There is no clear legal basis for regulating the annual credit growth of Vietnamese financial institutions

In fact, every year the State Bank of Vietnam (SBV) sets annual credit growth targets for each credit institution, including finance companies. However, the SBV’s allocation to each credit institution is not publicly disclosed. Each credit institution is assigned a different credit growth target. Based on information in the media, it appears that the SBV considers the financial condition of each credit institution, the target inflation rate, and the target GDP growth rate when making its decisions. In September 2022, reports indicated that the SBV would use its own rating system to determine the allocation of credit growth targets for each credit institution. The projected annual credit growth target may be adjusted by the SBV during the year based on an assessment of each credit institution’s operational performance and liquidity, as well as other development policies.

There is no specific law defining the scope of regulation or the principles governing how the State Bank of Vietnam (SBV) sets and allocates annual credit growth targets. The SBV’s authority to establish credit growth limits appears to be based on the 2010 Law on the State Bank of Vietnam. Specifically, the SBV is authorized to implement national monetary policy. The imposition of credit growth limits may be considered the implementation of monetary policy. However, in principle, the application of annual credit growth limits is contrary to the 2020 Investment Law, which stipulates that the State shall not require investors to be subject to production limits on goods and services. Furthermore, under the 2018 Competition Law, state agencies are not permitted to require or request a company to provide or refrain from providing goods or services, except when such goods or services fall under state monopoly or in emergency situations.