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Vietnam Banks' bad debt stands at 3pct but still in check: deputy Governor    
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Local banks bad debt ratio has hit 3 percent from previous 2 percent, and in the worst case it will climb up to 5 percent this year, however, the situation is still under control, said Nguyen Van Binh, the State Bank of Vietnam's deputy Governor at the mid-term Consultative Group (CG) meeting 2011 held in Ha Tinh.

The information came out after some donators showed concerns over the health of the credit system after repeated economic crisis.

"It's not true when saying that Vietnam's credit system was not affected by the past economic crisis. However, Vietnam's credit system currently is quite healthy and capable of contributing to the country's economic growth", the deputy Governor said.

To control the situation, the central bank will strictly curb credit growth of the whole banking system at below 20 percent in 2011 at first and investigate the banks with too rapid credit growth.

In case the banks' liquidity improves, the SBV is willing to issue compulsory bonds to withdraw cash to the system by that time, Binh said, showing his optimism that the liquidity will be improved "considerably" in the near future as a result of the SBV's consistent measures.

Deposit interest rates should range between 15 percent p.a. and 16 percent p.a., resulting in reasonable lending interest rates of about 17-19 percent p.a., Binh said, adding that the SBV has taken actions to achieve this "reasonable level of interest rates".

Preliminary results of the central bank's policies have raised the belief that Vietnam will likely reach this goal in 1-2 years, he noted.

Source: intellasia Interactive

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