Vietnam c.bank to boost money supply, credit

Vietnam’s central bank will likely pump 300 trillion dong ($14.4 billion) into the economy from now until the end of the year and allow commercial banks to lend around 238 trillion dong, according to a state-run newspaper on Thursday that quoted the central bank.
The figures point towards an increased money supply and credit, but the Thanh Nien newspaper said neither would exceed the official targets of 15-16 percent and 20 percent respectively.

State Bank of Vietnam governor Nguyen Van Binh told bankers at a meeting on Wednesday that he expected annual credit growth to come in at 15-18 percent this year, the newspaper reported.

Credit grew just 8.85 percent by August 30 from the start of the year, the central bank said. Full year credit growth in 2010 was about 28 percent.

In the coming four months, commercial banks can lend a total of 47.6 trillion dong per month, the newspaper reported.

Thanh Nien also quoted the central bank as saying the country’s money supply had grown 9.16 percent by August 30 from the start of the year, and was likely to expand by 59.5 trillion dong each month from now to the end of 2011.

As part of its efforts to reduce lending interest rates, the central bank also threatened to suspend bank directors for three years if they breached the ceilings, the newspaper reported.

The cap on dong deposits stands at 14 percent and for dollar deposits the ceiling is 2 percent.

Vietnam has been battling some of the world’s highest inflation and economists say years of soaring credit growth has been a key contributing factor.
Reuters

Tags: Vietnam banking industry, Vietnam finance, Vietnam financial