As of May 22, total lending of the whole system increased 2.29 percent from the end of last year, the State Bank of Vietnam (SBV) announced on May 27.

According to the bank, dong loans were up 4.57 percent while foreign currency lending declined 8.07 percent.

There is a high possibility that general credit would reach 2.5-3 percent at the end of this month, which would be a good sign after lending declined 1.71 percent in the four months of 2013, the central bank said.

Mobilising interest rates for the dong at many credit institutions now hover around 5-7.5 percent for terms of less than 12 months and 8-10 percent for terms of 12 months or more.

Enterprises that can prove their financial situation is healthy and their production and business plans are effective can manage bank loans with an interest rate of 7-8 percent.

The same day, the central bank issued a circular to amend some articles of its Circular No. 02 dated January 21, 2013 on asset classification, risk provisioning and utilisation of provisioning by credit institutions and foreign bank branches.

Accordingly, the new circular will come into effect on June 1, 2014 instead of June 1, 2013.

According to the SBV, the amendment is to create more favourable conditions for enterprises to access bank loans, boost credits of the economy, while cutting down lending interest rate and easing difficulties for production and business.

The central bank also asked credit institutions and foreign bank branches to synchronously implement measures on restructuring and tackling bad debts in line with a project on the restructuring of the credit institution system for the 2011-15 period and a project on dealing with bad debts approved by the Prime Minister.

Earlier on May 18, the Government allowed the SBV to establish the Vietnam Asset Management Company (VAMC). The 100-percent State-owned organisation implements activities relating to handling bad debts of credit institutions in Vietnam.-VNA