Ho Chi Minh City has requested the State Bank of Vietnam to arrange at least VND2 trillion (US$96.1 million) of loans at low interest rates for struggling companies in the city.
The request comes after credit expanded at a very slow pace in the first four months.
The city will identify companies that are in need of capital and will try to give them access to cheap loans, thesaigontimes.vn reported Thursday, citing Chairman of the People's Committee Le Hoang Quan.
However, he said weak companies that have been suffering losses for several consecutive years will not be supported.
Nguyen Ngoc Thang, deputy director of the central bank branch in the city, confirmed the request. He said city officials are seeking loans at interest rates of around 15 percent for local businesses, including agricultural producers, exporters and small-sized enterprises.
Thang said the problem is that many compaies no longer have any asset that can be used as loan collateral. Some banks now even accept unsold goods as a guarantee for loans, but the requirement for the goods is also high, he said.
Loans at commercial banks in the city only expanded 0.52 percent in the first four months to VND898 trillion. Bad debts accounted for 5.3 percent of outstanding loans, the report said.
Like us on Facebook and scroll down to share your comment