Central bank requests control of credit provision for major shareholder-linked customers

The State Bank of Vietnam (SBV) has asked its inspection agency and branches to pay special attention to credit approvals for customers associated with major and controlling shareholders amid declining credit quality and risks of swelling bad debt.

At a conference on bank supervision and inspection held in the central city of Danang on Saturday, SBV Deputy Governor Pham Quang Dung attributed lower credit quality to the impact of the economic downturn, damage from natural disasters in various regions, limited capital absorption by enterprises, and the struggling real estate market.

“Therefore, in addition to control of credit granting, caution should be placed on lending to sectors with potential risks, such as real estate, consumer finance, and securities,” he noted.

It is essential to continue enhancing the quality of supervision, focusing on credit quality and ensuring that credit is granted to the right persons and sectors, Dung stated.

Dung elaborated that this aims to identify risks, shortcomings and regulatory violations to promptly issue risk warnings and implement response measures, thereby ensuring the safety of credit institutions.

He also urged close supervision of weak credit institutions with lingering problems.

Dung emphasized the need to effectively implement the tasks outlined in Scheme 689 regarding the restructuring of the banking system associated with bad debt settlement for the 2021-2025 period, as well as the action plan for the banking sector to carry out Scheme 689.

Credit institutions must vigorously and effectively carry out the approved restructuring plans linked to bad debt settlement, while intensifying efforts to address existing bad debts and minimize new ones, he added.

Vietnam’s credit growth had reached only 7.38% as of September 17 against the end of last year, half of the 15% target set for the whole of 2024, according to the central bank.

While the growth was still far from the target, it was higher than the 5.73% recorded in the same period last year, it said.