Certain banks allowing loans above limit

The audit report for 2022, recently sent to the National Assembly, discussed certain shortcomings regarding loans and credits at commercial banks in 2021.

Credit growth in 2021 reached 13.61%, with credit poured into real estate rising by 15.4%, stocks 23.85% and corporate bonds 17.65%, the report said.

The economy’s outstanding credit ratio to GDP remained high, at 114.3% in 2020 and 113.2% in 2021. It represents potential difficulties regarding the flow of credit into high-risk fields.

The State Bank of Vietnam (SBV) has yet to issue any documents regarding the regulation and control of credit growth targets, both in general and for individual banks. This means that certain banks allow levels of loans above the ceiling as determined by the State Bank.

A limit on credit is a measure used in recent times to manage credit growth inflation. However, the Economic Commission once requested the central bank to scrap this credit limit as it could distort the market and affect businesses’ ability to gain access to funds.

Hoang Van Cuong, deputy headmaster of the National Economics University, said on Saturday that as the economy is in a tough spot and businesses need funds, SBV should choose well-functioning banks and consider allowing them higher credit limits.

SBV said it would come up with a roadmap to scrap credit limits, but for now, the measure is necessary to help manage inflation.