(PLVN) - The State Bank of Vietnam (SBV) still assigns credit growth targets to credit institutions every year to minimize risks to the financial system. This management method will continue to be implemented by SBV in the current context, although there have been many opinions that it should be removed so that banks can be more proactive.
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| The assignment of credit growth targets will still be carried out in the coming time. (Photo: TCTTTT) |
(PLVN) - The State Bank of Vietnam (SBV) still assigns credit growth targets to credit institutions every year to minimize risks to the financial system. This management method will continue to be implemented by SBV in the current context, although there have been many opinions that it should be removed so that banks can be more proactive.
2 times added credit growth target
Based on the credit growth target of 15% in 2024, from the beginning of the year, the State Bank specifically assigned credit room to credit institutions (CIs). Based on this target, CIs will proactively lend in all sectors of the economy . However, by the second half of August, the credit growth of CIs was uneven, with some CIs experiencing low growth, even negative growth, while some CIs increased close to the target announced by the State Bank.
Therefore, in order to implement the direction of the Government and the Prime Minister on flexible, effective and timely credit growth management, meeting credit capital for the economy and controlling inflation, stabilizing the macro-economy, the State Bank proactively adjusted the credit growth target for credit institutions. Accordingly, the State Bank sent a document to credit institutions notifying the additional credit growth level for credit institutions according to specific principles, ensuring publicity and transparency.
Specifically, from August 28, 2024, credit institutions with a credit growth rate in 2024 reaching 80% of the target announced by the State Bank in early 2024 will be proactively adjusted to increase their credit balance based on the credit institution's rating score. This additional limit is the State Bank's initiative without the credit institutions having to request it. For the same reason, on November 28, 2024, the State Bank continued to increase the credit target for eligible credit institutions. Thus, in 2024, the State Bank increased the credit target for credit institutions twice, and both times the State Bank proactively increased it, without having to wait for the credit institutions to request it.
Governor of the State Bank of Vietnam Nguyen Thi Hong said that Vietnam's credit growth is characterized by capital relying heavily on the banking system, so there was a period when the average growth of the entire system was over 30%; in some years it increased to over 50%, leading to consequences and risks for the banking system, especially weak banks that mobilize short-term capital but lend medium and long-term.
Meanwhile, the State Bank's management goal must contribute to controlling inflation and stabilizing the macro economy, while still ensuring the safety of the banking system's operations, in which the safety of the banking system's operations is the issue that must be put first and foremost. Because if the system of credit institutions has potential risks, it will have huge consequences for the economy, due to its spreading impact.
Therefore, the State Bank of Vietnam bases on actual developments and over the past years, the State Bank of Vietnam has applied credit limits for management. And when allocating and announcing credit limits to credit institutions, the State Bank of Vietnam must evaluate based on the credit institution's ranking, as well as the credit expansion capacity of the credit institutions. Along with that, the State Bank of Vietnam regularly monitors and warns credit institutions with high growth and potential risks.
Cannot remove credit room
Regarding the issue of assigning credit growth targets to credit institutions, many opinions suggest that this target should be abolished. Recently, at the National Assembly, many delegates also questioned this issue. Governor Nguyen Thi Hong said that the State Bank has organized many seminars to analyze, evaluate, and thoroughly review the current situation of the Vietnamese economy as well as the situation of credit institutions. In the current context, the State Bank cannot abandon the method of operating according to credit limits.
Economist Dinh Trong Thinh also agreed that it is not possible to remove the credit room. In essence, the credit room is the State Bank's management of the increasing lending rate of commercial banks. Vietnam's current capital market has not really developed as expected, businesses are very dependent on bank capital. Meanwhile, many commercial banks are willing to lend regardless of risks, so the credit room is the threshold that the State Bank sets for commercial banks to lend within the permitted limit to minimize risks. "If the credit room is removed, it means that commercial banks will decide on their own lending... this can have a huge impact on the financial and monetary system," said Mr. Thinh.
In addition, removing the credit room will no longer control the amount of money "injected" into the economy, especially "injected" into areas that have not been prioritized for development or "injected" too much without linking it to the real needs of businesses and people, which will easily cause inflation and waste capital. Not to mention, removing the credit room can cause bad debt, especially when credit is expanded into risky areas such as real estate. In addition, it must be mentioned that commercial banks will compete with each other in attracting borrowers in many ways, strongly affecting the stability of the market.
Source: https://baophapluat.vn/chua-the-bo-room-tin-dung-post533867.html
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