Commercial banks required to control credit growth in 2011

The Governor of the State Bank of Vietnam (SBV) issued Document No.2956/NHNN-CSTT on April 14 to require credit institutions and branches of foreign banks (Herein after called credit institutions) to strictly control credit growth in 2011 in line with Resolution No.11/NQ-CP of the Government dated February 24, 2011 and Directive No.01/CT-NHNN the SBV Governor dated March 1, 2011 with the aims of curbing inflation, stabilizing macro-economy and securing social protection. The SBV Governor requires credit institutions to conduct the following tasks:

Firstly, to develop a plan to keep the credit growth rate of below 20% in 2011 (Including the exchange rate adjustment factor) under Resolution 11/NQ-CP, so as to extend loans in accordance with Item No.14 of Article No.14 of the Law on Credit Institutions, including lending, discounting, leasing, factoring, guaranteeing and other credit operations.

Secondly, to reduce the pace and proportion of loans for the non-productive sector and to apply reserve requirement ratio in line with Item b of Article No.2 of  Directive No.01/CT-NHNN.

Credit extension to the non-productive sector includes loans to discount valuable papers for securities investment and trading, loans to real estate investment and trading, and personal loans. Directive No.01/CT-NHNN stipulates that the loan outstanding for the non-productive sector accounts at best for 22% of the total loan outstanding as of June 30,2011 and 16% as of December 31,2011. In failure to comply with this stipulation, credit institutions will be subject to twofold reserve requirement against the common reserve requirement ratio and restriction of operational scope for the second half of 2011 and the whole year of 2012.

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