The mechanism of controlling credit growth through administrative quotas has led to suboptimal capital allocation in the economy via the commercial banking system. It neither prioritizes nor incentivizes well-performing banks while failing to limit underperforming ones. Removing credit growth ceilings is necessary, said Ph.D. Le Dat Chi, Head of the Finance Department at the School of Business, University of Economics Ho Chi Minh City, in an interview with The Saigon Times. Why should credit growth limits be removed? The Saigon Times: Prime Minister Pham Minh Chinh recently instructed the State Bank of Vietnam (SBV) to study the possibility of removing the credit growth cap and shift to market-based management using a set of credit safety control criteria. What are your thoughts on this directive? Ph.D. Le Dat Chi: The loan growth limit is an administrative tool the SBV has applied since 2011. Its continued use has created an “ask-and-give” mechanism, where commercial banks are assigned a credit growth limit at the beginning of each year. Once a bank reaches this ceiling, it must request an extra quota from the SBV to continue lending. This leads to a situation where credit growth is not based on the bank’s own management efforts. […]
The mechanism of controlling credit growth through administrative quotas has led to suboptimal capital allocation in the economy via the commercial banking system. It neither prioritizes nor incentivizes well-performing banks while failing to limit underperforming ones. Removing credit growth ceilings is necessary, said Ph.D. Le Dat Chi, Head of the Finance Department at the School of Business, University of Economics Ho Chi Minh City, in an interview with The Saigon Times. Why should credit growth limits be removed? The Saigon Times: Prime Minister Pham Minh Chinh recently instructed the State Bank of Vietnam (SBV) to study the possibility of removing the credit growth cap and shift to market-based management using a set of credit safety control criteria. What are your thoughts on this directive? Ph.D. Le Dat Chi: The loan growth limit is an administrative tool the SBV has applied since 2011. Its continued use has created an “ask-and-give” mechanism, where commercial banks are assigned a credit growth limit at the beginning of each year. Once a bank reaches this ceiling, it must request an extra quota from the SBV to continue lending. This leads to a situation where credit growth is not based on the bank’s own management efforts. […]
The mechanism of controlling credit growth through administrative quotas has led to suboptimal capital allocation in the economy via the commercial banking system. It neither prioritizes nor incentivizes well-performing banks while failing to limit underperforming ones. Removing credit growth ceilings is necessary, said Ph.D. Le Dat Chi, Head of the Finance Department at the School of Business, University of Economics Ho Chi Minh City, in an interview with The Saigon Times. Why should credit growth limits be removed? The Saigon Times: Prime Minister Pham Minh Chinh recently instructed the State Bank of Vietnam (SBV) to study the possibility of removing the credit growth cap and shift to market-based management using a set of credit safety control criteria. What are your thoughts on this directive? Ph.D. Le Dat Chi: The loan growth limit is an administrative tool the SBV has applied since 2011. Its continued use has created an “ask-and-give” mechanism, where commercial banks are assigned a credit growth limit at the beginning of each year. Once a bank reaches this ceiling, it must request an extra quota from the SBV to continue lending. This leads to a situation where credit growth is not based on the bank’s own management efforts. […]
After more than a decade of development, e-commerce has become a key sales channel for hundreds of thousands of businesses. However, certain unnecessary administrative...
Over the past thirty years, trade cooperation has been the cornerstone of the Vietnam–U.S. relationship. To move further forward, both sides need to shift...
Nearly 80% of Vietnamese companies have adopted performance management systems, but inconsistent implementation across organizational levels has limited their effectiveness. As a result, business...
Vietnam is globally recognized for its rich supply of high-quality raw materials such as rice, coffee, cacao, and seafood. While local firms have leveraged...
The return of net buying by foreign investors further reinforced the local stock market’s rebound, reflecting optimism about Vietnam’s economic outlook in the coming...
Summer workouts may cause the body to lose water and electrolytes, thus affecting health and training results.
How to maintain enough water and electrolytes for...
An economy in which total outstanding credit increasingly exceeds the total value of goods and services annually produced implies that the debt burden on...
In its draft amendments to Decree 24/2012/ND-CP on gold trading management, the State Bank of Vietnam (SBV) has proposed ending the State’s monopoly on...