Central bank calls for tightening credit for property and securities

The State Bank of Vietnam (SBV) has asked credit institutions and branches of foreign banks to tighten their loans for property and securities so as to ensure operational safety and minimise risks.

Central bank calls for tightening credit for property and securities

The request came as the central bank has detected some signs of potential risks at some credit institutions through the monitoring of their operation in 2020.

Specifically non-performing loans on the balance sheet were on an upward trend compared to the end of 2019 and the bad debt ratio of some consumer finance companies was at a high level and increased at a faster rate than the previous year.

At the same time, credit to the property sector still accounted for a significant part of total outstanding loans while investment on corporate bonds for construction and property trading made up a major share of total investment in corporate bonds.

In its directive, the SBV asked credit institutions to strictly control the concentration of loans regarding some big customers and large-scale property projects.

The central bank also asked banks to strengthen the appraisal process, take risk prevention measures and proceed with caution when providing loans to high-risk property projects and in localities with a land craze.

For securities, banks were requested to curb the growth of credit to securities trading and comply with regulations on the conditions and limits of credit for investing in stocks and bonds, as well as other applicable regulations.

At the same time, banks should continue to actively deal with bad debt and make provisions for dealing with risks in their operation.