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Strict management for areas with high credit risk

Strict management for areas with high credit risk


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Money counting activities at a joint stock commercial bank in Bien Hoa city.

The State Bank of Vietnam (SBV) has just sent an official dispatch to credit institutions and foreign bank branches requesting strict control of credit related to loans for real estate business, securities, BOT projects, corporate bonds... to ensure operational safety and limit risks.

According to the State Bank of Vietnam, Dong Nai branch, by the beginning of March, 2021, the outstanding loans for real estate investment and business of credit institutions in the province reached about VND 43.2 trillion, account 17.5% of total of loan balance; outstanding loans for BOT, BT projects... was about 3.3 trillion VND, account 1.35% of total of outstanding loans.

Real estate credit has two main areas. Firstly, credit to areas where real estate traders, real estate speculation or high-end market segments, projects where the liquidity and efficiency of real estate investment in future are not high. These are subjects under strict and limited control by the State Bank, with direct or indirect sanctions against credit institutions. The State Bank of Vietnam requires credit institutions not to provide credit for capital needs for speculation or implementation of high-risk projects.

Second, the areas of investment to help the liquidity of commodity products are real estate consumption such as houses for low-income people or the segment of the low-priced houses, commercial nature for consumption, the needs of the people. This part is still assigned to commercial banks to deploy.

Mr Pham Quoc Bao, Deputy Director of the State Bank of Vietnam Dong Nai branch said that real estate, BOT projects, stock investment ... have potential risks so the branch will regularly monitor and warn credit institutions, monitor the situation of credit granting for the real estate sectors, especially strengthen the inspection, examination and supervision of credit granting activities in the above fields for timely handling.

In addition, the branch continued to strengthen inspection and supervision, promptly issued written warnings to credit institutions about the handling of bad debts, potential debts into bad debts; credit extension activities for potential high-risk fields such as stosk, real estate, consumption, BT, BOT projects... Continue to closely monitor and supervise investment and purchase, sale of corporate bonds situation, cross-holding of stock  between credit institutions, the situation of credit granting to big customers, customers with outstanding loans at many credit institutions...​​

Author: Phan Anh

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