VietNamNet Bridge – The State Bank will continue applying the “quota mechanism” in 2013 in an effort to control the credit growth of the national economy.

15 percent or 17 percent?

Credit growth and GDP growth are the hottest issues being discussed at the ongoing National Assembly’s session.

According to Tran Van Tan, head of the Credit Division of the State Bank’s Credit Department, the lending has increased again, though the increase remains slight. By September 30, 2012, the credit growth rate of the whole banking system had reached two percent.

Tan believes that in 2013, though economists still have predicted big difficulties, the State Bank would still try to control the credit growth rate at 15-17 percent.

Can Van Luc, a well-known finance expert said Dau tu that it’s too early to fix the credit growth quotas for commercial banks for 2013. However, if the government strives to obtain the GDP growth rate of 5.5 percent, the 15-17 percent credit growth rate would be reasonable.

International experts have agreed that for a developing economy like Vietnam, the credit growth rate which is triple the GDP growth rate would be “acceptable” with which the national economy would not see overly hot development.

“Of course, the 15-17 percent credit growth rate should not be considered a must. The 5.5 percent GDP growth rate target would still depend on many other factors, rather than the capital to be pumped into the national economy,” he said.

The GDP growth rate would still depend on the capital efficiency and non-bank capital sources. Experts have been sure that the credit growth rate of the year would be 7-8 percent in 2012 only, but the GDP growth rate would still be five percent. This has been explained partially by the high public investments and exports, and partially by the effective use of the capital.

Meanwhile, many experts think that 2013 would not see any considerable improvement in the credit growth because of the continued economic difficulties.

Dr Trinh Quang Anh, Director of the Economics research Center under the Maritime Bank, said that he cannot see any possibility of a breakthrough to be made in 2013.

“The credit has been growing very slowly with the modest growth rate of two percent so far. The disbursement would not get better until the bad debts are settled and enterprises’ capability of using capital is improved,” Anh said.

Bad debt process would decide credit quotas

Tan from the central bank said that the bank would impose credit quotas on every bank, instead of fixing a common quota for all the banks.

Especially, he said that the credit quotas would be defined by the central bank after considering the debt settlement results of the banks.

However, the principle has raised controversy. Deputy General Director of a joint stock bank said it would be not to allocate quotas differently to every bank.

He said that the central bank should learn the lesson from the currently applied mechanism. Since mid 2012, the central bank “loosened” the control over credit growth, allowing some banks to increase their ceiling credit growth rates. As a result, some “questionable” banks have also been allowed to push up lending.

“This would lead to the fact that banks would lose their confidence on the state bank’s policies,” he warned.

Luc agrees, saying that different quotas would be given to different banks. In fact, the quota allocation does not have much significance in 2012, because the actual growth rates are much lower than the allowed levels.

Therefore, Luc believes that it would be better to allow banks to push up lending and obtain the credit growth rates suitable to their capabilities.

Compiled by C. V