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SBV Action Plan on monetary, credit and banking solutions
Governor Nguyen Van Giau of the State Bank of Vietnam (SBV) issued on February 19 SBV’s Action Plan to carry out monetary, credit and banking solutions in a timely and effective manner under the guidance of the Government and the Prime Minister on the basis of Decree No.01/ND-CP dated January 9, 2009, Resolution No.30/2008/NQ-CP dated December 11,2008, Resolution No.30a/2008/NQ-CP dated December 27, 2008 and Decision No.167/2008/QD-TTg dated December 12, 2008 aimed at controlling inflation and stabilizing macro-economy, thus contributing to preventing economic downturn and maintaining social protection and a safe and sound banking industry.
This Action Plan was formulated on the basis of the Government’s directives contained in Resolution No.01/NQ-CP dated January 9, 2009 on major measures to guide the implementation of the Socio-Economic Development and State Budgeting Plans for 2009, Resolution No.30/2008/NQ-CP dated December 11, 2008 on urgent measures to prevent economic decline and to maintain economic growth and social protection, Resolution No.30a/2008/NQ-CP dated December 27, 2008 on the speedy and sustainable poverty reduction support program for the 61 poor districts and Decision No.167/2008/QD-TTg of the Prime Minister dated December 12, 2008 on the housing support policy vis-à-vis poor households.
Under this Action Plan, the SBV Governor urged all SBV entities to decisively and effectively take the following measures :
1. To extend credit in an effective manner and in line with law, to apply proper interest rates, and to tackle all problems related to loan repayment and access to bank credit by institutions and individuals :
- Making reviews and suggestions on lending mechanisms, guaranty, leasing, factoring, trust and others to facilitate institutions and individuals to get access to bank credit.
- Coordinating with the Ministry of Finance (MOF) to issue and implement the credit guaranty mechanism for small and medium enterprises (SMEs) to be carried out by the Vietnam Development Bank.
- Issuing the Instruction on measures to contribute to the promotion of production and business, goods distribution, economic decline prevention, and maintenance of economic growth and social protection.
- Convening quarterly credit review meetings between SBV with credit institutions and SBV branches of provinces and the cities under the central government to tackle problems in credit operations.
2. To continue the renovation of the credit extension policy vis-à-vis agricultural and rural areas, poor households and other policy-based beneficiaries to contribute to maintaining social protection:
- Submitting a draft decree to be issued by the Government on the credit policy towards agricultural and rural areas, including small-size loans, in the direction of encouraging and facilitating credit and financial institutions from within and without to extend credit to agricultural and rural areas.
- Working closely with relevant ministries and agencies to make revision of all the mechanisms related to credit operations for agricultural and rural areas, namely lending, loan security, security registration, secured asset liquidation, price insurance and consumption of agricultural products.
- Guiding credit institutions to extend credit with proper interest rates in line with their client-based policy; rescheduling loan repayment and continuing extension of new loans to meet the financial requirement of effective production and business for enterprises and households in agricultural and rural areas.
- Coordinating with relevant ministries and agencies to develop and implement the credit mechanism for the 61 poor districts under the modality that the State will provide a grant of 50% of the interest rate of loans lent by the state-owned commercial banks for afforestation, agricultural production, construction of agricultural, forest and marine product-processing enterprises, reservation and consumption of agricultural products, and assistance for poor households to promote husbandry, aquaculture and trades.
- Issuing guidelines for the Vietnam Bank for Social Policies in lending, recovering and introducing documents and procedures of housing loans in accordance with Decision No.167/2008/QD-TTg of the Prime Minister dated December 12, 2008.
- Making revision of the lending mechanism and procedures for poor households, students and other policy-based beneficiaries for the purpose of promotion of production and business, improvement of livelihood and study.
- Coordinating with relevant ministries and agencies to develop and implement the plan of mobilizing domestic and foreign financial resources to help the Vietnam Bank for Social Policies to extend credit to poor households, students and other policy-based beneficiaries in the years 2009-2010.
- Coordinating with the Ministry of Planning and Investment (MPI) and other relevant ministries and agencies to revise the policy to assist and encourage SMEs and economic collectives to get access to bank loans and develop their business.
3. Making recommendations on and implementing the interest rate support and fund-mobilizing mechanism for the investment demand stimulus project :
- Taking the lead in coordination with MOF and other relevant ministries and agencies to submit a draft decision to be issued by the Government on interest rate support for institutions and individuals in getting bank loans for their production and business, and issuing guidelines and implementing the interest rate support mechanism.
- Guiding commercial banks to balance their operational resources to disburse the contracted loans for key national and major projects, investment demand stimulus projects in accordance with the direction of the Government, and buying government bonds aimed at investing in the investment demand stimulus projects.
- Coordinating with relevant ministries and agencies to actively negotiate with international institutions to mobilize Official Development Assistance (ODA) and other funding resources; and facilitating commercial banks to mobilize foreign resources.
4. Managing the monetary policy instruments and interest and exchange rates in a flexible and prudent way in line with the purpose of demand stimulus, promotion of production and export, macro-economic stability and maintenance of a safe and sound banking industry :
- Developing and implementing the plan to manage the monetary policy instruments and interest rates in 2009 in order to proactively control the increase of the total liquidity and credit outstanding to the economy, managing a proper interest and exchange rate policy by market forces, and ensure the solvency and safety of the banking industry.
