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Monthly Information on Banking Activities (May, 2009)
SBV announces the monthly information on banking cctivities (May, 2009) as follows:
I- State Bank of Vietnam (SBV) Activities
1. Issuance of legal documents
- The Governor issued Circular No. 08/2009/TT-NHNN stipulating detailed regulations on network of small - sized finance institutions.
- The Governor, on May 5, issued Circular No. 09/2009/TT-NHNN stipulating detailed regulations on interest rate subsidy loans for procuring instruments and material for agricultural production and rural housing development.
- The Governor, on May 8, issued Circular No. 10/2009/TT-NHNN amending regulations on confidential levels applicable to different kinds of documents and things set in Decision No. 45/2007/QD-NHNN of the SBV Governor dated December 17, 2007.
- The Governor, on May 27, issued Circular No. 11/2009/TT-NHNN amending Circular No. 03/2009/TT-NHNN dated March 2, 2009 on regulations for valuable paper-secured loans of the SBV for commercial banks.
- Circular No. 12/2009/TT-NHNN was issued on May 28 to provide guidelines on loans guaranteed by the Vietnam Development Bank in accordance with Decision No. 14/2009/QĐ-TTg and Decision No. 60/2009/QD-TTg of the Prime Minister.
2. Management of credit and monetary policies
Under the instructions of the Government, the SBV continued to guide the whole banking sector to effectively implement the monetary and credit policies in order to contribute to preventing economic downturn and maintain economic growth and social protection. In particular :
- Continuing to complete a number of implementing guidelines of the interest rate subsidy program of the Prime Minister;
- Continuing to closely monitor the implementation of the interest rate subsidy program and to promptly address the arising difficulties and obstacles while directing the SBV departments and branches to publicize this program;
- By closely watching the macro-economic development, SBV continued to maintain the base interest rate unchanged at 7% p.a., the refinancing interest rate at 7% p.a. and the discount rate at 5% p.a. as in April while flexibly managing the Open Market Operations in order to regulate the liquidity of credit institutions and stabilize the interest rates in the inter-bank market.
- Taking comprehensive measures in order to enhance oversight of foreign exchange operations and stabilize the money market by the following actions :
Firstly, SBV required all the state-owned commercial banks (SOCBs) to continue reducing both the mobilizing and lending foreign exchange interest rates, to closely coordinate with SBV’s entities to promote communication and information to avoid the public expectation for VND devaluation, and to work closely with the relevant authorities to redress operations of the foreign exchange market.
Secondly, SBV took comprehensive intervention measures to stabilize the forex market, namely (i) conducting large-scale forex swaps with commercial banks in order to hlp them extend credit to the economy in line with the Government’s interest rate subsidy program; (ii) effectively regulating the foreign exchange inter-bank market with the aim of supporting the liquidity of commercial banks; (iii) coordinating with relevant ministries and agencies to enhance oversight of foreign exchange trading of the commercial banks; (iv) taking necessary measures to prevent the hoarding of foreign exchange by enterprises and attract more foreign exchange into the commercial banks; and (v) encouraging large importers to borrow foreign exchange loans instead of purchase to calm down the the foreign change demand pressure.
- Issuing an Instruction to ask the credit institutions to take proper operational measures while proactively preventing risks, to effectively manage their capitals in line with SBV’s regulations, to offer the mobilizing rates at a proper level in compliance with capital demand and supply of the market and SBV’s regulations with a reasonable margin between the mobilizing and lending rates, to closely monitor credit quality together with effective credit extension. The SBV functional departments and provincial and municipal branches were required 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, and to control growth of the total liquidity and credit at a proper level; and to enhance supervision in banking operations and foreign exchange management.
- With the aim of tackling problems in the relations between enterprieses and banks, the SBV in coordination with the Vietnam Chamber of Commerce and Industry (VCCI) organized meetings with representatives of enterprises in Hanoi and Ho Chi Minh City to discuss how to best implement the interest rate subsidy scheme and foreign exchange management.
- To implement Decision No. 167/2008/QD-TTg of the Prime Minister dated December 12, 2008 on housing assistance for the poor, the SBV in coordination with the Ministry of Construction promulgated an inter-ministerial circular on guidelines of the housing assistance policy for the poor.
