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Promoting credit expansion needs to go hand in hand with safety and health. Source: Internet.

Credit flows must be made more efficient

In 2023, credit growth will reach about 13.5%, although it has not yet reached the target set by the State Bank of Vietnam (SBV), but it is also a number that shows the efforts of the entire banking industry in promoting credit capital, because for most of 2023, credit is very "sluggish", becoming a disease of "excess money" at banks. Although credit has accelerated again in the last months of the year as expected, we must also look back at the limitations of 2023 to calculate more reasonable capital flows for 2024.

Accordingly, the most notable thing is that from the end of 2022 throughout 2023, the "health" of the business is extremely weak. The world economic context maintains high inflation, weakening demand among the population, affecting supply, which is also the orders of export businesses. Domestic consumption was also affected and weakened. That's why many businesses "complain" that even if they have money, they don't know how to spend it, because inventory is high or raw material prices are high, so buying into production also incurs losses.

Also because businesses are facing difficulties and their business is in danger, banks are even more cautious in approving loans, especially when the pressure of bad debts is becoming more and more tense and greater than in previous years. So even though interest rates continue to decrease and many preferential credit packages are continuously launched, businesses are not interested in borrowing capital, making it difficult to launch more credit.

In such a context, by 2024, credit flows must be improved in a more effective direction. The State Bank is targeting credit growth in 2024 of about 15%, with adjustments appropriate to developments and the actual situation. Even in the first days of the year, the monetary management agency assigned the entire credit growth target (room) of 15% to banks. This mechanism is completely different from the rule of previous years, when the State Bank often divided the credit "piece of cake" into parts and would consider increasing room for each bank in batches during the year.

Explaining this move, according to Mr. Pham Chi Quang, Director of the Monetary Policy Department, State Bank (SBV), the difficulties of the economy in 2023 will continue in 2024, because many central banks Large companies still maintain interest rates at very high levels, the possibility of an economic recession can still occur, which can affect aggregate demand, import and export while Vietnam is a highly open country. Therefore, Mr. Quang said, with these difficulties, the State Bank realizes the need to immediately assign credit growth limits to try to boost aggregate demand and promote growth. Thus, right from the beginning of the year, the State Bank has provided enough capital, promptly promoted legal needs, and promoted the spread of capital into the economy.

Safe and diverse capital flows

The direction and tasks given by the State Bank in credit management in 2024 are to be proactive, flexible, consistent with macroeconomic developments, inflation, and meet the capital needs of the economy. Therefore, the State Bank said it will continue to direct credit institutions to direct credit to production and business areas, priority areas and growth drivers (investment, consumption, export) according to the policy. Government policy; Strictly control credit in potentially risky areas. The State Bank also requires credit institutions to create favorable conditions for businesses and people to access bank credit capital, remove and promote the expansion of consumer credit coupled with safety and health, contributing to limit "black credit".

But of course, credit growth, whether strong or weak, must always go hand in hand with safety. The lesson on credit management and granting credit to "backyards", ecosystems like that of Saigon Commercial Joint Stock Bank (SCB) is too great, so this is also an issue that Government leaders and the State Bank of Vietnam pay special attention to. attention in credit management now and in the future. Deputy Governor of the State Bank Dao Minh Tu stated that in 2024, credit capital flows will be closely monitored, credit will be controlled in the "backyard" or ecosystem, and capital will be concentrated in some corporations and some fields. In addition, experts also draw attention to the banking industry on the issue of controlling bad debts, as well as strengthening and perfecting the legal basis for handling bad debts.

However, according to the World Bank's (WB) scoring scale, Vietnam is being warned that the country has the highest credit/GDP ratio in the group of low-middle income countries. According to Moody's and Fitch Ratings, Vietnam has the highest domestic credit/GDP ratio among countries with Ba2 and BB+ ratings. Therefore, experts have repeatedly recommended the diverse and healthy development of the capital market, with the expectation that the stock and corporate bond markets will continue to recover in 2024, promoting capital flows in the medium and long-term capital for businesses.

On the other hand, the efforts of the banking industry or the entire financial market are not enough. For capital flow to be effective, all parties must participate. Deputy Governor of the State Bank Dao Minh Tu said that businesses as well as other ministries and branches must make the economy vibrant for credit to increase; Businesses also have to boldly borrow capital because businesses are still saying "don't want to borrow". In addition, experts and businesses also suggest synchronously implementing many solutions to stimulate aggregate demand with policies on tax reduction, consumption stimulus packages, market stabilization..., ensuring the supply chain. Circulation response... so that businesses operate effectively from credit capital flows.