Move must ensure sufficient credit capital for the economy and secure the system of credit institutions.

VIS Rating received Ministry of Finance approval for the provision of credit rating services in September and began operations on November 24.

Figures reveal that 12 banks have committed to cut rates from 0.5-3 percentage points per annum.

Money flows prioritized for areas such as agriculture and rural development, small and medium-sized enterprises, exporters, and supporting industries.

KB Securities Vietnam (KBSV) has said that if banks use up the new credit limit, then credit in the industry as a whole will increase about 13.2 per cent compared to the beginning of the year. Therefore, the State Bank of Vietnam (SBV) can loosen the limit again, from 0.5-1.2 per cent, to achieve the annual target of 14 per cent.

A recent banking report from VnDirect shows that the State Bank of Vietnam (SBV) has loosened credit limits on 18 banks. Sacombank now has the highest limit, at 4 per cent, followed by MB and Vietcombank with 3.2 per cent and 2.7 per cent, respectively. TPBank, Eximbank, and LienVietPostBank also received adjustments. The SBV prioritized banks with a healthy credit structure in extending limits. According to VnDirect, total credit growth is estimated at 13 per cent by the end of the year following this adjustment; close to the 14 per cent target set by the central bank.

Banks involved in handling poorly-performing credit institutions, reducing lending interest rates to support businesses and individuals, and controlling credit in potentially risky areas have all had their credit growth limits adjusted by the State Bank of Vietnam. According to the World Bank, Vietnam’s credit-to-GDP ratio is among the highest in the world; a warning to the country about the potential risk of macro instability.

According to Viet Dragon Securities (VDSC), with lending rates on the rise, tightening credit space may push rates even higher in the second half of the year. The State Bank of Vietnam could adjust its credit growth target to make it more in line with actual needs, and credit growth for the year as a whole could reach 16 per cent.

At a national conference on removing difficulties during the implementation of the 2 per cent interest rate support program, held on August 26, banks no longer proposed increasing the credit growth limit. Instead, difficulties raised this time mainly related to the identification of beneficiaries and lending conditions.

Dr. Can Van Luc, Chief Economist at BIDV, has said there are many positive factors enabling the State Bank of Vietnam (SBV) to open up credit space in September. These include liquidity in the banking system being fully under control. Medium and long-term capital flows are stronger, and the proportion of short-term and medium-term capital has improved markedly.