- Issuing a Circular to guide credit institutions to extend negotiable loans in line with Resolutions No.23/2008/QH12 of the National Assembly dated November 15, 2008 on the 2009 Socio-Economic Development Plan and the guidance of the Prime Minister in Document No.627/VPCP-KTTH dated January 23, 2009.
- Recommending revision of the managerial mechanisms of such monetary policy instruments as reserve requirement, refinancing, open market operations (OMOs) and currency swaps.
- Developing and implementing the exchange rate management plan for 2009.
- Submitting detailed regulations to be issued by the Government and the Prime Minister on implementing the Foreign Exchange Ordinance and issuing various documents under SBV’s authority to guide the implementation of Decree No.160/2006/ND-CP of the Government dated December 28, 2006 on detailed implementing guidelines of the Foreign Exchange Ordinance; and making review and recommending revision of the mechanisms of managing foreign borrowing and repayment and foreign exchange trading of credit institutions.
- Making qualitative statistics and forecasts of cash flows related to foreign borrowing and repayment; coordinating with the Ministry of Industry and Trade (MIT) to strictly control the balance of trade; and set up the early warning system for risky foreign loans of enterprises.
- Enhancing oversight of the implementation of regulations on foreign exchange management to restrict speculation and illegal trading of foreign currencies in the market.
- Issuing and implementing the mechanism of managing and supervising the gold trading floors.
5. Enhancing supervision and ensuring a safe and sound banking sector:
- Closely monitoring the developments of the global financial crisis and economic recession, and forecasting possible negative impacts on the Vietnamese banking industry and economy in order to proactively take protective measures.
- Submitting to the Government for issuance and issuing under SBV’s authority new mechanisms on organizational structure and operations of commercial banks and restructuring the system of commercial banks; the mechanisms on licensing and establishing joint-stock commercial banks; and regulations on establishing and terminating the operational network of commercial banks.
- Recommending revision of the organizational and operational mechanisms of the system of the People’s Credit Funds in line with the law on collective economy and for the purpose of prudent and effective operations.
- Strengthening supervision to get timely knowledge of operational developments of credit institutions and to come up with corrective measures.
- Submitting to the Government for issuance of revised Decree No.91/1999/ND-CP of the Government on the organizational structure and operations of banking supervision ; and submitting to the Government for issuance of a new decree in place of Decree No.202/2004/ND-CP on fining administrative violations in the monetary and banking sector.
- Completing the organizational structure of the Supervision Agency in accordance with Decree No.96/2008/ND-CP of the Government on functions, tasks, mandate and organizational structure of SBV; and enhancing capacity building for supervisors in service of on-site inspection and regular monitoring of operations of each credit institution.
- Improving information quality in service of credit operations of credit institutions; and processing and assessing credit operations for the economy.
- Closely monitoring developments in the money market and recommending resolutions for arising problems in line with the Plan already adopted by the Prime Minister.
6. Improving the quality of macro-economic and monetary statistics, analysis and forecast :
- Improving the information and reporting system between credit institutions and SBV; and developing the balance sheet of the financial sector in line with Decree No.82/2007/ND-CP of the Government dated May 23, 2007 on information disclosure in service of formulating and managing the national monetary policy.
- Improving the quality of macro-economic and monetary statistics and forecast for 2009 and the following years to serve as the foundation for managing the monetary, credit and banking policies.
- Improving the quality of formulating, analyzing and forecasting the international balance of payment.
- Consolidating and assessing the socio-economic situation, production and business of enterprises and households, and operations of credit institutions in provinces; and making proposals to deal with arising problems.
7. Improving the quality of and enhancing non-cash payment; and developing and diversifying advanced banking services :
- Implementing without delay the plans of sub-projects of the Non-Cash Payment Project for the 2006-2010 period and orientations towards 2020 as approved by the Prime Minister under Decision No.291/2006/QD-TTg dated December 29, 2006.
- Completing the second phase of the Modernization Project of the Inter-Bank Electronic Payment System; implementing centralized payments in a single account of the commercial bank head office with SBV; and studying and implementing centralized payments of the State Treasury through its account with SBV.
- Recommending revision of mechanisms to facilitate payment service providers to develop advanced and diversified banking products and services based on the application of information technology.
8. Promoting international cooperation in the banking industry :
- Coordinating with relevant ministries and agencies to conduct negotiations and exploit the ODA resources and foreign aids and donor programs for Vietnam in line with the investment demand stimulus direction of the Government; and providing timely periodical or unexpected information and data under the commitments with the International Monetary Fund, the World Bank and other institutions for the development and expansion of international cooperation.
- Closely watching and updating international financial and monetary situation, the developments of foreign capital flows and assessment by international partners of the impact of the global financial crisis and economic recession on the domestic economy and money market and apply international protective measures in conformity with Vietnamese conditions.
9. Promoting information and communication in the banking sector :
By the means of such specialized publications as the Banking Times and the Banking Review and especially the daily Vietnamese and English versions of the SBV Website, to provide adequate, timely and updated information on monetary, credit and banking policies and performance to the public, enterprises, domestic and foreign investors and international institutions for their better understanding of domestic banking operations, thereby contributing to stabilizing the local money market and banking operations.
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