Credit expansion limit raised for banks with reduced interest rates
The latest increase in credit expansion limit will be prioritized for banks with strong liquidity and lending interest rate reductions, says the central bank's Deputy Governor Dao Minh Tu.
“This move is to encourage commercial banks to focus on mobilizing capital and reducing interest rates, creating favorable conditions, both in capital sources and interest rates, for businesses, projects and programmes,” Tu said at a press meet Thursday.
Some lenders like Agribank are yet to hit the credit growth limit allocated at the beginning of the year, so they will not have it expanded this time, he added.
The State Bank of Vietnam (SBV) had raised its credit growth cap for the country's banking system this year by 1.5-2 percentage points to 15.5-16% on Monday, citing improved liquidity in the system and abatement of some external impacts.
Stressing the need to manage currency flow and keep a close watch on the operations of commercial banks in order to ensure capital sources are used for right purposes, Tu said priority had to be given to production, agriculture and rural development, exports, support industries, and small and medium-sized enterprises.
The move also aims to help residents gain access to housing, especially social housing.
“As housing for people is always considered a priority area, the central bank has directed commercial banks to create conditions for people to access capital to buy houses,” he noted.
Tu said that the credit growth increase of 1.5-2 percentage points will pump about VND240 trillion ($10.08 billion) into the economy.
To date, overall credit growth has reached 12.2%, lower than the set limit of 14%. This means there is still "room" for commercial banks to provide more capital for businesses and the economy.
The deputy governor stressed that all SBV policies aim to support economic growth in a sustainable manner while continuing to rein in inflation and ensuring macro-economic stability.
Vietnam’s consumer price index (CPI) in November rose 4.56% from December 2021 and 4.37% year-on-year, reflecting rising inflationary pressure, driven by hikes in gasoline prices and housing rent.
On average, the CPI in the first 11 months of the year increased by 3.02% over the same period last year. Meanwhile, core inflation, which reflects price changes without volatile commodities like food and energy, increased by 2.38%, according to the General Statistics Office.
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