|
Monthly information on banking activities (October, 2010)
I. Guidance and management of the State Bank of Vietnam (SBV)
1. Credit and monetary policy management
SBV continued to manage the monetary policy in an active and flexible manner in line with the Government targets of growth and inflation control. In particular:
- Maintaining the base interest and refinancing rates of 8% p.a, re-discount rate of 6% p.a, and the rate of 8% p.a for overnight inter-bank electronic payment and financing the shortage in the clearing of the SBV for banks.
- Continuing to flexibly manage open-market operations, mainly bids of valuable papers to ensure the liquidity and safety of the system, maintain the stability of the money market and send out signals of interest rate reduction at reasonable levels; continuing financial support for credit institutions by the means of refinancing and foreign currency swaps.
- Issuing the Circular to guide the execution of monetary policy instruments to support credit institutions in providing loans for agricultural and rural development (Excluding the local People’s Credit Funds). Specifically, (i) requiring a 1/5 and 1/20 VND reserve requirement ratios equivalent to the common level for those credit institutions with the proportions of loans to surpass 40%-70% and above 70% of their loan outstanding in service of agricultural and rural development, respectively; (ii) using part of SBV annual money supply to refinance those credit institutions which provide loans for agricultural and rural development with prioritized maturities and lending sources; and (iii) taking other measures if needed to support credit institutions in line with the targets and conditions of economic development and the requirement of promoting agricultural and rural development.
2. Developing a safe and sound system of credit institutions
- Implementing new regulations on prudential ratios in operations of credit institutions. According to preliminary assessment, most credit institutions had met prudent ratios set in Circulars No.13/2010/TT-NHNN and No.19/2010/TT-NHNN as of June 30, 2010 (Excluding the ratio of credit extension against the mobilized resources). SBV has been assessing the actual performance and deal with specific recommendations of individual institutions.
- Recently, several foreign entities and individuals introduced themselves as representatives of international institutions to meet with certain ministries, municipal and provincial agencies, and Vietnamese enterprises to offer big loans with low interest rates and long maturities or grants, provided that they require guaranty of the Government through the Ministry of Finance, SBV or commercial banks. In order to avoid the negative impact on credibility and risks for Vietnamese agencies and businesses, SBV requires credit institutions to carefully consider loans offered by certain foreign partners, based on the strict compliance with regulations of the Government and the SBV regulations on borrowing and repayment of foreign debts, and to refrain from issuance of such papers as invitations, promises of guaranty, letters of authorization or other forms of commitments prior to obtaining adequate information about the offering partners. Additionally, SBV requires SBV municipal and provincial branches to make advisory reports to the local authorities on measures to prevent risks of loans offered by foreign partners in line with practical condition in their locations; to direct and coordinate with local credit institutions to implement the SBV guidelines.
- Continuing to instruct credit institutions to focus on reviewing and handling ‘old’ debts and considering to provide new loans to the Vinashin Group and its affiliates; and requiring the Vinashin Group to actively implement the Prime Minister’s instructions and to coordinate with credit institutions in solving related issues.
- Continuing to implement the recapitalization roadmap in line with Decree No. 141/2006/ND-CP, all joint-stock commercial banks with charter capital below VND 3,000 billion each got the SBV approval on the charter capital increase plan. 11 out of 22 these banks got IPO approval of the State Securities Commission, the rest have been completing their procedures for their IPO. SBV has been strictly monitoring the implementation of recapitalization of commercial banks and working out plans to dealing with those banks which would not meet the recapitalization requirement.
3. Developing non-cash payment
- In order to speed up bank-card transactions through the POS system, improve services for bank-card holders and reduce the workload of the ATM system of commercial banks, right after the successful POS connection among Banknetvn, Smartlink and 8 commercial banks in Hanoi, SBV continued to instruct the relevant entities to carry out the POS connection plan in Ho Chi Minh City.
- In face of several cases of ATM breakage to steal cash, SBV required the ATM service providers to regularly check the security of ATM premises, and enhance coordination with the public security agencies in combating this crime to ensure safe operations of the whole ATM system.
II. Credit and monetary performance
1. Interest rate:
Implementing the consensus of interest rate reduction, the common VND mobilizing rate slightly went down to 11% p.a. from October 15, 2010, and the rate of 11% has been applied to all deposits of 1-12 month terms. The USD mobilizing rate slightly increased. The lending rates in both VND and USD were comparatively stable as compared to the previous month.
2. Exchange rate:
The VND/USD exchange rate was stable at 18,932 in the official market while commercial banks quoted their exchange rates at 19,480-19,500 VND/USD. However, the VND/USD exchange rate in the parallel market was on an upward trend and higher than that of commercial banks, especially in the second half of October.
3. Fund mobilization
The total deposits at credit institutions was estimated to increase by 22.81% as compared to end 2009
4. Credit to the economy:
Credit to the economy at end-October was estimated to increase by 22.5% as compared to end 2009.
5. Total liquidity:
The total liquidity at end-October was estimated to increase by 21.29% in comparison with end 2009, of which the cash in circulation rose by 13.04%.
sbv
|
