Wed. Nov 30th, 2022

VietNamNet Bridge – In 2012, the maximum credit growth rate was decided by
the State Bank which granted “quota” to every commercial bank. Will the quota
scheme be applied in 2013?

 

Vietnam, credit growth rate, quota, economic recession, interest rate

Analysts have every reason to think that the quota scheme would not be applied
by the central bank this year, saying that there’s no need to set up a
limitation on the credit growth, once the worry about the minus credit growth
rate has been raised.

A report by the State Bank of Vietnam showed that by February 6, 2013, the
outstanding loans of the whole banking system had been minus 0.16 percent over
the end of 2012. This has been described as a threat to the national economy,
because the minus credit growth would have bad impacts on the national economy.

However, a banker in Hanoi said the low credit growth rate in the first months
of the year is foreseeable. Businesses borrowed short term capital late last
year to organize year-end production. Meanwhile, the first months of the year
were the time for them to pay debts. This explains why the outstanding loans
always increase very slowly in the first months of the years.

Deputy General Director of Maritime Bank–Tran Xuan Quang, also said that it’s
still too early to make any conclusion just after seeing the minus credit growth
rate in the first two months.

While some experts warned about the low credit growth rate in 2013 due to the
production stagnation, President of OCB Trinh Van Tuan said he believes the
situation would be better in the time to come, when the government’s measures
show effects.

Tuan affirmed that it would not be too difficult to obtain the 12 percent credit
growth rate for the whole banking system this year as targeted. Especially, he
thinks that the growth rate could even be higher.

The banker went on to say that in 2012, OCB still obtained the credit growth
rate of 15 percent. Meanwhile, it is still awaiting the quotas from the State
Bank for 2013.

Quota scheme not applauded by banks

In 2012, the State Bank decided the maximum credit growth rates for every
commercial bank, depending on their capability, business scale and the credit
quality.

However, a lot of banks reportedly did not use up the quotas granted to them.
This was attributed to the low demand for capital from businesses, which decided
not to step up production in the context of the low purchasing power.

Despite the great efforts by the State Bank to slash the lending interest rates
to make it easier for businesses to access bank loans, the outstanding loan
growth remains very slow.

Tuan of OCB believes that the interest rate reduction could not be the factor
that helps push up lending. He said businesses would come to banks to ask for
loans if only they can see that the market demand increases and they can sell
products.

Quang has also affirmed that the bank is ready to provide loans at preferential
interest rates to the clients with good profiles and feasible business projects.

It’s highly possible that the above said quota scheme would also be applied in
2013, which means that the central bank would set limitations on every group of
banks, after considering the banks’ business scale, credit quality, the
liquidity management and the corporate governance.

Meanwhile, Le Quang Trung, Acting General Director of VIB thinks that the State
Bank should not set quota for the groups of banks, but it should only set the
caps on five priority sectors.

Tien Phong

By vivian