A clerk processes a transaction at a VietinBank branch in Quang Tri. Credit growth this year is struggling to exceed 10 per cent, below the anticipated rate of 12 per cent. — VNA/VNS Photo Danh Lam

HA NOI (Biz Hub)— Credit growth this year could fall short of annual targets, with banks unlikely to increase lending significantly by the end of the year.

The remark was made by Nguyen Hong Minh, director of the State Bank of Viet Nam's HCM City branch.

Speaking last week, Minh said credit growth would struggle to exceed 10 per cent, below anticipated rate of 12 per cent.

Banks present at the meeting expressed reluctance to lend out for fear of accumulating bad debts, the cost of legal proceedings to recall collateral and stagnant market conditions.

Spokespersons also said the legal process of handling mortgaged assets was complex and made debt recovery difficult task for lenders.

The deputy general director of ACB, Bui Tan Tai, said it usually took three to four years to resolve issues pertaining to mortgaged assets. Some banks even had to spend up to 10 years recovering assets from defaulted loans.

The process also varied according to different provinces with borrowers also able to use loopholes to delay the process for banks.

In northern Hai Phong Port City, a bank wanting to liquidate a house as a mortgaged asset must provide the homeowner with new residency before the liquidation can proceed, according to the Constitution, said Tai.

The director of the HCM City branch of Mekong Housing Bank, Tran Ngoc Thanh, also said that banks could not sell mortgaged assets themselves, as banks are dependent on local bureaucracies to complete the sale.

Banks also said the gloomy real estate market had prevented them from liquidating mortgaged properties. — VNS