Weak banks to miss credit growth allocation

According to an instruction issued by the Governor of the State Bank of Vietnam (SBV) 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 percent. These fields include securities investment and trading, real estate and consumption.

The 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.

vir

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