State Bank upholds credit growth cap, urges lending for production

Vietnam's central bank has confirmed its cap on the banking system's credit expansion for this year will be unchanged at 14%, urging banks to boost lending for production activities.

In a dispatch dated November 22 to credit institutions and banks, both local and foreign, the State Bank of Vietnam (SBV) asked them to balance their capital sources and increase lending for enterprises and people to help drive economic growth.

Till now, the whole banking system’s credit growth is about 11.5% while the year’s cap is 14%. "There is still room for banks to provide loans," it wrote.

The SBV will work out market measures in line with government instructions, based on conditions of the whole system and of each bank, the SBV added.

Unprecedented cash flow difficulties, including a lack of working capital and capital for medium-term and long-term investment, have placed many Vietnamese companies in a precarious situation.

As a result, the competitiveness of many industries is weakening, says a recent report submitted to the Prime Minister by the Private Economic Development Research Board (Board IV) under the Prime Minister's Advisory Council on Administrative Procedure Reform.

According to Tran Du Lich from the National Financial and Monetary Policy Advisory Council, enterprises across all sectors are facing a myriad of difficulties. Garment and footwear firms lack orders while real estate developers have no money to continue implementing their projects.

Commercial banks themselves are also facing liquidity-related problems with rising bad and doubtful debts, low deposit growth, and a congested corporate bond market, according to the specialist.