Vietnam's central bank has ordered banks to limit lending to stock investors to 3 percent of their total outstanding debt, as part of measures to stabilise the fledgling but fast-expanding stock markets.
Commercial banks must reduce loans to stock investors to a maximum of 3 percent of total outstanding debt by Dec. 31 this year, the Vietnam News Agency on Friday quoted Nguyen Danh Trong, deputy director of the bank's monetary policy department, as saying.
Banks which are already under the 3 percent limit must implement the cap from July 1, the central bank ruled.
"Banks should review the risk associated with stock lending before making the decision to lend," Trong was quoted as saying by Lao Dong newspaper.
Trong said lending to stock investors by the overall banking system now stood at an average of 2.5 percent to total outstanding debt and there were about 12 banks which had exceeded the limit to about 7 percent.
"The big risk in stock investment is the loss of liquidity," Trong added.
The central bank said in its first-half review of the stock markets that total market capitalisation had jumped about 43 percent to $20 billion at the end of June from $14 billion recorded at the end of 2006.
The main Ho Chi Minh Stock Exchange index grew a massive 144.5 percent in 2006 and about 36 percent this year with a market capitalisation of about $14 billion.
Source: Reuters
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