In practice, annually, the State Bank of Vietnam (SBV) allocates annual credit growth limits to each credit institution including the finance company. However, the SBV’s allocation for each credit institution is not publicly available. Each credit institution will be subject to different credit growth limits. Based on newspaper reports, it appears the SBV takes into account the financial status of each credit institution, targeted inflation rate and targeted GDP growth rate to make the decision. In September 2022, it was reported that the SBV should use its ranking system to decide to allocate credit growth limits to each credit institution.

The planned credit growth limit for a year can be adjusted by the SBV during that year based on the assessment of the operation status and liquidity of each credit institution, as well as other development policies.

There is no specific law that sets out the scope and principles of how annual credit growth limits are set and allocated by the SBV. The power of the SBV to set the credit growth limit seems to be based on the Law on SBV 2010. In particular, the SBV is authorized to implement the national monetary policy. Imposing a credit growth limit could be viewed as implementing monetary policy. However, technically, the imposition of the annual credit growth limit is contrary to the Investment Law 2020 which provides that the State will not require investors to be subject to limits on the production of goods and services. In addition, under the Competition Law 2018, a State agency is not allowed to request or recommend a company to supply or not supply goods and services unless the goods or services are subject to State monopoly or in case of emergencies.

This post is written by Nguyen Quang Vu.

Vietnam Business Law