HANOI -- Vietnam's central bank said on Monday it had raised its 14% cap on the local banking system's credit growth for this year by 1.5-2.0 percentage points.
The move comes after the local property and financial markets have faced a credit crunch over the past weeks following increases in the central bank's policy rate.
The State Bank of Vietnam said in a statement banks with good liquidity and offering low interest rates will be eligible for an increase in their credit growth.
"These are flexible measures for the time being," the central bank said.
The central bank said it would closely monitor the situation, especially inflation, to prepare monetary policies for next year.
Vietnam has one of the fastest growing economies in Asia, backed by strong manufacturing and robust exports. Its economic expansion also relies heavily on strong credit growth.
The economy has rebounded from the COVID-19 pandemic, but has recently faced numerous challenges. Weaker global demand and a strengthening U.S. dollar has prompted the central bank to raise its policy rates by a total of 200 basis points and allow the dong currency to weaken against dollar.
The rate increases, coupled with the government's move to tighten rules on corporate bond issuance and restrict their refinancing, have left the economy facing a credit crunch.