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Friday, June 21, 2024

Credit growth quotas still necessary, says central bank governor

The Saigon Times

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HCMC – Credit growth quotas remain essential for sustaining economic growth and supporting businesses and individuals, said Nguyen Thi Hong, governor of the State Bank of Vietnam (SBV).

Speaking at a session of the National Assembly (NA) on November 6, Hong acknowledged lower-than-expected credit growth in the first nine months of the year.

She said the demand for credit had been woefully low as the Covid-19 pandemic had left protracted impact on individuals and small businesses.

Hong underscored the necessity of continuing to allocate credit growth quotas to banks.

These credit growth quotas are determined annually and vary from one bank to another based on specific criteria set by the SBV. This ranking system helps identify banks with sound operations and potential for credit expansion.

However, the NA’s Resolution 62, issued on June 16, 2022, called for a review of this approach, suggesting potential adjustments. Nevertheless, Governor Hong stressed that, given the economy’s significant reliance on credit, the allocation of credit growth quotas remains crucial.

Under more favorable conditions, reconsidering the credit growth quota allocation mechanism might be weighed, particularly when other segments of the financial market, such as corporate bonds, can meet businesses’ long-term credit requirements, said Hong.

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