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SBV: Directing credit flows to manufacturing and priority sectors

08/09/2021

In the upcoming period, the State Bank of Vietnam shall perform the state management  of credit activities in a safe, smooth and efficient manner, directing credit capital flows to focus on production and priority areas in line with the Government's policy.

According to the Governor of the State Bank, in directing and administering monetary and credit policies, the State Bank synchronously implements solutions to encourage credit capital flows to focus on production and business fields, priority fields, and fields that create driving forces for economic growth in line with the Government's policy; at the same time, strictly control credit in potentially risky fields such as real estate, securities, BOT, BT traffic projects, etc.

As a result, credit grew reasonably, efficiently, credit quality and system safety were improved; The growth rate and the proportion of credit in potential risk sectors have decreased gradually over the years.

The proportion of credit for investing and trading in securities accounted for a small proportion (0.5%) of the total outstanding loans of the economy; real estate credit growth gradually decreased and focused mainly on the essential needs of the people and the economy (accounting for more than 60% of outstanding real estate loans).

In addition, the State Bank regularly strengthens inspection, supervision, and directs credit institutions to strictly control credit in potentially risky areas, ensure operational safety and control the use of loans for the right purposes.

In the first months of 2021, the stock market grew strongly, real estate prices increased, especially the land price in the locality after receiving information on urban planning, traffic, infrastructure or land price adjustment, etc.

According to the Governor of the State Bank of Vietnam, this development has many reasons, partly due to the difficult economic outlook caused by the COVID-19 pandemic, the decrease in bank deposit interest rates, many businesses and people had money but lacked opportunities to expand production and business, therefore they increased investment in securities and real estate.

This trend is similar to the general situation in the world over the past year in the context of unpredictable economic prospects, a sharp drop in bank interest rates (many countries apply negative interest rates), stock market, real estate market, etc. increased sharply in many European countries, USA, UK, Australia, Canada, Japan, China, etc.

The risk monitoring of these markets falls under the management of many ministries and branches. Recently, the Government and the Prime Minister have drastically directed relevant ministries and branches (Finance, Construction, Natural Resources and Environment) to closely collaborate with localities to strengthen supervision, management, and warning of risks, publicly announce information on land use plans and land prices; detect, prevent, deter and severely punish acts of manipulating and speculating to increase prices; boost real estate supply, etc.

As for the banking industry, right from the beginning of 2021, the State Bank has directed credit institutions to strictly control credit in potentially risky areas, therefore credit in these areas is under control.

 

Kylie Nguyen

© 2019 Vietnam Bank for Agriculture and Rural Development No. 2 Lang Ha street, Ba Dinh district, Hanoi, Vietnam
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