SBV Tightens Credit Growth in 2011

The Governor of the State Bank of Vietnam (SBV) has issued the Document No.2956/NHNN-CSTT dated April 14, 2011 to require credit institutions and branches of foreign banks (collectively called credit institutions) to strictly control credit growth in 2011.

 

Accordingly, the SBV requires credit institutions to develop a plan to keep the credit growth rate of below 20 percent in 2011. Besides, they have to reduce the pace and proportion of loans for non-productive sectors (real estate, securities and consumption) and to apply reserve requirement ratio in line with Item b of Article No.2 of Directive No.01/CT-NHNN.

 

In case the SBV does not receive reports on credits for non-manufacturing sectors in June and December 2011 on July 12, 2011 and January 12, 2012, respectively, it will take loans for non-productive sectors in May and November 2011 to apply compulsory reserve requirement ratio in accordance with the Item b of Article No.2 of Directive No.01/CT-NHNN.

 

The Directive No.01/CT-NHNN stipulates that outstanding loans for non-manufacturing sectors accounts at best for 22 percent of total outstanding loans as of June 30, 2011 and 16 percent 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.