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Monthly Information on Banking Activities (April, 2009)
The monthly information on banking activities inApril, 2009 is as follows:
I. State Bank of Vietnam (SBV) activities
1. Issuance of legal documents
- The Governor issued on April 7 Circular No.05/2009/TT-NHNN to stipulate detailed guidance on the execution of interest rate support of medium and long-term loans to corporate and individual borrowers to invest in new projects of production and business.
- The Governor , on April 9, issued Circular No.06/2009/TT-NHNN on detailed regulations of preferential loans in line with Resolution No.30a/2008/NQ-CP of the Government dated December 27, 2008 on support for poor districts nationwide.
- Circular No. 07/2009/TT-NHNN was issued on April 17 to stipulate prudent ratios applicable to micro financial institutions in Vietnam
2. Management of credit and monetary policies
Implementing instructions of the Government on carrying out measures to prevent economic decline, maintain growth rate and secure social protection, the SBV Governor focused on instructing such operations as follows:
- Continuing to closely monitor the interest rate support loans in line with Decision No.131/QD-TTg. The SBV leaders had meetings with several SBV provincial branches and commercial banks to review the situation and promptly handle arising difficulties; requesting People’s Committee of provinces and cities to ask credit institutions to assess the results of implementing interest rate support scheme in February and March, 2009 for reporting to the Government.
- The disbursement amount of the interest rate support program of the whole banking industry by April 23, 2009 reached around VND 254,900 billion. Specifically, the group of state-owned commercial banks and the Central People’s Credit Fund have disbursed VND 187,660 billion; and the group of joint-stock commercial banks, the group of joint-venture banks, foreign banks branches and wholly-owned foreign banks, and the group of financial companies have allocated about VND 55,245 billion, VND 11,042 billion, and VND 953 billion for this program, respectively.
- The SBV promulgated circular on guiding and instructing entities of the banking sector to urgently implementing Decision No.443/QD-TTg dated April 4, 2009 on interest rate support for VND medium and long-term loans for the business and productive corporate and individual borrowers to invest in new projects of production and business. At the same time, the SBV instructed the Vietnam Development Bank to actively review all the difficulties and problems related to providing interest rate support loans to the state-prioritized borrowers, and coordinate with the relevant departments of the SBV for submission to the Government.
- To implement Decision No.497/QD-TTg dated April 17, 2009 on supporting interest rate loans for procuring instruments and material for agricultural production and rural housing development, the SBV on April 21 had a meeting with the Ministry of Agriculture and Rural Development, the Ministry of Finance, the Ministry of Industry and Trade and the Vietnamese Government Office to define specific issues for promulgating documents in line with instructions of the Prime Minister.
- Implementing Resolution No. 30a/2008/NQ-CP of the Government, SBV issued Circulation No. 06/2009/TT-NHNN on guidelines for the detailed implementation of the interest rate support program for the poor areas, applicable to the beneficiaries of afforestation, developing agricultural production, investing in processing zones, reservation and consumption of agricultural products, developing breeder poultry and aquatic breeding and other kinds of handicraft production.
- Implementing the Prime Minister’s instruction on supplying more resourcdes to the market, SBV has reduced the refinancing rate and the rediscount rate by 1 percentage point, managed the Open Market Operations (OMOs) in a flexible manner and conducted swaps in foreign currencies with commercial banks with low interest rates (ranging between 6%-6.5% p.a.). Meanwhile, SBV required the state-owned commercial banks to decrease the lending interest rate to the maximum of 10.5% p.a. for the loans which were signed before the date of the adjustment of the base interest rate.
- Foreign exchange management: In tendam with widening the trading band of exchange rates, SBV has taken a series of measures to raise the foreign exchange supply and to stabilize the foreign currency market. These measures include (i) to request the provincial and municipal People’s Committees nationwide to direct the specialized entities to supervise and take proper sanctions against such activities as advertising and quoting products’ prices in foreign currencies and illegal purchasing foreign currencies by individuals and organizations; (ii) to take proper measure against forex trading with the exchange rate higher than the trading band ceiling; and (iii) to ask the banking sector to redress operations of their foreign exchange agents.
In order to meet the currency demand for petrol import, the SBV has established an inspection team to monitor the compliance with the regulations on foreign exchange trading for petrol import. Accordingly, the team will inspect the purchasing of foreign currency from the SBV by several commercial banks for supporting petrol import during the period of January 1 – March 3, 2009. The period for inspection will be from March 30 to April 10, 2009.
- Implementing the Prime Minister’s instructions on managing the Gold Trading Center, the SBV has submitted to the Prime Minister a regulation on managing gold trading center. Accordingly, SBV will be responsible for managing the operations of the gold trading floors, in which credit institutions could do trading gold via accounts, while the Ministry of Industry and Trade will be responsible for managing the operations of the physical gold trading floors. Meanwhile, SBV directed those credit institutions with operational gold trading floors, and those credit institutions with partnership with the service provision to the gold trading floors to strictly comply with prudent ratios set by SBV and to regularly report the operations of the gold trading floors. As of April 1, those credit institutions, which have not had any operations relating to gold trading, should wait until the issuance of the guidelines by the SBV.
