Banking industry to remove credit quota policy from 2026

Banking industry to remove credit quota policy from 2026

Prime Minister Phạm Minh Chính has requested the State Bank of Vietnam (SBV) to develop a roadmap to pilot the removal of the credit growth quota regulation from 2026.

The central bank must ensure publicity, transparency and have a strict inspection and supervision mechanism to avoid systemic risks. Photo vietnambiz.vn

Under a newly issued direction on implementing solutions to promote growth, control inflation and stabilise the macro economy, the PM notes that the removal must be accompanied by a system of clear standards and criteria to classify credit institutions that have governance capacity, healthy operations and compliance with safety indicators in banking operations.

At the same time, the PM has also required that the management agency must ensure publicity, transparency and have a strict inspection and supervision mechanism to avoid systemic risks, ensure the safety of the credit system and the goal of controlling inflation.

The removal will replace the current administrative management tool with a market mechanism, with an aim to increase the transparency and health of the credit system.

The credit growth quota policy, which puts a cap on the credit expansion of each bank, has been maintained by the SBV since 2011, when Việt Nam’s economy was experiencing hyperinflation stemming from excessive money supply.

The tool was used to successfully control the quality of lending and ensure the safety of the banking system and macroeconomic stability.

However, experts say that after over a decade of implementation, this tool is currently inappropriate and is criticised for creating a ‘ask and give mechanism’, hindering people and businesses from accessing bank loans. Due to the quota system, even with a monetary surplus, banks cannot lend if they run out of their allotted credit quota.

Experts have so far also suggested that the SBV can choose the best commercial bank group to test the removal of the credit growth policy in its initial phase of implementation.

“The SBV can experiment with allowing about the 15-20 best banks to freely increase credit. The remaining banks will still have to apply the credit growth cap,” said Nguyễn Tú Anh, former director of the Centre for Economic Information, Analysis and Forecasting under the Central Economic Committee.

Under the newly issued direction, the PM has also requested the banking industry to strive to achieve the highest goals in an approved project on restructuring the system of credit institutions associated with bad debt handling in the 2021-25 period.

“In particular, it is necessary to focus on thoroughly handling bad debt, strictly controlling credit in high-risk areas and improving credit quality, limiting new bad debt,” the directive says.

In addition, the SBV is required to strengthen supervision and strictly handle violations such as manipulation, cross-ownership and lending to ‘backyard’ enterprises to ensure the safety of the banking system.

The PM has also directed to continue to reduce costs, simplify procedures, promote digital transformation, and prioritise credit for areas such as investment, export, digital economy and green economy.

“The SBV needs to soon complete the mechanism for credit programmes such as supporting young people to buy social housing and the VNĐ500 trillion package for investment in infrastructure, science and technology, and digital transformation,” the PM says in the dispatch.

Regarding credit in 2025, the Government has this week also requested the SBV to proactively adjust the credit growth target for 2025 in line with inflation and the annual GDP growth target of 8.3-8.5 per cent.

“The SBV must resolutely and proactively adjust the credit growth target for 2025 publicly and transparently to be in accordance with inflation and the GDP growth of 8.3-8.5 per cent, meeting the capital needs of the economy,” the Government states in Resolution No. 226/NQ-CP dated August 5, 2025 on growth target.

Besides, the SBV is required to direct credit institutions to control and direct credit to production and business sectors, priority areas, traditional growth drivers of the economy such as investment, export and consumption, and new drivers including science and technology, innovation, digital transformation, digital economy, green economy, circular economy and social housing.

The SBV must carefully prepare monetary policies for the last months of 2025 and 2026, and report to the Government Standing Committee before August 20, 2025. 

Bizhub