Unlike previous years, for the first time, the State Bank has assigned the entire credit growth target of 15% from the beginning of 2024. This is a somewhat bold decision by the State Bank in providing capital to serve the economy.

According to the State Bank of Vietnam's report, credit growth in 2023 is 13.5%, which is a good number in the context of sluggish credit growth in the first three quarters of the year.

In 2024, for the economy to absorb a credit growth rate of 15% compared to the previous year, it requires great efforts from banks and businesses. Besides, there is also the business environment factor.

At the press conference on the implementation of the tasks of the State Bank on January 3, Mr. Pham Chi Quang - Director of the Monetary Policy Department, said that the State Bank assigned a one-time credit growth target at the beginning of the year to credit institutions because it assessed that the difficulties of 2024 would continue. Central banks of countries have not yet lowered interest rates, the possibility of a slight recession in economies is possible. Global demand will decrease, leading to a decrease in exports, greatly affecting an economy with a large openness like Vietnam.

“With the trend of aggregate demand continuing to decline in 2024, the SBV believes that it is necessary to take measures to stimulate the economy by immediately assigning credit growth from the beginning of the year to try to boost aggregate demand. This is one of the proactive, drastic, and creative solutions of the SBV in promoting economic growth.”

What is more favorable than previous years to promote credit growth right from the beginning of the year is the lowest interbank interest rate ever, creating conditions for commercial banks to reduce deposit and lending interest rates.

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The credit growth target for 2024 is 15%. (Photo: Hoang Ha).

Deputy Governor of the State Bank of Vietnam Dao Minh Tu noted that credit capital allocated from the beginning of the year must be lent for the right purpose and to the right subjects, not just allocated credit limits and then thrown all into backyard businesses and the bank's ecosystem while other areas of the economy are not given attention.

Therefore, in 2024, the State Bank will strengthen supervision of banks' capital flows. This demonstrates objective transparency, without the mechanism of asking and giving in granting credit room.

According to Mr. Nguyen Duc Long - Deputy Chief Inspector of the Banking Inspection and Supervision Agency - during the inspection and supervision process, if it is discovered that a credit institution is lending to the wrong subjects and for the wrong purposes, there will be measures to handle it.

Mr. Long also affirmed that the State Bank is very concerned about the issue of cross-ownership at credit institutions. In the inspection and supervision of banks, they will also inspect capital contributions, and if violations of regulations are detected, they will be handled.

However, the representative of the Inspection and Supervision agency admitted that this is a relatively complicated issue, and monitoring and supervision is very difficult.

According to Official Dispatch No. 10167 dated December 31, 2023 of the State Bank of Vietnam sent to credit institutions to notify about the assignment of credit limits in 2024, this agency requires credit institutions to seriously, fully and promptly implement the Prime Minister's direction in ensuring credit quality, using capital for the right purpose, effectively, and limiting the increase in bad debt.

In particular, the State Bank strictly prohibits credit institutions from granting credit not in accordance with the law, not to the right subjects, granting credit to the board of directors, executive board and related persons of credit institutions, enterprises in the ecosystem, backyard enterprises, etc. with preferential interest rates while people and enterprises with legitimate and legal needs have difficulty in accessing credit capital.