- SBV submitted to the Prime Minister a plan to establish an Interministerial Working Team on international balance of payment with the aim of enhancing the quality of monitoring, planning, collecting data, analyzing and forecasting international balance of payment. The team will be led by an SBV Deputy Governor with the participation of representatives from the Ministry of Investment and Plan, the Ministry of Finance, the Ministry of Industry and Trade and other relevant agencies.
3. To strengthen and develop credit institutions system
Currently, there are 21 commercial joint-stock banks and 5 joint-venture banks with charter capital below VND 2,000 billion. In order to improve the feasibility of Decree No.141/2006/NĐ-CP, the SBV has submitted to the Prime Minister to assign the SBV to instruct these commercial banks to formulate their plans to increase charter capital to the minimum of VND 2,000 billion by December 31, 2009 to be sent to the SBV for supervision and to serve as the foundation to increase their charter capitals to VND 3,000 billion by December 31, 2010 each; to permit the SBV to take proper measures to deal with those credit institutions which fail to meet this requirement.
The SBV issued Circular No. 07/2009/TT-NHNN on April 17 to stipulate prudent ratios applicable to small-sized financial institutions in Vietnam
4. To continue implementing the Non-Cash Payment Project in the period of 2006-2010 and Orientation towards 2020
To effectively implement the second stage of electronic salary payment in line with Instruction No.20/2007/CT-TTg of the Prime Minister dated August 24, 2007, the SBV defined the orientation in 2009 as improving quality of electronic salary payment, taking advantage of best experiences and coping with the shortcomings in the implementation of the first stage. At the same time, the SBV required the SBV municipal and provincial branches and non-cash payment service providers to actively take measures to meet the top objective of improving electronic salary payment.
To continue developing modern payment methods, the SBV has allowed the Vietnam Payment Solution Company (VNPAY) to conduct pilot Electronic Purse VnMart through payment services suppliers. VNPAY is the third institution permitted to conduct this pilot service.
5. To enhance international cooperation in the banking sector
Governor Nguyen Van Giau attended the 5th ASEAN Central Bank Governors' Meeting (ACGM) and the 13th ASEAN Finance Ministers' Meeting (AFMM) in Pattaya, Thailand in April. At this meeting, the Governors discussed the regional and global economic situation and outlook as well as the measures to cope with the current crisis; regional monetary and financial cooperation; issues related to the Chiang Mai Multilateral Initiative (CMIM), aiming at the realization of CMIM in as soon as possible under the guidance of the ASEAN Summit held in Hua Hin, Thailand.
II. Other Activities
1. Governor Nguyen Van Giau had meetings with SBV provincial branches of the provinces of Phu Tho, Thai Nguyen, Yen Bai, and Thanh Hoa and two commercial joint-stock banks namely the Vietnam Commercial Joint Stock Bank for Private Enterprise (VP Bank) and the South East Commercial Joint-Stock Bank (SeaBank)
The SBV Governor had a meeting with the Country Director of the World Bank (WB) in Vietnam
2. The SBV and the ADB signed a loan agreement for the comprehensive socio-economic development project of Thanh Hoa City with the total cost of USD 72 million.
The SBV and the WB signed the Financial Sector Modernization and Information Management System Project (FSMIMS) which is worth USD 71.830 million.
III. Credit and Monetary development
1. Interest rate:
The mobilizing interest rates were on slightly upward trend with an increase of 0.2 - 1.5 percentage points. The VND mobilizing rates ranged from 7.1- 8.6% p.a. Lending rates of credit institutions were stable at 8 – 10.5% p.a. State –owned commercial banks adjusted lending rates of above 10.5% p.a of signed contracts to the maximum rate of 10.5% p.a
Lending rates in USD continued to decrease in comparison with late March. Specifically, the mobilizing and lending rates declined by 0.5 -1 percentage point and 0.3 – 0.7 percentage point respectively. The current mobilizing rates were commonly at 1.4% - 2.81% p.a, and the lending rates ranged from 4%- 7% p.a.
The negotiable lending rates of the personal and credit card loans were commonly at 12%-15% p.a.
2. Exchange rate:
The average exchange rate of USD/VND in the inter-bank market, on April 29, 2009, was at 16,937, down by 0.1 percentage point as compared to late March, 2009. Credit institutions quoted the exchange rates at the maximum rate stipulated by the SBV.
The exchange rate of EUR/VND fluctuated in line with the development of EUR in the international market. On April 29, 2009, the exchange rate of EUR/VND in the domestic market was at 23,405 – 23,949, an increase of 0.6 percentage point as compared to late March; the exchange rate in the parallel market fluctuated in compliance with an upward trend in the domestic market.
3. Total liquidity:
The total liquidity was estimated to increase by 3.43% as compared to late March, and by 11.4% in comparison with late 2008, of which the amount of cash in circulation out of the banking system was up by 0.6% as compared to late March, and by 19.37% in comparison with late 2008.
4. Fund mobilization:
The total deposits in credit institutions were estimated to be up by 3.74% as compared to last month, and by 9.88% in comparison with end 2008; of which VND and foreign currency deposits increased by 4.52% and 1.07% respectively.
5. Credit to the economy:
Credit to the economy, by April, 2009, increased by 4.86% in comparison with the previous month, and rose by 11.16% as compared to end 2008, of which VND and foreign currency investment was up by 5.81% and 0.65% respectively.
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