Foreign banks asked to limit 2011 credit growth

The State Bank of Vietnam has issued a dispatch asking foreign banks to obey the cap on 2011 credit growth which has been applied to local institutions.

Foreign-owned banks and foreign bank branches must make plans to confine their 2011 credit growth to less than 20% compared with late last year, with the exchange rate factor taken into account.

Credit operations under the law comprises of lending, discounting, finance leasing, factoring, underwriting, and other forms of granting credit.

Those institutions must send reports on the credit growth plan to the Monetary Policy Department of the central bank before this Friday.

Given this year’s credit growth, foreign lenders will need to give a credit line to their branches and those figures must be submitted to the provincial branches of the central bank.

Like domestic banks, foreign banks have been asked to reduce the proportion of loans for the non-manufacturing sector to 22% by late June and 16% by the end of this year.

Lending to non-manufacturing sectors comprises of loans for stock investment, real estate transactions and investment, and consumption purposes.

The central bank said if a bank cannot ensure the ratios above on time, it would double the required reserve ratio for the bank and take some measures to limit operations of the bank in the second half of this year and next.

The central bank has shown a steely determination to keep the credit growth this year below 20% as mentioned in Resolution 11 of the Government to curb inflation and stabilize the macro economy.

According to the central bank’s report, by March 16, money supply is expected to increase by 2.07% from late last year, mobilization grew 1.56% while the credit growth is estimated at 3.67%. – Saigon Times

Tags: Vietnam credit growth