At the Government’s monthly press conference of February 2024, Deputy Governor Pham Thanh Ha of the State Bank of Vietnam (SBV) shared that the banking sector has been conducting various measures aimed at removing the difficulties in production and business operations, as well as promoting credit demand. However, it is necessary to have a synchronized coordination from other policies to help remove those difficulties and promote credit growth.
Deputy Governor Pham Thanh Ha at the Government’s monthly press conference of February 2024
According to the SBV Deputy Governor, within the credit management in 2024, the SBV had set the credit growth target for the whole year at about 15%, in alignment with the objectives of developing the economy and controlling the inflation. The SBV had allocated the credit limits to the entire system of credit institutions on December 31, 2023, and publicized the principles for the determination and allocation of credit in order to enable the credit institutions to proactively extend their credit operations.
In practice, the credit growth in the first two months of 2024 had been slow as compared to that of the same previous periods, while the liquidity of the entire system of credit institutions is still abundant. According to the SBV Deputy Governor, a regular reason is the seasonal factor. In December 2023, the credit growth was quite high, recorded at 4%. Economic activities are normally more vibrant in Q4 of the year, leading to more vibrant lending operations. As for January and February, which are usually the Lunar New Year festivities, according to the seasonal factor, the credit activities normally decrease in volume, and lending operations normally experience a slower growth as compared with the fourth quarter of the previous year.
In addition, another factor is that, this year, the world economy has not really recovered, the key international markets have not yet developed strongly, affecting the output and export factors, while the domestic market is still in difficult situation, so the credit demand has also decreased.
About the solutions, the SBV has conducted a several solutions to promote the credit growth. Right from the beginning of February, the SBV had issued documents requesting the credit institutions to enhance the credit growth, strengthen their reviews and simplify their lending procedures with the aim of improving the customers’ accessibility to bank loans, focus on the digital transformation applied to the credit processes. On February 20, 2024, the SBV had organized a conference on promoting credit to support businesses and enhance economic growth.
The SBV Deputy Governor added that the SBV has been reviewing the applicable legal documents for possible amendments to ensure alignment with the newly adopted Law on Credit Institutions (revised), increasing the accessibility to bank loans and support the people and businesses to remove their difficulties.
That is to say, the SBV has been making big efforts to handle with the difficulties in production and business operations, as well as to promote the credit growth. On the side of the lenders (the banks), the liquidity is still abundant, and they are ready to provide the capital to the economy. "However, it is necessary to have the coordination of other policies in a more synchronized way, among which, it is necessary to improve the operational efficiency of the relevant funds, such as the Credit Guarantee Fund for Small and Medium Enterprises (SMEs) and the SME Development Fund, in order to enhance the credit accessibility of those enterprises," said the Deputy Governor.
On the side of the borrowers, the businesses should proactive restructure their operations, implement more feasible investment or production projects, proving the viability of their projects, as well as enhancing the transparency, strengthening their financial capacity so that the lenders could appraise and provide loans more easily in the coming time.
The SBV Deputy Governor emphasized that the SBV would continue to monitor the credit growth in March, Q1 and other following months in order to conduct specific measures to further promote the credit growth, support the borrowers and the economic growth.
Le Hang