The banking system is ready to provide capital at a reasonable price

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The SBV has just adjusted credit growth limits for many banks with different rates. Some banks are adjusted up 15%, some banks are 12% or some banks are only 11%… Dr. Chau Dinh Linh – Banking University of Ho Chi Minh City. Ho Chi Minh had discussions around this topic.

– In your opinion, what are the criteria for the State Bank to allocate and expand credit room for banks?

– Talking about credit limit, it must be affirmed that this is a tool to manage monetary policy of the State Bank. Although it is more an administrative tool than the market, it is a recognized tool and in the current context of Vietnam, it is imperative to use this tool to intervene in the market to achieve the goal of supporting support economic growth.

The SBV must rely on the size, quality of assets, related to the bank’s objectives and areas of credit growth… to assign credit growth targets accordingly, ensuring capital flows into the economy in the right direction, safely and effectively. Often banks with good financial health, business model, risk management according to Basel II, Basel III standards, income from credit / total income reflected at an acceptable level of risk … will be granted a higher credit growth limit by the SBV compared to banks with lower indexes.

This policy is also very flexible when banks that use up most of their credit quota can propose to loosen the room. In addition to the above criteria, the SBV will base on the ratio of bad debt, the current credit balance to which areas to lend and at the same time associate with the bank’s risk management… to consider and approve the opening of credit room.

I find that the SBV’s approval of credit growth targets is not based on sentiment but on very clear criteria. The coordination of credit growth targets is very important to adjust capital from excess places to places with lack of capital to achieve credit growth targets, more importantly, capital flows to the right address are priority areas to support economic growth.

Dr. Chau Dinh Linh. Photo: TBNH.

– In your opinion, how did the recent interest rate reduction affect credit growth?

– I positively appreciate the recent move to reduce interest rates of banks to create consensus in the system. Along with debt deferred operations, debt structure … according to Circular 01, Circular 03, the reduced lending interest rate creates peace of mind for borrowers. However, the impact of this interest rate cut on credit growth is not much. Because currently, the enterprise is in a defensive position, not expanding production and business. This is a major challenge for credit growth in the last months of the year.

– So what are the important factors to promote credit growth in the last months of the year to reach the set target, sir?

– In order of priority, disease control is the most important factor. When the epidemic is under control, economic activities return to normal, capital demand returns, and credit will begin to grow again. And credit growth fast or slow also depends on the recovery of the areas in which banks promote lending.

Next, the move to sharply reduce the interest rates of banks while extending the SBV’s credit system shows that the banking system has been ready to provide capital at reasonable prices so that businesses especially enterprises in the field of priority take advantage of opportunities to recover production and business. , promoting economic growth to meet the set targets.

– There are opinions, the credit room is still effective, should not be abandoned. What is your view on this matter?

– Looking back at the past and considering the current context, it is clear that the credit room is still effective in supporting the SBV to flexibly administer monetary and credit policies, which has had a positive impact on GDP growth in recent years.

From the perspective of the market economy, I think that the credit room will also be removed like the previous short-term deposit rate ceiling. But this change must have a roadmap, and converging many factors to be possible. When the economy develops sustainably, the weight of monetary policy tools and independence is increased, then this can be taken into account. At present, this is still an important monetary policy tool to effectively coordinate the supply and demand of capital to achieve the goals set by the State Bank and the Government.

Source: – Translated by