Government to inspect credit growth management by central bank

The headquarters of Saigon Commercial Bank in HCM City’s District 1. — VNS Photo Bồ Xuân Hiệp.

HCM CITY — The Government will conduct an inspection of credit growth management by the central bank in response to low credit growth.

During a meeting with the central bank last Friday, Deputy Prime Minister Lê Minh Khái instructed the central bank to continue to review regulations to flexibly manage monetary and credit policies.

The Government Inspectorate will need to report the inspection’s results in January 2024, he said.

As of the end of November, credit growth has only reached about 8.4 per cent, falling short of the year’s target of 14.5 per cent.

In addition, the uneven distribution of credit growth among lenders is another hurdle, with some banks having high levels of growth while others have reported extremely low growth in credit.

A supervisor at an HDBank branch in HCM City’s District 4, who requested anonymity, told Việt Nam News: “Most commercial banks now have excess liquidity due to a lack of credit.”

While there is an abundance of capital supply, the disbursement of loans has been challenging due to the sluggish economy, she said.

The credit standard could not be lowered in order to ensure system safety and prevent non-performing debt from increasing again, she noted.

Representatives of commercial banks have proposed relevant authorities continue to resolve legal obstacles related to real estate market and work to stimulate domestic consumption, particularly during the upcoming Lunar New Year. 

They have also called for the acceleration of public investment capital disbursement to boost investment and business activities in the economy.

The central bank last week announced it will adjust growth targets among credit institutions as a result of uneven credit growth.

Credit limits for certain banks will be changed based on their performance since the beginning of the year, with additional credit limits being granted to banks that have prioritised credit for key sectors and have lowered interest rates.

Experts have warned credit growth this year will only reach 12 per cent, as real estate and consumer loans for real estate, which make up 70 per cent of bank lending, have dropped significantly.

Exports and production are also facing difficulties, leading to a decrease in demand for capital.

The lower-than-targeted credit growth is a concern for the economy’s recovery in general, experts noted. 

Prime Minister Phạm Minh Chính, speaking at multiple meetings, has also stressed the importance of increasing credit access and removing difficulties facing businesses.

The PM has consistently ordered the central bank to have flexible and efficient monetary policies to promote growth and ensure safety in the credit system. 

Meanwhile, money continues to flow into banks despite low deposit rates of below 6 per cent per year, as deposits are still seen as a safe investment.

The level of deposits at banks has reached a record high of more than VNĐ6.44 quadrillion as of the end of September this year. 

In a related issue, during the sixth session of the 15th National Assembly, the NA requested the Government enhance inspection of the banking sector, following several serious violations in the sector.

The most serious case involved the embezzlement of US$12.36 billion from Saigon Commercial Joint Stock Bank (SCB), leading to charges against Trương Mỹ Lan, chairwoman of Vạn Thịnh Phát Group, for embezzlement, violations of banking operations, and bribery. 

After facing a bank run in October 2022, SCB was taken over by the central bank to minimise the negative impact to SCB customers and the overall sector.

The SCB scandal is the biggest in the country’s banking history to date. — VNS