SBV to tighten capital inflow to high-risk fields
The State Bank of Vietnam (SBV) has urged credit institutions to tighten lending to high-risk fields.
In a statement, SBV urged banks to exercise caution in lending to fields such as real estate, consumption or stock trading, and focus instead on allocating capital for mid- and long-term loans in the manufacturing sector to ensure liquidity.
SBV requested banks to be cautious over lending to high-risks area.
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SBV also asked banks to undertake regular monitoring of their debtors’ finances and progress made in their projects.
Credit institutions are required to maintain credit growth within safe limits, and to improve credit risk management, especially on conditions for lending.
“Credit expansion should go hand-in-hand with strict supervision to ensure loans are used for the purposes for which they are intended and do not add to bad debt,” the statement said.
Along with this process, banks have to control the capital inflow to the stock market, which is in conformity with Circular No.1 stipulating the minimum safety limits and ratios for transactions performed by credit institutions, and related laws.
SBV requested banks to shift focus on lending toward production and manufacturing, and to meet the demand for capital in priority sectors such as agriculture, export, supporting industries, small and medium enterprises (SMEs), and hi-tech companies.
As of November last year, loans rose by 22.13 percent in supporting industries, 20 percent in hi-tech enterprises, and 22.1 percent in agriculture and rural development, which are all prioritized by the Government.
In addition, SBV asked banks to keep the credit growth rate in line with its targets and credit/monetary policies. This year, SBV will continue to curb inflation, stabilize the macro-economy and the currency market, support economic growth and ensure the effective operation of the banking system. The central bank expects total money supply to increase by 16 percent and credit, 17 percent.
Bad debt in Vietnam's banking sector, mostly incurred due to a slowdown in the country’s real estate market in the early 2010s, had been cut to 2.34 percent by the end of September 2017, down from 2.46 percent at the end of last year, according to the State Bank. The central bank set up an institution—Vietnam Asset Management Corp.—in late 2013 to deal with toxic loans.
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