How Many Weak Credit Institutions Remain Unresolved?

Cross-Ownership and Bank Manipulation: How Does It Work?

Continuing the morning session of the National Assembly on December 3, delegate Nguyễn Thị Việt Nga (Hai Phong) provided feedback on the implementation of resolutions regarding questioning and supervision in the banking sector.

While agreeing with the contents of the bank’s report, Nga also identified several limitations. Notably, the “credit quota” mechanism has been reduced but lacks a clear roadmap for complete elimination. Citing Resolution 62 of the National Assembly, she emphasized the need to study and limit, eventually abolishing the mechanism of allocating credit growth targets to individual credit institutions.

However, in practice, the “credit quota” mechanism persists, with specific targets assigned and adjusted for each credit institution. Nga noted, “The report focuses on describing current practices but fails to outline a clear roadmap for completely abolishing this mechanism. It also does not fully explain why, after many years, the call to ‘phase out quotas’ still lacks a specific timeline and accompanying solutions.”

Regarding the restructuring of weak credit institutions, the Hai Phong delegate stressed that National Assembly resolutions highlight the goal of fundamentally addressing weak credit institutions by 2025, preventing new weak institutions, tightly controlling cross-ownership and backdoor practices, and reducing bad debt to below 3%.

In this context, Nga argued that the report should address critical questions: How many weak credit institutions remain unresolved? What is the current ratio of bad debt and potential bad debt compared to the National Assembly’s target? To what extent has cross-ownership and bank manipulation been effectively addressed?

“These details are not clearly presented in the report. While we see efforts in processes and legal frameworks, the ‘real transformation’ within the credit institution system remains unclear,” Nga observed.

Based on this analysis, the Hai Phong delegate proposed that the State Bank develop and submit to the National Assembly a specific roadmap to gradually reduce and eventually eliminate the administratively allocated credit growth targets.

“Until complete elimination is achieved, credit target allocation should be stable, with mid-year adjustments minimized. Additionally, more credit institutions should be allowed to autonomously manage credit growth within a predefined ‘safety framework,'” she suggested.

How to Reorganize the Gold Market

Another notable issue highlighted by the delegate is the instability of the gold market. According to Nga, the State Bank has taken decisive actions in recent times, including increasing gold supply, auctions, business inspections, and amendments to Decree 24.

At times, the price gap between domestic and international gold has significantly narrowed. However, there have been periods when the price difference surged again, posing risks of speculation and market manipulation.

Nga noted that while the report details the measures taken, it fails to thoroughly analyze the root causes or outline a clear roadmap for reorganizing the gold market post-Decree 24 amendments. This reorganization should aim to reduce monopolies, foster healthy competition, prevent price manipulation, and ensure gold price fluctuations do not disrupt macroeconomic stability, as mandated by the National Assembly.

“Thus, the requirement of Resolution 173/2024 to ‘stabilize the gold market and prevent impacts on monetary stability and system safety’ has only been partially met, with sustainability remaining uncertain,” the Hai Phong delegate remarked.

Following the amendments to Decree 24, Nga urged the State Bank to promptly issue detailed guidelines and publicly announce the roadmap for reorganizing the gold market. This should ensure fair competition, reduce monopolies, and enhance transparency. Additionally, she called for research and reporting to the National Assembly on the feasibility of establishing a centralized gold trading platform with stringent management mechanisms, aligned with international standards.