New credit limits ‘are likely’

VietNamNet Bridge – The State Bank of Viet Nam (SBV) is likely to continue assigning different credit growth limits to local credit institutions this year, according to a report in Thoi Bao Ngan Hang (Banking Times).

The headquarters of the State Bank of Viet Nam in Ha Noi. SBV will likely continue allocating different credit growth limits to local credit institutions this year.

The headquarters of the State Bank of Viet Nam in Ha Noi. SBV will likely continue allocating different credit growth limits to local credit institutions this year.

SBV would classify local credit institutions in more groups than last year, said the report, explaining that the move was expected to help improve control over both lending expansion and credit in the banking system. Last year, SBV classified local banks in four groups with different lending growth limits. Specifically, it set a maximum credit growth rate at 15 per cent for Group A (healthy banks), 15 per cent for Group B (moderately healthy banks), 8 per cent for Group C (unhealthy banks) and zero per cent for Group D (weak banks).

Though declining to unveil details on new credit growth limits for each group, the source cited by Thoi Bao Ngan Hang, said some banks would be banned from expanding lending this year.

Foreign credit institutions would be categorised into two groups to manage lending in accordance with their equity capital, the source added.

Credit growth limits will be granted partly basing on banks’ lending to prioritised areas, including agriculture and rural development, exports, supporting industries, small and medium-sized enterprises and hi-tech fields.

According to a survey by the SBV’s Monetary Statistics and Forecasting Department released recently, most banks predicted this year’s credit growth would improve compared to last year, with gains between 10-20 per cent. SBV targeted loan growth of 12 per cent for the whole banking system this year.

Banks are also expected to continue allotting capital to prioritised sectors such as agriculture and rural development, exports and support industries to spur the country’s economic growth. Banks would also limit loan grants for companies in the real estate and securities sectors this year, according to the survey.

Source: VNS

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