A customer borrows at a Vietcombank's branch in Hà Nội. Banks must reduce the credit limit for a customer from 15 per cent to 10 per cent and for a customer and his/her related parties from 25 per cent to 15 per cent. — Photo cafef.vn

A new regulation on reducing the bank credit limit for large customers under the amended Law on Credit Institutions, will adversely affect both banks and large enterprises, experts said.

Under the law, which came into force on July 1, banks must reduce the credit limit for a customer from 15 per cent to 10 per cent and for a customer and his/her related parties from 25 per cent to 15 per cent, under rules heading up to January 1, 2029.

Specifically, over the next five years, the credit limit will be decreased by 1 per cent every year for a customer and 2 per cent for a customer and his/her related parties. Therefore, over its first year of implementation, the credit limit for a customer will fall from 15 per cent to 14 per cent and for a customer and his/her related parties from 25 per cent to 23 per cent.  

Nguyễn Thanh Tùng, general director of Vietcombank, said the new policy will not only put banks at risk of reducing outstanding loans, but also could cause large enterprises to struggle to access to bank capital.

According to Dr. Nguyễn Hữu Huân, the lecturer at HCM City University of Economics, banks, which have high outstanding loans for large customers, will have to reduce outstanding loans to such customers and find other customers to compensate.

Meanwhile, Huân said, large corporations must accept a reduction in outstanding loans. It means they will have to shrink business activities, or seek additional capital from other banks.

Tùng proposed for large banks, which have successfully controlled credit and liquidity risks, should have a special mechanism so that banks can promptly provide capital to the economy, specifically for large corporations.

To lighten the impact of reducing the credit limit on enterprises, Nguyễn Quốc Hùng, general secretary of the Vietnam Banks Association, suggested that banks should cooperate to co-finance projects.

A bank, whose customer has outstanding debt exceeding the regulated credit limit, needs to proactively invite other banks to participate in co-financing the customer’s projects, Hùng said.

If the project is good, it is possible to ask other banks to co-finance it, he said.

In addition, syndicated loans with the participation of more than one bank in managing and evaluating projects also help increase the transparency and efficiency of the projects, Hùng said.

Big banks have also promoted the provision of syndicated loans. Vietcombank, BIDV and VietinBank have recently cooperated to finance US$1.8 billion to build the Long Thành International Airport.

Hùng believes the five-year roadmap from 2024 to 2029 for banks to reduce credit limits is appropriate.

He expected that banks will unite to deploy lending so that all people and enterprises can have access to bank loans and there need be no fear of lack of capital for large projects. — VNS