Stop focusing loans on a few corporates, PM warns banks

By Anh Minh   December 7, 2023 | 07:13 pm PT
Stop focusing loans on a few corporates, PM warns banks
An employee counts Vietnamese banknotes at a bank in Hanoi. Photo by VnExpress/Giang Huy
Prime Minister Pham Minh Chinh has called on banks to stop prioritizing a few corporates for loans to reduce risks and increase other customers’ access to funds.

Speaking at a meeting with bank executives Thursday, he said: "Banks need to stop focusing their funding only on a few companies and their ecosystem. Besides, they must not provide loans at low interest rates to their own leaders."

His warning came in the context of one the biggest financial scams in Vietnamese history coming to light recently. Businesswoman Truong My Lan has been found to indirectly own a 91% stake in lender SCB by buying its shares in the names of 27 of her associates and going to obtain over 90% of the bank’s total loans over a 10-year period.

As of the end of November the banking sector’s credit growth was only 9% as against the year’s target of 14%. This means the remaining 5%, equivalent to VND700 trillion ($28.85 billion), needs to be disbursed this month.

The slow credit growth is a cause for concern because it shows that businesses still have difficulty accessing loans as credit policies have yet to "catch up" with market developments, Chinh said.

He instructed the State Bank of Vietnam to come up with solutions to ensure adequate funding for the economy and prevent corruption in the banking system.

New mechanisms should be trialed to enhance fintech and online lending activities, he added.

Banks need to be more transparent in publishing their lending criteria, he added.

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