Nineteen banks in HCMC will lend nearly US$6 billion to local companies, family-run businesses and individuals this year, double the target set by the city government for the year.

Banks sign agreements to lend over VND128 trillion to enterprises this year.

At a launching ceremony of the 2015 bank-business connectivity program on January 26, the banks inked deals with the central bank’s HCMC branch and the HCMC Department of Industry and Trade to provide corporate and individual borrowers with loans amounting to over VND128 trillion (around US$6 billion).

The major lenders include Vietcombank with VND30 trillion, BIDV with VND20 trillion and Sacombank with VND10 trillion.

Earlier, the central bank’s branch in the city expected banks would lend VND60 trillion with preferential interest rates to businesses through the program this year, up 50% from the previous year.

This year, lenders will apply short-term lending rates of no higher than 7% per annum for designated borrowers and medium- to long-term rates of around 9% per annum.

The lender banks may also consider lowering the interest rates for old loans to help struggling borrowers.

Nguyen Hoang Dung, deputy general director of VietinBank, told the ceremony that the lender would consider reducing long-term interest rates by one to two percentage points against common levels within the next seven to 10 days.

Last year, VietinBank reported total outstanding loans of over VND20 trillion for the program. The bank applied short-term rates of 5.5-6% per annum and medium- to long-term rates of 7-10% per annum.

VietinBank has had no debt problems with the participating corporate borrowers of the program over the past three years as industry associations have provided it with enough information about those borrowers, Dung said.

Between 2012 and 2014, over 4,500 customers took out loans worth VND67.5 trillion thanks to the program, said Nguyen Hoang Minh, deputy director of the central bank’s HCMC branch.

No overdue debts have been reported so far. However, many enterprises have not benefited from the program. Despite their feasible business plans, some have not been able to gain access to bank loans in the program given the lack of collateral, Minh said.

Banks should consider providing unsecured loans for certain enterprises. Minh said businesses could also mull borrowing from the city’s credit funds for small and medium-sized enterprises.

Last year, over 1,140 customers took out loans totaling over VND40 trillion from the program, up 1.3 times and three times from the previous year respectively.

Nguyen Dong Tien, deputy governor of the central bank, said the city’s lending model has been deployed nationwide. Up to now, enterprises have borrowed over VND250 trillion (US$11.7 billion) from the program.