Concerning low interest rates but decreasing credit growth in January 2024 and the direction of pushing low interest capital “right, hitting” into the economy, a reporter from Nguoi Lao Dong newspaper has discussed with Deputy Governor of the State Bank of Vietnam, Dao Minh Tu, on this topic.
The reporter: “The latest data from the State Bank of Vietnam shows that credit growth in January 2024 decreased by 0.6% compared to the end of 2023, in the context of banks simultaneously launching preferential low-interest credit packages. Why is that?”
Deputy Governor of the State Bank of Vietnam, Dao Minh Tu
– Deputy Governor of the State Bank of Vietnam, Dao Minh Tu: Since the beginning of 2024, the State Bank of Vietnam has implemented proactive and flexible credit management solutions in line with macroeconomic developments, inflation, and capital needs for the economy. The credit growth target for the whole year is 15%, adjusted to be suitable for the actual situation, announced early to allow banks to proactively develop plans and provide capital for the economy.
After one month of implementation in early 2024, the actual data shows that some banks have increased their credit growth while others have decreased it, resulting in a general decrease in credit growth in the economy. According to commercial banks, the reason for the decrease in credit growth is due to the law of demand – capital needs usually decrease during the Lunar New Year period. The credit demand of the economy has decreased due to a decrease in investment and production-business demand; some customer groups have needs but do not meet loan conditions or still face legal procedure difficulties; the law of the harvest season, etc.
According to the State Bank of Vietnam, the deposit and lending interest rates continue to decrease. Photo: BINH AN
“- The current credit growth and capital injection into the economy seem unrelated to interest rates because, according to the banks, lending rates have never been as low as they are now, right?”
– As mentioned, one of the reasons why credit did not increase in the first month of 2024, despite the historically low lending rates, is due to the decrease in capital demand during Tet. Statistics from the State Bank of Vietnam show that as of January 31, the deposit and lending interest rates continue to decrease. The average deposit and lending rates of transactions generated by commercial banks decreased by approximately 0.15% per year and 0.25% per year, respectively, compared to the end of 2023.
To promote credit growth, credit institutions need to focus on specific measures that can direct capital flow into priority areas and sectors with good recovery potentials according to the government’s directions. For example, the 15,000 billion VND credit package supporting the forestry and fishery sectors in the past time has been effective with a 100% disbursement rate. Therefore, the State Bank of Vietnam encourages banks to double the scale of this package to 30,000 billion VND and implement it to support enterprises.
“- At the industry-wide credit-driven conference in 2024, many banks continue to suggest extending Circular 02/2023 to support customers in restructuring debts. What is the State Bank of Vietnam’s view on this matter?”
– During this time, the State Bank of Vietnam has implemented many solutions to support production-business and solve difficulties for customers. The State Bank of Vietnam has also implemented credit programs and policies for sectors and fields according to the government’s and Prime Minister’s directions, key projects, and growth drivers. Restructuring repayment terms and maintaining debt categories to support customers in difficulty have been implemented in accordance with Circular 02/2023.
If it is necessary to extend the implementation of Circular 02, 6 months or 1 year should be carefully considered. The continued implementation of the policy to restructure the repayment terms and maintain debt categories according to Circular 02 needs to comply with the regulations. The view is to extend based on ensuring harmony, both supporting businesses and people while tightly controlling to avoid policy abuse, concealing bad debts, and shifting the future’s capital risk to the credit institutions.
“- According to the State Bank of Vietnam’s perspective, which sectors will be targeted for credit growth to hit the right target?”
– The banking sector has proactively implemented various solutions to enhance credit and contribute to economic growth. Banks need to direct credit flow into production-business sectors, priority sectors, and economic growth drivers according to the government’s and Prime Minister’s guidelines while tightly controlling credit for sectors with inherent risks, ensuring safe and efficient credit operations.
The priority sectors are agriculture-rural areas, small and medium-sized enterprises, export, support industries, and high-tech applied enterprises. The banking sector aims to direct capital flow into green sectors and projects; provide capital for essential sectors of the economy and legitimate consumer needs of the people.
“- Regarding real estate, what is the State Bank of Vietnam’s view on credit capital for this sector, which receives great attention from businesses and the market?”
– The State Bank of Vietnam has repeatedly affirmed that it does not tighten credit for the real estate sector. For this sector, banks need to continue to review and classify real estate projects to have appropriate credit solutions such as eligible projects, projects meeting the actual market’s needs, social housing projects, commercial housing projects, etc. Banks need to actively guide and create favorable conditions for people and enterprises to access credit capital, especially through digitalized sales channels, products, and services.
Besides, banks need to diversify credit products and services to be suitable for each customer segment and market, each type of production-business demand of people and enterprises.
