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SBV Governor issues instructions for prudential operations of credit institutions
The Governor of the State Bank of Vietnam (SBV) issued Instruction No.01/CT-NHNN to urge credit institutions, entities of the SBV’s headquarter and SBV’s provincial and municipal branches to take several measures to ensure prudential and effective operations of credit institutions in order to stabilize the money and foreign exchange market, hence contributing to containing economic downturn, maintaining economic growth at a reasonable and sustainable level, and proactively curbing inflation.
1. For credit institutions: The SBV Governor instructed these institutions to continue implementing effectively measures mentioned in Instruction No.06/2008/CT-NHNN dated 31 December 2008 of the SBV Governor and directive measures set by the SBV in late 2009, making best forecast of economic and monetary development and proactively taking measures against possible risks in their operations.
In regard to management of capital resources, the Governor urged credit institutions to further mobilize capital from domestic and overseas markets, extend effective credit to the economy; to take measures to ensure the balance of capital mobilization and utilization; to closely control the scope and structure of short, medium and long-term credit in VND and foreign currencies in line with their mobilizing capacity, maturity and structure; to maintain their solvency; and to ensure prudent ratios in their operations. In addition, the Governor required credit institutions to set mobilizing interest rates in VND and foreign currencies in line with the capital demand and supply of the market, and the SBV’s regulations on VND base interest rate management mechanism; and strictly implement the SBV’s regulations on exchange rate and management of foreign exchange.
Regarding credit operations, credit institutions are required to focus on implementing effectively interest rate subsidy mechanism; closely control the credit quality together with credit extension to meet the credit demand with priority for production and business of small and medium enterprises, rural areas and key projects of the Government; closely control loans for the real-estate sector and securities business, and personal loans; strictly comply with the regulations on lending, loan classification, and risk provisioning while avoiding to ease borrowing conditionality.
In addition, credit institutions are also required to strictly comply with all the regulations in extending VND and foreign exchange credit to those institutions with foreign exchange revenue from their exported products and services.
2. For entities located in the SBV headquarter and provincial and municipal branches, the SBV Governor requires these entities to make their best efforts in providing advice and recommendations for flexible management of the monetary, credit and exchange rate policies in order to stabilize the interest and exchange rates, to control growth of the total liquidity and credit at a proper level; to enhance supervision in banking operations, and foreign exchange management; and to decisively and effectively undertake the measures in line with the Action Plan under Decision No.01/NQ-CP dated January 9, 2009, Resolution No.30/2008/NQ-CP dated December 11, 2008 and Resolution No. 30a/2008/NQ-CP of the Government dated December 27, 2008.
This instruction is fully posted in the Legal Documents Column of the Vietnamese version of the SBV Website.
Viet Huong- Diem Hang
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