3. Strengthening of credit institutions
- Under the instruction of the Prime Minister, the SBV submitted a report on the performance and licensing of foreign bank branches in Vietnam to the Cabinet.
- In order to ensure prudent operations of non – bank credit institutions, the SBV promulgated a document to redress operations of these institutions while requiring SBV relevant departments to complete necessary regulations and closely monitor operations of these institutions.
4. To improve the SBV organizational structure
The SBV coordinated with Government Office to complete and submit draft Decision on the functions, tasks, mandate and organizational structure of the SBV Financial Supervision Agency to the Prime Minister.
The SBV has urgently developed the Plan on renovating statistics and reporting operations of the banking sector to improve the effectiveness of these operations.
The SBV Governor, on behalf of the Government, joined the World Bank (WB) in signing the Financial Sector Modernization and Information Management System Project (FSMIMS) with the total cost of USD 60million in order to improve capacity and effectiveness of operations of the SBV as a modern central bank.
5. To enhance international cooperation in the banking sector
The SBV Governor attended the 42nd Annual Meeting of the Board of Governors of the Asian Development Bank (ADB) in Bali, Indonesia. Upon his return from the meeting, the SBV Governor reported and recommended the Prime Minister to: (i) assign the SBV in working with the ADB to get access to the ABD new lending program targeted to support stimulus package of the Government; (ii) allow the SBV to work with the Japan Bank for International Cooperation (JBIC) to review lending procedures applicable to commercial banks in order to support these institutions to cope with the global financial crisis; (iii) assign the Ministry of Planning and Investment (MPI) in coordination with the Ministry of Finance (MoF), the SBV and other relevant ministries and agencies to urgently review preparation of lending programs/projects based on the ADB support items list during the period of 2009-2010, at the same time assess the feasibility of these projects in 2009 for submission to the PM ; to work with AFD and JBIC on borrowing procedures for the stimulus package of the Government; (iv) assign the SBV in coordination with the MoF to negotiate on the pending issues of the international cooperation programs of the Chiang Mai Multilateral Initiative (CMIM); and collaborate with relevant agencies to study and make inputs for the draft CMIM agreement.
II. Other Activities
1. Governor Nguyen Van Giau had a meeting with Chairman of the Taiwan Cooperative Bank and paid a visit to the Mekong Delta Housing Development Bank.
Deputy Governor Nguyen Van Binh met with the WB monitoring team of the Rural Finance Project.
2. On May 29, Governor Nguyen Van Giau chaired the Conference on banking operations for the second half of 2009.
III. Credit and Monetary Development
1. Interest rate:
- VND interest rate: the mobilizing rates tended to increase by 0.15-0.65 percentage point p.a, and the mobilizing rates were commonly quoted at 7.7-8.88% p.a. Lending rates were stable and quoted at 8.5-10.5% p.a. The lending rates after deducting the interest rate subsidy ranged from 4.5% to 6% p.a.
- USD interest rate: the interest rates were on a downward trend with a decrease of 0.2-0.5 percentage point for the mobilizing rates and 0.3-0.6 percentage point p.a for the lending rates. The mobilizing rates were commonly quoted at 1.24%-2.65% p.a and the lending rates ranged between 3 to 7% p.a.
2. Exchange rate:
The money market tended to be stable. The average exchange rate of USD/VND in the inter-bank market, on June 1, 2009, was at 16,938, up by 0.018 percentage point as compared to the end of last month. Credit institutions quoted the exchange rates at the maximum rate stipulated by the SBV.
3. Total liquidity:
The total liquidity was estimated to increase by 3.19% as compared to April, up by 14.55% in comparison with late 2008, of which the amount of cash in circulation out of the banking system was down by 0.11% as compared to April, and up by 19.6% in comparison with the end of 2008.
4. Fund mobilization:
The total deposits in credit institutions were estimated to go up by 3.87% as compared to the previous month, an increase of 13.64% in comparison with end 2008; of which VND and foreign currency deposits increased by 4.6% and 1.33% respectively.
5. Credit to the economy:
Credit to the economy, by May, 2009, increased by 4.2% in comparison with the previous month, and rose by 14.91% as compared to the end of 2008, of which VND and foreign currency investment amounts were up by 4.96% and 0.68% respectively.
Thu Huong - Diem Hang
sbv
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