State Bank of Vietnam Moves to Boost Lending
Following the global financial crisis of 2008, one of the biggest barriers to economic growth was restricted access to capital and finance. As banks became reluctant to lend, business leaders found it harder to borrow to invest in the growth of their companies or to tide them over during the downturn in consumer spending.
The so-called ‘credit crunch’ that followed put a handbrake on economic growth in countries around the world as banks and businesses alike adjusted to a reduced appetite for risk and a more cautious attitude to debt.
Though we are now in an altogether different economic climate, access to capital remains an important lever to unlock growth. For this reason, the State Bank of Vietnam (SBV) this month announced a new Directive urging banks and financial institutions to accelerate the availability of credit.
The SBV Directive encourages banks to lend to so-called ‘priority’ sectors, as per the guidance of the Government and the Prime Minister. On the other hand, it cautions against lending to riskier areas to avoid creating bad debts on their balance sheets.
The State Bank also advises financial institutions to streamline their procedures for granting loans, take advantage of new digital technologies, and develop a broader range of consumer finance products. This is designed to ensure that both investors and individuals have greater access to capital through a wider range of channels. Last, but not least, the SBV urges banks to provide full and accurate information about their financial products and services.
The Directive is designed to help the central bank achieve its credit growth target for 2024: The SBV is aiming for 15 per cent growth in credit provided to domestic and foreign banks in Vietnam in 2024.
APFL Partners has advised a wide range of international enterprises on structuring their investment projects and handling their capital markets transactions in Vietnam. We advise local and international clientele including banks, corporations, investment funds, and multilateral financial institutions dealing with transactions on the lender, borrower, issuer, or guarantor side as well as more sophisticated and innovative transactions.
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