Vietnam Money Supply Up 1.5% at end-Jan: Central Bank
The State Bank of Vietnam, the country’s central bank, said that the total money supply, M2, rose 1.5% by the end of January.
In the month total outstanding loans by domestic banks rose 1% while total deposits at the banks were up 0.3%, the central bank said.
Local banks have been faced with a lot of difficulties in capital mobilization, citing ceiling interest rate scheme as a major reason.
Bankers said that they could not mobilize capitals at deposit interest rates which are below 10.5% per annum as requested by the central bank. As a result, banks cannot provide sufficient loans for local production and business.
In fact, the ongoing liquidity crunch has forced local banks to dodge the law to raise enough funds for lending. They are offering bonus percentage points on deposits and collecting high rates of up to 21% per annum on lending through extra fees for various services.
Le Xuan Nghia, vice chairman of the Hanoi-based National Financial Supervision Commission, said at a recent banking conference that lack of capital will be the biggest difficulty for the local banking system this year.
As the economy has begun to recover from the slowdown, many people will put their savings at banks which will funnel capital into more profitable sectors, real estate and stock markets, added Nghia.
The SBV Governor Nguyen Van Giau has predicted credit and M2 growth at 25% for this year, compared to 26.02% and 37.73% by end-2009. (SBV)
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