State bank asked to ensure sufficient credit supply

The State Bank of Vietnam (SBV) must ensure sufficient credit supply for the economy in the rest of this year, requested Prime Minister Pham Minh Chinh in a recent dispatch.

Deposits at banks reached a record high of more than 6.44 quadrillion VND as of the end of September, representing a rise of 9.95% against the end of 2022. (Photo: VNA)

The State Bank of Vietnam (SBV) must ensure sufficient credit supply for the economy in the rest of this year, requested Prime Minister Pham Minh Chinh in a recent dispatch.

Taking lessons from problems in credit growth management in 2022, the central bank must  urgently review the credit supply of credit institutions for the economy and each sector and take measures to manage credit growth for 2023 in a timely, effective and feasible manner.

A report must be submitted to the Prime Minister before December.

Achieving the credit growth target will be a challenge in the context of the low capital absorption rate of businesses and the entire economy.

The central bank’s statistics showed that as of the end of October, the total outstanding loan was estimated at 12.8 quadrillion VND, or a growth rate of 7.39%, while the credit growth rate target was set at around 14-15% for the full year.

“At the moment, money flow is still poured into banks because deposits seem to be the safest channel for cash holders,” economic expert Nguyen Tri Hieu said.

Despite low deposit rates at below 6% per year for new sums, deposits at banks reached a record high of more than 6.44 quadrillion VND as of the end of September, representing a rise of 9.95% against the end of 2022, increasing for 13 months straight.

Meanwhile, banks were struggling with providing lending for production and business.

According to Director of the Credit Department under the State Bank of Vietnam, due to impacts of economic slowdown, enterprises’ risk level is higher, making it difficult for credit institutions to increase lending because the credit standard could not be lowered to ensure system safety and prevent bad debt from increasing again.

Many forecasts were that credit growth would reach only 12% this year as lending to the real estate sector, which accounted for 70% of total banking sector lending, was struggling. Besides, production and business were in difficulty, leading to low borrowing demand.

SBV Governor Nguyen Thi Hong said that it is necessary to raise measures to promote domestic demand and expand exports.

Previously, the Government asked the central bank to allocate credit growth quotas in July 2023 to serve as foundation for credit institutions to proactively expand credit growth this year. The focus was on credit for the real estate sector, production and business.

Many banks have recently offered lending packages with preferential rates.

VNA