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Monthly information on banking activities (December, 2010)
I- State Bank of Vietnam activities:
1. Management of credit and monetary policies:
In December, the State Bank of Vietnam (SBV) continued to manage the monetary policy in a flexible and prudent manner in line with the Government’s instructions with the aim of curbing inflation and assisting credit institutions to improve their liquidity. In particular:
- To maintain the refinancing and base interest rates at 9% p.a, and rediscount rate at 7% p.a
- To continue flexibly managing open market operations (OMOs) by mainly offering valuable papers to enhance the settlement liquidity for credit institutions, ensuring safe and sound banking operations and maintaining a stable money market; To assist credit institutions to improve their liquidity by the means of refinancing loans and foreign currency swaps.
- In early December, in the context of unexpected increase of the VND mobilizing rates up to 17 - 18% p.a, the SBV promptly took the following measures: (i) requiring commercial banks to terminate without delay capital mobilization at high interest rates in order to avoid instability of the money market and adverse impact on the banking sector and the economy as a whole, and to draw serious lessons from this happening, (ii) reaching high consensus with the Vietnam Banks Association and commercial banks in keeping the maximum VND mobilizing interest rates at 14% p.a (Interest rates for deposits and valuable papers ...) including promotional expenses in any forms and gradually decreasing interest rates in line with practical inflation and capital supply and demand in the market; and publicly quoting VND mobilizing rates at all the mobilizing premises in compliance with the SBV rules.
- In implementing Instruction No.2164/CT-TTg of the Prime Minister dated November 30, 2010 on further promoting production and ensuring the balance of commodity and service supply and demand, and price stabilization, the SBV required credit institutions to adjust credit structure in order to increase the amount of capital and lending proportion for agricultural and rural areas and export, inventory commodities for the Lunar New Year of the Cat, and providing loans to deal with the aftermaths of natural disasters, and for effective production of small and medium enterprises.
- To intervene in the foreign exchange market by selling a proper amount of foreign currencies for importation of essential commodities and at the same time taking other measures to stabilize the forex market; to closely monitor and forecast movements of the international gold price , and gold supply and demand in the domestic market in order to allow enterprises to import a proper quantity of gold to stabilize the gold price; and monitoring credit institutions in implementing Circular No.22/2010/TT-NHNN dated October 29,2010 on mobilizing and lending gold by credit institutions, and promptly handling violations (If any).
2. Developing the safe and sound system of credit institutions:
To continue requiring credit institutions to comply with the regulations on the prudent operational ratios as stipulated in Circular No.13/2010/TT-NHNN dated May 20, 2010 and Circular No.19/2010/TT-NHNN dated September 27, 2010; and reviewing the implementation of these two Circulars and process all recommendations put forth by each credit institution.
3. Implementing other tasks:
- Following the successful launching of the inter-connected POS system in Hanoi, the SBV directed Smartlink and Banknetvn to work with 15 commercial banks to successfully implement the pilot POS connection project in Ho Chi Minh City.
- The SBV coordinated with the Vietnam Bank Card Association, the Ministry of Public Security and commercial banks to ensure safe operation of ATMs.
- In response to the control of administrative procedures in line with Decree No. 63/2010/ND-CP dated June 8, 2010 and the implementing guidelines of the Prime Minister, the SBV established the Administrative Procedures Control Division.
- In order to consistently and comprehensively implement the major policies for agricultural and rural development to match with the potential of the nation and intensive international integration, the SBV, on December 10, 2010, coordinated with the Ministry of Agriculture and Rural Development, the Ministry of Trade and Industry and other relevant agencies to successfully organize the Seminar on consistent measures to promote agricultural and rural development.
- The SBV held conference to review banking performance in 2010 and chart out the tasks of the banking sector for 2011. Accordingly, the SBV will manage the monetary policy in a flexible and prudent manner and by market forces in close combination with the fiscal policy and other macro-economic policies, thereby contributing to achieving the objectives of economic growth, inflation control and trade deficit restriction.
II. Credit and Monetary Development
1. Interest rates:
To implement the consensus on VND mobilizing rates, from December 15, the average VND mobilizing rate was 12.44% p.a; the average lending rate was 14.94% p.a (The rates for agricultural and rural development and exporters were 12 - 14% p.a, 15 - 18% p.a for other sectors). The interest rates in USD were stable as compared to November, with the average mobilizing and lending interest rates being 4.08% p.a and 6.26% p.a respectively.
2. Exchange rate:
The inter - bank VND/USD exchange rate was stable at 18,932 in the official market while commercial banks quoted their exchange rates at 19,495 - 19,500 VND/USD. The VND/USD exchange rate in the parallel market was on a downward trend, but higher than that of commercial banks; the VND/USD exchange rate was at 20,980 - 21,080 at end December.
The gold price fluctuated following the international gold price movement, remained at VND 35.95 - 36.07 million/tael.
3. Fund mobilization
The total deposits with credit institutions were estimated to increase by 1.83% as compared to end November, and by 27.2% as compared to end 2009.
4. Credit to the economy
Credit to the economy at end - December was estimated to increase by 2.28% as compared to end November, and by 29.81% as compared to end 2009.
5. Total liquidity
The total liquidity at end - December was estimated to increase by 1.87% as compared to end November and by 25.3% as compared to end 2009; cash in circulation increased by 2.14% as compared to end November and 15.01% as compared to end 2009.
Diem Hang
sbv
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