Mar 2, 2012

Vietnam - SBV should directly pump capital for real estate market



Statistics from the State Bank of Vietnam (SBV) showed that till the end of 2011, the proportion of non-production loans of the entire banking system was at 11.3 percent, even exceeding 16 percent in some cases but the central bank came out with timely control measures.

Property loans decreased from 10 percent to 9 percent and the property loan growth rate also declined to 15 percent.

In 2012, the central bank still limits loans for non priority sectors (securities, real estate and consumer) at no higher than 16 percent, which indicates that the "room" for real estate loans almost depletes.

Do Minh Toan, deputy general director of Asia Commercial Joint Stock Bank (ACB) said that currently ACB is limiting property loans except home loans for staying purpose.

The bank does not lend for project development.

Tran Hoang Ngan, member of the National Assembly, suggested that to activate the real estate market, the central bank should directly pump capital to create liquidity for the market. The capital injection may be at 50 percent of the total outstanding loans for real estate with duration of three years.

However, the central bank should require commercial banks receiving these capital flows but they are disallowed to increase the total outstanding debt but debt settlement only.

These commercial banks will resolve liquidity problem and repay for to people to avoid taking the advantage of the amount of capital pumped by the central bank to continue to invest in real estate.

Currently, the total deposits of the commercial bank system are mainly for terms of 3-6 months while real estate credit is often medium and long terms of about 5-10 years.

This year, the central bank will give requests on restructuring the total deposits and lending. Commercial banks will continue to tighten medium and long term loans and give priorities for short term loans. Thus, real estate credit will be unlikely to have high growth.

VietBiz24



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