PM orders control over capital poured into property sector

Prime Minister Pham Minh Chinh has asked the State Bank of Vietnam (SBV) to closely control the capital injected into the real estate sector to prevent property speculation and ensure that property projects meet the demands of residents.

PM orders control over capital poured into property sector
Prime Minister Pham Minh Chinh speaks at a meeting with the State Bank of Vietnam. - Photo: VGP

At a meeting with the central bank, the Government leader said SBV must control loans so that they are used for proper purposes, focusing on production. Besides urgent solutions, SBV should work out long-term solutions to develop the local financial market, the local media reported.

The currency and capital market must be balanced to reduce pressure on credit institutions and meet the medium- and long-term capital mobilization demands of the economy, Chinh added.

According to statistics from SBV, as of mid-March, outstanding loans for the real estate sector grew 2.13%, higher than the overall credit growth of 2.94%.

Amid the huge capital poured into the real estate and securities sectors, SBV Governor Nguyen Thi Hong said the central bank had employed some control solutions, such as reducing the short-term capital for medium- and long-term loans and raising the risk coefficient.

Hong added that the growth of credit in the real estate sector has slowed down and the outstanding loans for securities have made up a small proportion of the total outstanding loan. In addition, banks’ investment in corporate bonds has also been small.

Hong also pinpointed some new challenges facing the banking sector. For example, the outstanding loan to the country’s gross domestic product has exceeded 140%, one of the highest in the world. If the ratio continues rising, the banking sector will find it hard to balance capital. 

In addition, bad debts tend to increase due to the impact of Covid-19. SBV also faced difficulties in dealing with banks which had been earlier acquired at zero Vietnamese dong and developing digital banking services due to the lack of legal corridors in peer-to-peer lending and e-money and digital money management.

 

Therefore, Hong proposed the Government issue policies to encourage innovations and deal with risks.

In response, PM Chinh said SBV should prioritize addressing some issues first and come up with solutions for hard jobs.

He hailed the central bank for its efforts to help remove Vietnam from the list of currency manipulators, saying that SBV should continue working with the U.S. side to ensure harmonious and sustainable trade relations between the two countries.

As for the restructuring of the banking system, Chinh stressed the job should be conducted in a drastic manner but must ensure the safety of the system. SBV should also come up with solutions to reduce bad debts.

The central bank was also assigned to use monetary policies to control inflation, stabilize the macroeconomy, support the economic growth and create confidence among residents and investors. The banking system must also cut expenditures and create conditions for residents and enterprises to access loans but must not lower requirements for borrowers.

SGT

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