Banks to Have Different Credit Growth Limits: A Basis to Cut Interest Rates?

18-Feb-2012 Intellasia | StoxPlus | 7:01 AM Print This Post

Vietnam banks were unprecedentedly assigned different annual credit growth targets in 2012, and experts said that will create a basis for trimming down interest rates, the local online newspaper Saigon Dau Tu reported.

The State Bank of Vietnam (SBV) on February 13 issued Directive No. 01/CT-NHNN, in which it announced credit growth limits for four different groups of credit institutions. Specifically, the central bank set maximum credit growth rate at 15 percent for Group 1 (healthy banks), 15 percent for Group 2 (moderately healthy banks), 8 percent for Group 3 (unhealthy banks) and 0 percent for Group 4 (weak banks).

Group-4 banks are allocated 0 percent credit growth and thus unlikely to race to attract deposits while tSTC in groups 1 and 2 which are mostly strong and branded lenders will not raise interest rates to draw depositors, either, said an unnamed bank leader, adding that this will create a basis for lowering interest rates in the future.

However, many said that interest rates in the near future remain unpredictable, as real estate loans stay high, funding imbalance still persists and interbank debts have not been resolved. These issues can only end when the central bank supports small banks in handling bad loans and restructuring their activities.


Category: Finance

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