The State Bank of Vietnam (SBV) officially announced on Feb 14 the rates of credit growth allocated for commercial banks this year.
This was released at a press conference chaired by Vice Governor of SBV, Nguyen Dong Tien, who said that the bank was focusing on implementing resolution 01 of the cabinet in developing the socio-economic plan in 2012.
Tien said that they will take steps to assure clearing of debts between inter-banks system so as to mobilise fund for priority targets set for 2012.
However, he added, that in 2012 the banking system will undergo restructuring as its main task. Another task is to intensify the control of credit institutions and bank groups, especially small banks that must strictly comply with regulations.
According to an instruction issued by the Governor of the State Bank of Vietnam, Nguyen Van Binh on Feb. 13, banks belonging to Group 4 (weak banks) will not be allocated any credit growth this year.
The remaining three groups, including Group 1 (healthy banks), Group 2 (average banks), Group 3 (below average banks) will be allowed credit growth rates of 17 per cent, 15 per cent and 8 per cent, respectively.
The purpose of the instruction is to ensure the safety and effectiveness of the banking system in 2012.
After six months of implementation, the SBV will adjust the rate allocated to credit institutions to suit changes in monetary and credit situation as well as banking activities at that time.
Under the instruction, credit institutions are asked to control lending to discouraged fields at under 16 per cent. These fields include securities investment and trading, real estate and consumption.
SBV will also double the compulsory reserve rate of VND, or limit the scope of business to banks who register excessive credit growth or too much lending in non-preferred fields.
Of this, commercial banks and credit institutions will be allocated growth based on the health of the organisation and their performance last year. Institutions will be classified into four groups based on SBV criteria, with well-performing lenders classed in group A and weaker lenders in group D.
Specifically, group A will be allocated the highest credit growth of 17 per cent for the year; group B, 15 per cent; group C, 8 per cent and group D, zero per cent.
After six months, the central bank will review such allocations and may adjust the growth rates to meet monetary policy goals.
The list of the four groups of banks and credit institutions has not been revealed yet.
But Tien revealed that the credit in buying real estate, credit for employees to buy shares in State run companies, are not in the priority group.
Last year, the SBV issued a general rate of under 20 per cent for all banks.