HÀ NỘI — The expansion of the banking sector must go hand-in-hand with quality as it is entering a new phase, Prime Minister Lê Minh Hưng said at a meeting on Thursday.

At the meeting with the State Bank of Vietnam (SBV) and credit institutions, the PM said besides just focusing on expansion, the sector must become safer, more efficient and more modern.

"Credit growth must be balanced with risk control; digital transformation must be coupled with data security; and international integration must be matched by governance capabilities that meet international standards," the PM said.

The PM noted that the SBV’s monetary policy management must ensure the goals of controlling inflation, maintaining macroeconomic stability, safeguarding major economic balances and system safety and supporting double-digit economic growth.

He emphasised the need for proactive, flexible, safe, and effective management of interest rates, exchange rates, and credit in alignment with established goals.

Notably, he said, the banking sector must share the burden with the public and businesses through concrete measures to stabilise deposit interest rates, lower lending rates, channel credit to the priority sectors to foster growth, and strictly control risks.

The PM also required the SBV to maintain its benchmark interest rates and boost market liquidity to help credit institutions access low-cost capital.

At the meeting, the SBV said that it will allocate 2027 credit growth quota for commercial banks based on their interest rate reductions. The banks failed to comply with the SBV's directives and raised rates to draw in deposits and edge out the competition, resulting in the credit quota reduction for next year.

According to the SBV, given the economy's continued heavy reliance on capital from the banking system, it has made significant efforts to manage monetary policy and interest rates.

However, with increasing inflationary pressure and limited room for controlling inflation according to the Government’s targets, the average monthly CPI in the remaining months of 2026 must increase by only about 0.34 per cent.

The banking sector must pursue multiple targets at the same time: meeting capital needs to support economic growth, controlling inflation, reducing interest rates and stabilising the foreign exchange rate.

A large gap of about VNĐ2 quadrillion (US$75.8 billion) between credit and raised capital is posing potential risks related to liquidity and interest rates, and is threatening the banking system's operational safety.

According to the SBV, interest rates will continue to face significant pressure in the next few years.

This is due in part to a rise in deposit and lending interest rates, which have been increasing since the end of 2025 and are expected to continue their upward trajectory.

Credit demand for production, business and consumption is also expected to expand in the next few years to help meet the Government's double-digit growth target. Meanwhile, the increase in raised capital across the entire banking system remains lower than credit growth.

At the same time, domestic inflation is trending upwards, further increasing pressure on interest rates.

Central banks around the world have adjusted their interest rates upwards or continue to maintain high interest rates as well.

The SBV said it will continue directing credit institutions to manage interest rate levels in line with market trends, balancing the ability to attract deposits with reasonable lending rates, and will encourage institutions to share benefits and lower lending rates to support customers.

The central bank also said it will conduct inspections and increase supervision of deposit and lending rates, while strictly penalising violations related to interest rates and unhealthy competition in deposit mobilisation.

Based on credit institutions' compliance with the SBV’s directives on lowering interest rate levels, the central bank will allocate 2027 credit growth quotas by reducing room for institutions that fail to properly carry out instructions.

At the same time, the SBV will continue to closely monitor global and domestic economic developments and manage monetary policy in a proactive and flexible manner. It will coordinate closely with a reasonably expansionary and targeted fiscal policy, as well as other macroeconomic policies, to control inflation, maintain macroeconomic stability and support sustainable economic growth.

The SBV will also continue to manage open market operations flexibly, remaining aligned with monetary policy objectives and maintaining appropriate policy interest rates to support credit institutions.

It plans to refinance credit institutions to support liquidity, lend to programmes approved by the Government or the Prime Minister, and support the restructuring of credit institutions and the resolution of bad debts.

According to the SBV, it will carry out credit measures aligned with macroeconomic conditions, inflation, money market developments and the economy's capital absorption capacity.

It will also continue to roll out support measures and create favourable conditions for commercial banks to extend loans for rental housing, small and medium-sized enterprises operating in priority sectors and key projects with significant spillover effects. — BIZHUB/VNS