Credit institutions, including foreign bank branches, which have highbad debts or violate the regulations on capital contributions or sharepurchases from other ventures, will have their credit growth restricted,according to a circular from the State Bank of Vietnam.
Under Circular 10/2012/TT-NHNN, issued by the State Bank on April 17,credit institutions which have had minimum capital adequacy ratios lowerthan 8 percent for six consecutive months won't be allowed to expandtheir credit.
Also, commercial banks whose bad debts goabove 10 percent of their total outstanding loans for three consecutivemonths will have their credit growth rates lowered. They will also bebarred from expanding their lending operation.
Bankswhich violate regulations on investment in fixed assets might be appliedcapital adequacy ratio higher than the regulated rate.
Credit institutions that violate three times in a fiscal year won't beallowed to expand their operations for six months of the followingfiscal year.
The circular will come into effect from May 30.
The State Bank reported that credit shrank by 1.96 percent in the firstquarter of the year compared with the end of last year.
Of this, the proportion of outstanding loans to discouraged sectorsreduced from 11.02 percent at the end of last year to 10.77 percent bythe end of February.
By March 26, total money supplies were estimated to have increased by 1.06 percent in comparison with the end of last year.
During the first quarter, total deposits rose by 1.39 percent.
During the same period, the lending interest rates of loans made foragriculture, rural development and exports ranged from 14.5 percent to16 percent per year. The lowest rate was 13.5 percent applied forcorporate customers committed to selling foreign currency revenues tobanks.
Rates for the production sector were commonly set from 15 percent to 20 percent per year.
The non-production sector was offered rates from 20 percent to 25 percent.
The overnight interest rate in Vietnamese dong was set at 8-9 percenton the inter-bank market. Meanwhile, one-week, two-week and one-monthterm rates were 9-10.5 percent, 10-11.5 percent and 12-13 percent,respectively.-VNA