Banks want caps on lending growth enlarged

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With inflation barely contained yet, Vietnam's partly private lenders are already asking the State Bank of Vietnam to raise their credit-growth cap for this year, though they have barely been lending as the central bank seeks to combat inflation with policy tightening.

Trinh Van Tuan, chairman of Ho Chi Minh City-based Phuong Dong Bank, said his bank has sought to increase the growth cap to 25-30 percent from the original 15 percent, news website VnExpress reported Monday.

The bank's credit growth in the first seven months was a mere 1 percent.

HDBank, another city-based lender, has asked for a rise from 10 percent to 17 percent, chief executive Nguyen Huu Dang said.

Credit had expanded by 8-9 percent in the first half, he said.

In February the central bank classified local lenders into four groups depending on their health, and fixed credit growth caps of 17 percent, 15 percent, 8 percent and 0 percent for them.

On August 10 Hanoi-based TienPhong Bank announced that its cap has been increased to 27 percent, the first bank to get permission to breach the earlier cap.

Its CEO, Nguyen Hung, said he was confident of growing credit by 27 percent since the bank has existing clientele to lend to.

"Allowing credit growth at 27 percent proves that the central bank must have believed in the ability of partly private banks," he said.

The central bank has also hiked the cap for others.

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Hanoi-based Ocean Bank Monday said its new limit is 27 percent, while Military Commercial Joint-Stock Bank was allowed to expand loans to 25 percent.Nguyen Thi Hong, head of the State Bank of Vietnam's Monetary Policy Department, told news website VnEconomy that increasing the caps to 25-27 percent is appropriate considering the extremely low credit growth overall.

But Le Xuan Nghia, a member of the National Financial and Monetary Policy Advisory Council, warned that speeding up credit growth in the last couple months could lead to high inflation at the end of the year.

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