Newly-built villas in the Viet Hung Residential Area in Ha Noi's Long Bien District. Such projects remained barred from receiving commercial credit under current State Bank policies in favour of social housing projects. — VNA/VNS Photo Tuan AnhThe State Bank of Viet Nam has loosened credit hold ups for social property projects which have had difficulty accessing capital due to Government policies by allowing commercial and foreign banks to fund these projects.

Projects to build apartments for low-income people and workers at industrial, economic and processing parks, and housing projects that will be completed and available for use before 2012 are now eligible for credit.

People who need money to purchase or upgrade accommodations and can prove they can repay the loan with salary or wage documentation are also eligible to apply for loans.

Credit institutions were told to offer reasonable lending interest rates.

Document No 8844/NHNN-CSTT, issued on Monday, was designed to ensure social welfare and secure the stable economy.

The move is also expected to warm up the frozen property market which has been hit by tightened credit policies and the investment flow moving from housing to gold or savings accounts.

By the end of June 2011, the country's property loans totalled VND245 trillion (US$11.67 billion). HCM City accounted for 45 per cent of the figure while Ha Noi accounted for 18 per cent, according to reports from the National Finance Supervision Committee.

The State Bank also told credit institutions to apply strict controls on outstanding loans for non-production related businesses and reminded them that banks were required to bring down the non-production lending ratio to 16 per cent of total outstanding loans by December 31.

The SBV also encouraged banks to provide sufficient credit lines for agricultural production, rural development, the export sector, industries and small-and-medium sized enterprises.

The lending ratio for these sectors at credit institutions was initially set at no more than 20 per cent of total outstanding loans by the year end. However, due to the current economic situation, the central bank has announced that some credit expansions for these priority sectors exceeding the 20 per cent ratio would be considered.

Source: VNS