Why did Bank Negara set all its credit targets at the beginning of the year?

The central bank has set the entire credit growth target at 15% from the beginning of the year, and its message is that commercial banks must be stricter, stronger, and more responsible. Banking and Finance Why did the National Bank set all its credit targets at the beginning of the year? Tuan Nguyen • {Published} Having set a 15% credit growth target at the beginning of the year, Bank Negara’s message is that banking trade must be fiercer, stronger and more responsible.

Different from previous years, the National Bank has achieved the overall credit growth target of 15% from the beginning of 2024 for the first time. This is a somewhat bold decision by the National Bank in providing capital to serve the economy.

According to the National Bank’s report, credit growth in 2023 will be 13.5%, which is a good number against the background of sluggish credit growth in the first three quarters of this year.

In 2024, if the economy is to absorb a credit growth of 15% over the previous year, it will require huge efforts from banks and enterprises. In addition, there are business environment factors.

At a press conference on January 3 to deploy the tasks of the National Bank, Fan Zhiguang, Director of the Monetary Policy Department, said that the National Bank issued a credit growth target to banks at the beginning of the year, and CITIC believes that difficulties will continue in 2024. Central banks in many countries have yet to cut interest rates, and the economy is likely to experience a slight recession. Global demand will decrease, resulting in reduced exports, which will have a huge impact on a highly open economy like Vietnam.

“As aggregate demand continues to decline in 2024, the SBV believes it is necessary to take measures to boost the economy and implement credit growth immediately from the beginning of the year in an attempt to boost aggregate demand. This is a positive, radical, and aggressive move by the National Bank to promote economic growth. One of the creative solutions.”

Things are on sale at more discounts than in previous years credit growth Since the beginning of the year, inter-bank interest rates have been at historically low levels, creating conditions for commercial banks to lower deposit and loan interest rates.

The credit growth target for 2024 is 15%. (Photo: Hoang Ha) Bank Negara Malaysia Deputy Governor Tao Mintu pointed out that the credit funds allocated at the beginning of the year must be lent to the right purposes and the right objects, rather than throwing away all the credit after allocating it. restrictions, backyard businesses have access to the banking ecosystem, while other sectors of the economy remain out of the spotlight.

Therefore, the National Bank will strengthen supervision of bank capital flows in 2024. This reflects objective transparency and there is no longer a claim mechanism in the granting of credit space.

Nguyen Duc Long, deputy inspector general of the banking watchdog, said that during the inspection and supervision process, if credit institutions are found to be lending to the wrong entities and for the right purposes, measures will be taken. deal with.

Mr Long also confirmed that Bank Negara is very interested in the issue of cross-shareholdings in credit institutions. During the inspection and supervision activities, the bank will also inspect the capital contribution and will deal with any violations found.

However, representatives from the inspection and regulatory agencies admitted that this is a relatively complex issue and it is very difficult to monitor and supervise.

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