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Sunday, July 14, 2024

Central bank allocates all credit growth quotas for banks

The Saigon Times

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HCMC — The State Bank of Vietnam (SBV), the country’s central bank, announced on Monday that all the remaining credit growth quotas had been allocated for commercial banks, thus sending the total for this year to 14%.

Early this year the central bank set the credit growth target for 2023 at 14% to 15%.

During a late June press conference held by the SBV, Deputy Governor Dao Minh Tu said that back in February this year, commercial banks were given credit growth quotas equivalent to 11%.

In the latest update, the SBV has allocated the remaining credit growth quotas of the year for commercial banks, taking it to 14%.

The credit growth quota allocation is divided into multiple phases throughout the year – at the beginning, middle and end. But it is different this year as all the quotas had been fully allocated in the middle of year.

This approach allows banks to boost lending to the economy as directed by the Government, especially considering lower-than-expected economic growth in the first half of the year.

As of the end of June, total outstanding loans in the banking system reached VND12.4 quadrillion, up a modest 4.7% versus the end of 2022.

The slight increase can be attributed to enterprises scaling back production and business activities due to weak market demand and high interest rates. In contrast, credit expanded by 8-9% in the same period last year, with many banks using up their credit growth quotas then.

The annual credit allocation takes into account proposals from each lender, considering their operational situation, financial capacity, management capabilities, and ability to expand credit in a healthy manner. This approach ensures liquidity and safe operation in the banking system.

The SBV has urged banks to take decisive measures to promote safe and effective credit growth, directing credit towards the production and business sectors, priority industries, and growth drivers in alignment with Government policies.

Looking ahead, the central bank remains committed to closely monitoring domestic and international market developments, ready to support liquidity and create favorable conditions for banks.

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