End of the line for loan hopefuls as banks exhaust credit quotas

Hoang Nam of Hanoi wanted a mortgage recently and was confident he would get the loan since he was buying the apartment to live and not to speculate, but every bank he approached turned him down.

"We are approaching our credit ceiling and cannot give loans," they told the 30-year-old media employee.

Another Hanoi resident, Xuan Bach, wanted to buy a used car, but even banks that advertise they disburse loans in 24 hours are turning down his application.

Employees at several banks said the credit cap is keeping many borrowers waiting since they could get a loan only when other borrowers repay.

Some banks have told their employees to stop accepting new loan applications.

Property developers have repeatedly said they cannot borrow from banks and so lack money to work on their projects for the rest of this year.

The State Bank of Vietnam has set a credit growth cap of 14 percent this year and allocated banks quotas as it seeks to keep inflation under control.

Often in the past it has revised upwards the quotas in the middle of the year, but with the credit growth rate of 9.35 percent this year being the highest in a decade, it has desisted this year.

Lenders like Vietcombank, BIDV, MB, ACB, VPBank, and Shinhan have all said they are closing in on their credit ceiling.

The head of a bank who asked not be identified said with the 7 percent credit cap nearly reached, the bank is waiting for a revision by the central bank and is selective about giving new loans, filtering out consumption and securities-linked loans to prioritize other sectors.

Economist Can Van Luc said the central bank has to ensure there is liquidity in the economy to achieve the government’s two-year recovery plan.

"The State Bank of Vietnam needs to make a more detailed analysis of the inflation to take appropriate action."

While the government should not be reckless with inflation, it needs to make sure there is enough credit for public disbursement, he added.