In 2021, the State Bank of Vietnam (SBV), the country’s central bank, set a credit growth target of 12%, around the same level of the estimated rate of 11-12% of last year.

The State Bank of Vietnam.

This is among key targets for 2021 set in the SBV’s directive No.01/CT-NHNN, aiming to stabilize macro-economic conditions and support economic growth.

The SBV also expects to keep the inflation rate below 4%, unchanged from last year’s target, to ensure the stability of the monetary and foreign exchange markets. The M2, which  measures money supply that covers cash in circulation and all deposits, could grow by 12% in 2021.

The banking sector is tasked with enhancing credit quality with a focus on priority fields, while further addressing difficulties for people and businesses affected by the pandemic and natural disasters.

“Measures are expected to manage the foreign exchange markets and channel the capital inflows into production and businesses,” stated the directives, adding the central bank would continue to build up the foreign exchange reserves in case the market conditions turn favorable.

The SBV stressed the importance of restructuring credit institutions, especially weak banks, and restrict new bad debts.

As the banking sector is set to be a pioneer in government’s efforts towards digitalization, the SBV urged banks to push for non-cash payment activities and expand the digital ecosystem for new digital services and products.

The SBV is committed to pursuing its administrative reform process to facilitate a transparent and fair business environment to support economic development, which is in line with the national development strategy for Vietnam’s banking sector until 2025, with vision to 2030.

In 2020, the SBV cut its interest rate caps four times, the moves which have encouraged commercial banks to provide loans at lower interest rates.

Accordingly, the refinancing interest rate is lowered from 4.5% per annum to 4%, rediscount rate from 3% to 2.5%, overnight interest rate from 5.5% to 5% and interest rate via OMO from 3% to 2.5%. 

The SBV also lowered the interest rate ceiling to 4% annually from 4.25% for deposits with maturities of one month to less than six months.