Alongside the expected benefits, there may be some unintended consequences of the recent policy to increase credit growth quotas for well-performing lenders. What are they? Can they be mitigated? Why the early adjustment? On August 28, the State Bank of Vietnam (SBV) wrote to several banks, informing that they would get additional credit growth quotas. These banks had achieved at least 80% of the 2024 credit growth quotas allocated early this year by the SBV. They did not need to make a formal request for extra quotas. Unlike in previous years, the SBV early this year allocated full credit growth quotas to commercial banks, with the credit growth target for the entire banking system set at 14-15%. This is seen a solution to encourage early loan disbursements to fuel economic growth. With total outstanding loans in the system at the end of 2023 reaching nearly VND13.57 quadrillion, an additional VND2.03 quadrillion is expected to be injected into the economy. However, results showed that credit growth in the first months of this year remained low. The demand for credit was low as businesses were struggling with difficulties and the economy needed time to absorb the sudden surge in credit in late […]
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