The Vietnam Banking Association (VNBA) has asked local commercial banks to reduce outstanding loans to help stabilize commodity prices and curb inflation rate.
Duong Thu Huong, general secretary of VNBA, said last weekend that commercial banks should improve credit quality and stop lending for real estate speculation in order to reduce outstanding loans, lessening pressure on inflation hike in December and the first quarter of 2008.
VNBA also reminded member banks of implementing seriously the central bank’s Instructive 03 on reducing loans for securities investments to below 3 per cent by the end of this year.
Commercial banks should not increase deposit interest rates, which triggers unsound competition among them, putting bad impacts on the whole banking system, the association said.
Tran Dinh Trien, head of VNBA’s Legal Department, said total deposits grew sharply in 11 months, enough to meet demand for lending; therefore, banks should not to further raise interest rates.
This year, Vietnam is expected to see bank deposits up 36.5 per cent and outstanding loans up 34 per cent from last year.
Two biggest cities will have very high credit growth in 2007. Ho Chi Minh City will see total deposits up 55 per cent, outstanding loans up 51 per cent, while Hanoi will witness the growth rates of 36.1 per cent and 38.5 per cent, respectively.
Vietnam’s CPI hovered by 9.45 per cent in 11 months, driven by the impacts of natural calamities, epidemics, the increase in prices of essential goods and global petroleum, gold, and materials. It is expected to surpass two-digit level by the end of this year. (Banking Times, Liberated Saigon)
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