Vietnam Central Bank Governor Urges Diversification Beyond Bank Loans for Large Projects

Governor Pham Duc An of the State Bank of Vietnam has urged a diversification of funding sources for large-scale, long-term projects, moving beyond sole reliance on bank loans to incorporate equity, public investment, public-private partnerships (PPP), and official development assistance (ODA). Speaking at the conference on "Mobilizing Financial and Banking Resources to Serve Hanoi's Economic Growth Period 2026-2030" on September 12, Governor An stated that while bank credit is a crucial resource, it cannot and should not be the sole source of capital for all development needs. For projects of significant scale and long lifecycles, a balanced structure between equity, credit, public investment, PPP, and other legal resources is essential. This diversified approach, he explained, enhances project sustainability and reduces maturity pressure on the banking system. For businesses, access to capital is contingent on their management capacity, financial transparency, equity, and cash flow quality. The Governor recommended that Hanoi and its businesses continue to diversify medium and long-term financial resources, utilizing tools from capital markets, bonds, green finance, and ODA, thereby reducing dependence on a single capital channel. "The more complete the legal framework, clear the progress, and defined the financial plan for a project, the more basis credit institutions will have to appraise and decide on rapid funding," Governor An noted. Recently, regulatory bodies have introduced policies to expand banks' lending capacity for large projects. These include proposals to increase lending limits to up to 52% of equity for certain Hanoi projects and to exclude loan balances for specific projects by Vingroup, Sun Group, and Masterise from annual credit growth targets. As of August 28, the total outstanding credit across the system reached approximately VND 20.5 quadrillion, a 10.24% increase from the end of 2025. Around 77.3% of this credit serves the production and business sectors. Hanoi alone hosts 165 credit institutions with over 2,000 transaction points, accounting for more than 37% of total capital mobilization and about 31% of the entire economy's outstanding loans. In the first eight months of the year, credit in Hanoi increased by 13.05%, surpassing the overall system's growth rate. Since late last year, the State Bank of Vietnam has reported high credit growth rates. By the end of 2025, Vietnam's credit-to-GDP ratio stood at 146%, the highest among lower-middle-income countries. Governor An emphasized that unlocking capital requires synchronized coordination among regulatory bodies, local authorities, banks, and businesses. He instructed the State Bank of Hanoi Branch to closely monitor capital mobilization, credit growth, interest rates, non-performing loans, and capital absorption in the region. The branch is also tasked with collaborating with Hanoi to review the capital needs of key programs, construction works, and projects. Issues must be clearly categorized as either credit-related or belonging to other domains to ensure they are directed to the correct agencies, preventing businesses from facing excessive bureaucratic hurdles.