho Chi Minh City is developing measures to increase credit growth to 12 -14 percent by strengthening links between banks and companies, according to an official from the State Bank of Vietnam.

The central bank's Ho Chi Minh City branch deputy director, Nguyen Hoang Minh, said the local sector would likely double the credit line for enterprises to between 25-30 trillion VND (1.2-1.4 billion USD).

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 SBV 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 municipal 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 SBV 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 the 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.

Last year, thanks to close links between local banks and credit institutions, 533 enterprises, 68 household-production establishments and two cooperatives in 2013 in Ho Chi Minh City received bank loans totalling 14 trillion VND (633.50 million USD).

These were offered with the interest rate of under 9 percent per year for short-term loans and 12 percent for medium- and long-term loans, according to the SBV branch in the city.

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

According to the municipal People's Committee, total bank loans reached 952 trillion VND (45.2 billion USD) in 2013, a rise of 9 percent compared to the previous year.

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