Wednesday, 20/08/2025
   

Prime Minister requests urgent removal of credit growth cap regulation

Prime Minister Phạm Minh Chính on Thursday requested the SBV to promptly remove the regulation on assigning a credit cap to each commercial bank.

Prime Minister Phạm Minh Chính on Thursday directed the State Bank of Vietnam (SBV) to urgently consider removing the credit growth cap regulation imposed on commercial banks and replacing the administrative management tool with a market mechanism.

Prime Minister Phạm Minh Chính speaks at the meeting.

At the Government’s regular meeting, the PM requested the SBV to promptly remove the regulation on assigning a credit cap to each commercial bank. Instead, the SBV needs to shift its management to a market mechanism and develop a set of criteria for credit safety control and report it to the Prime Minister this month.

The credit growth quota policy, which puts a cap on the credit expansion of each bank, has been maintained by the SBV since 2011, when Việt Nam’s economy was experiencing hyperinflation stemming from excessive money supply. The tool was used to successfully control the quality of lending and ensure the safety of the banking system and macroeconomic stability.

However, experts said that after over a decade of implementation, this tool is currently inappropriate and hinders people and businesses from accessing bank loans. Due to the quota system, even with a monetary surplus, banks cannot lend if they run out of their allotted credit quota.

Experts suggest the SBV can choose the best commercial bank group to test the removal of the credit growth policy in its initial phase of implementation.

“The SBV can experiment with allowing about the 15-20 best banks to freely increase credit. The remaining banks will still have to apply the credit growth cap,” suggested Nguyễn Tú Anh, former director of the Centre for Economic Information, Analysis and Forecasting under the Central Economic Committee.

However, Anh noted, testing the removal of the credit growth cap needs to be strictly controlled, because when the restriction is removed, the competitive environment between banks will become more intense. This will create motivation and encourage banks that are unable to freely increase credit to improve their governance quality and operational efficiency, so that they can join the group.

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