Nine banks face punishments for high credit ratio

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Nine commercial lenders have failed to cut back credit to non-manufacturing sectors by June 30 and will be punished with higher reserve requirements, the State Bank of Vietnam said last week.

Central bank governor Nguyen Van Giau said the lenders, including five partly private banks and two foreign bank branches, did not limit credit to non-production businesses at 22 percent of total loans as required. He did not provide the names of the banks.

The central bank will double reserve requirements for these banks starting this month, Giau said.

The current reserve ratio on non-term foreign currency deposits and on those with terms of up to 12 months is 7 percent. The ratio on non-term dong deposits is 3 percent.

Giau said doubling reserve requirements for the nine lenders will not have any impact on liquidity of the banking system as a whole.

He said the banks, however, did not exceed the 22 percent limit by much and they can easily bring the credit down to that level in August. The central bank will cut the reserve requirements if they manage to do so, he said.

The State Bank of Vietnam in March 1 ordered all lenders to restrict non-manufacturing credit at 16 percent by the end of the year. It targets annual credit growth of 20 percent for 2011.

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