HCMC – Vietnam’s central bank has said it has no policy to restrict commercial banks from lending to the real estate sector.

Deputy Governor of the State Bank of Vietnam Dao Minh Tu said at a meeting yesterday between the SBV and real estate firms that just some segments of the housing market had been restricted from borrowing because of potential risks.

Commercial banks still make loans available for property firms with feasible projects and business plans, he said, adding the real estate sector still accounted for more than one fifth of outstanding loans in the banking system in 2022.

Data from the central bank showed real estate loans grew over 24% last year, which was higher than other sectors.

Total outstanding loans for the real estate market amounted to a five-year high of VND2,580 trillion in late 2022, accounting for 21.2% of the total in the banking system, said Ha Thu Giang, head of the SBV’s Credit Department.

The current credit crunch was attributed to the large loans given to the real estate sector in the first half of 2022, leading to banks using up their credit quotas in the second half.

The corporate bond market crash put an additional strain on the banking system, as companies in need of capital switched to bank loans, a banker said.

However, lenders failed to meet their demand as they had to provide loans to other sectors with lower risk and monitor money supply and inflation concern.