The State Bank of Viet Nam, on Monday, issued Document 3128/NHNN-TD appointing eight commercial banks to pilot a credit product linking four entities involved in the realty sector.
Among the eight commercial banks are BIDV, Vietinbank, Vietcombank and Agribank. The other banks are Mekong Housing Bank, Viet Nam Construction Bank, Lien Viet Post Bank and Sai Gon-Ha Noi Bank.
The pilot credit link, which involves investors, contractors, building material suppliers and banks, aims to tackle difficulties hampering the local property market. It will help reduce building material inventories while creating favourable conditions for enterprises with overdue debts to renew their loans. Renewed loans would have capital to continue construction of unfinished projects to ensure construction quality and the scheduled progress, according to the central bank.
The credit link will also help banks to control the money flow and ensure that the cash will not be diverted for wrongful purposes.
The central bank said the credit quality would be enhanced and bad debts will be reduced as a result.
The document allows problems arising during the pilot implementation to be reported to the Governor.
Nguyen Viet Manh, Director of the central bank's Credit Department, said at a conference in May that the credit links for investors, contractors, material suppliers and banks played an important role in removing problems for the real estate market.
The credit-link model was introduced together with the credit package worth VND50 trillion (US$2.38 billion) by the Viet Nam Construction Bank and property Thien Thanh Corporation.