Map for bank’s credit growth to be released

A State Bank source said detailed guidance on banks’ credit growth this year would soon be released, which would allow commercial banks to follow their own business plans as long as they could meet risk management and regulated requirements of safe operations.

“Credit growth targets for the whole banking system will not be the same at banks. Commercial banks, based on their capabilities, can boost lending higher by more than 27 per cent this year,” he said.

State Bank governor Nguyen Van Giau last week said the credit growth cap for the whole banking system would be kept at 30 per cent in 2009 and gradually lowered in the following years.

“It is an appropriate and sound policy, as banks differ on funding availability and customers’ demands for capital,” said Doan Van Thang, deputy general director of LienVietBank. Thang said his bank, established just over a year ago, had targeted a 150 per cent credit growth this year and had already completed 80 per cent of its yearly lending target.

Although there has been no official credit tightening documents, recent State Bank moves, including curbing credit growth targets for the whole banking system from 30 per cent to 25-27 per cent, continuously asking banks to enhance risk management and lowering the ratio of bank’s short-term funds to finance mid and long-term assets by 10 per cent, have made people believe that the credit tightening policy has begun.

However, economists said the inflation threat was now less of a threat, with an 8.31 per cent year-on-year rise in the consumer price index (CPI) over the first eight mont

hs, and early monetary policy tightening could hamper an economic recovery.

“With the current lending growth limit of 25-27 per cent, capital supplies will not be enough for production and business demand in the last months, when it is time for enterprises to meet their fiscal targets,” said Cao Sy Kiem, a member of the National Advisory Council on Monetary Policy.

Kiem said lending growth quotas should be raised to over 30 per cent as enterprises were now in need of huge capital. “There are not many chances, especially for small commercial banks, to boost their lending,” said Thang. He said 30 per cent banking system credit growth would help satisfy enterprises’ hunger for capital and assist the economic recovery.

“Banks’ lending should not be seen as the only factor leading inflation. While lending growth limits should be raised to stoke the economy, close management to ensure capital goes to the real economy, rather than speculation, enhancing cash withdrawals from issuing bonds and verifying mobilisation tools of enterprises will help ease inflation,” said Kiem.