|
Monthly information on banking activities (February, 2011)
I- State Bank of Vietnam activities:
1. Implementing comprehensive measures to control inflation and stabilize macro-economy:
In response to Resolution No.02/NQ-CP of the Government dated January 9, 2011, the guidance of the Prime Minister in Report No.15/TB-VPCP dated February 14, 2011 on monetary policy management, and specially Resolution No.11/NQ-CP of the Government dated February 24, 2011 on key solutions to control inflation, stabilize macro-economy, and secure social protection, the State Bank of Vietnam promptly and decisively conducted such measures as making recommendations to the Cabinet on key solutions to manage the monetary policy in 2011; issuing directives and formulating plans to implement monetary and banking solutions with the aim of controlling inflation, stabilizing macro economy and securing social protection in 2011... In February, the SBV carried out several specific measures as follows:
1.1 Managing monetary and credit policies:
- Adjusting the refinancing interest rate, the overnight rate in the inter-bank electronic payment and the rate of loans to finance short balances in clearing operations between SBV and commercial banks and the rate for 7 day term in the open market operations from 9% p.a up to 11% p.a. while maintaining the base interest rate at 9% p.a , and the rediscount rate at 7% p.a.
- Flexibly managing open market operations (OMOs) and refinancing in order to provide liquidity to credit institutions during the Lunar New Year of the Cat, and recover without delay money from credit institutions upon their improved liquidity to closely control the money supply right from the beginning of the year.
- Directing credit institutions to develop and implement the 2011 operational plans in line with the targeted credit growth of below 20% and the total liquidity of about 15-16%; gradually reducing the proportion of loans for the non - productive sector (Accounting at most for 22% of the total loan outstanding by June 30, and 16% by December 31); and closely monitoring bad debts. SBV will flexibly adjust the risk provisioning and other prudent ratios so as to focus credit flows on the important and essential productive and business sectors of the economy.
- Promptly completing the drafting and issuing of new regulations on the base interest rate, and other interest rates in case of abnormal movements of the money market and banking operations, loan fees and time deposit withdrawal before due date.
- Revising the foreign currency lending mechanism to control the lending growth rate of foreign currencies only for essential productive and business clients who are able to obtain foreign exchange revenue from their production and business.
1.2. Managing exchange rates and foreign exchange:
- Adjusting the inter-bank average exchange rate from 18,932 to 20,693 VND/USD applicable on February 11th and narrowing the trading band for the VND/USD exchange rate to ± 1% from ± 3% in order to enhance the liquidity of the market, encourage exports and reduce trade deficit, improve the balance of international payment and contribute to increasing international reserves.
- Strictly controlling foreign exchange loans and sales for importation of non-essential and non-urgent commodities.
- Formulating and implementing necessary measures to require enterprises and individuals, especially the state-owned economic groups and general corportations, to sell their foreign exchange revenues to and to buy foreign exchange from banks in cases of their reasonable demands; and strictly controlling the utilization of international payment cards and foreign currency spending abroad by institutions and individuals.
- Closely monitoring and forecasting fluctuations of international gold price, and gold supply & demand in the domestic market for proper management of gold export and import, thereby preventing speculation, hoarding, and manipulation in the gold market.
- Directing the SBV municipal and provincial branches to coordinate with the local authorities in strictly controlling the foreign exchange and gold operations and dealing with all violations.
1.3. To enhance supervision of operations of credit institutions:
- Requiring credit institutions to provide loans and reschedule the debt payment, classify loans, and make and utilize risk provisioning in accordance with the applicable regulations; to conduct internal audit and control, and evaluate the compliance of laws and internal regulations on credit, and to detect credit risks with timely processing measures.
- Developing and implementing plans for supervision of non-productive sector lending, credit quality and prudent ratios of credit institutions in the first half of 2011 to ensure their safe and sound operations; and to strictly deal with violations to be publicized on the SBV website.
1.4. Strengthening and improving the quality of information and communication in order to raise social knowledge and consensus in the monetary policy management and banking operations in 2011, thereby contributing to effective implementation of the solutions to curb inflation, stabilize macro – economy and secure social protection.
2. To ensure money and credit market stability in the Lunar New Year:
In order to implement the guidance of the Prime Minister in ensuring adequate supply of commodities and services, and stabilizing the market price during the Lunar New Year , the SBV proactively took consistent measures of stabilizing the money market on the occasion of Lunar New Year. Thanks to these efforts, the domestic market before, during and after the Lunar New Year remained stable, the liquidity of credit institutions was ensured to meet the settlement demand of the economy.
3. International cooperation:
Under the assignment by the Steering Committee for the 2011 ADB Annual Meeting, the SBV has been actively coordinating with the other relevant ministries and agencies to conduct all necessary preparatory work for this Meeting.
II. Credit and Monetary development
1. Interest rates:
The mobilizing and lending rates slightly changed as compared to the end of the previous month, the average VND mobilizing rate was 13.04% p.a ; the lending rate rose by 0.5 – 1 percentage points p.a, the average VND lending rate was 16.23% p.a (The rates for rural and agricultural production, and exporters were at 14-16% p.a; the rates for the non - productive sector were 18 – 20% p.a). The USD mobilizing rates were relatively stable as compared to the previous month, with the average mobilizing and lending rates commonly standing at 4.2% p.a and 6.37% p.a respectively.
2. Exchange rate:
The VND was depreciated in February, 2011 due to the SBV adjustment of the average inter-bank exchange rate and trading band narrowing. The inter – bank VND/USD exchange rate by February 25 was at 20,683 in the official market while commercial banks quoted their exchange rates at the permitted ceiling level. The VND / USD exchange rate in the parallel market was 22,070 – 22,170.
The gold price sharply increased due to the rise of the international gold price and the changes in the average inter - bank exchange rate, at VND 37,530 - 37,670 million/tael by February 25.
3. Fund mobilization
The total deposits with credit institutions by February 22 was estimated to increase by 5.79% as compared to the end of the previous month due to a sharp rise of deposits after the Lunar New Year. The total deposit outstanding was up by 1.9% against end 2010.
4. Credit to the economy
Credit to the economy by February 22 was estimated to increase by 1.46% as compared to the previous month, and by 2.71% in comparison with end 2010.
5. Total liquidity
The total liquidity by February 22 was estimated to increase by 1.83% as compared to the end of the previous month, and by 2.75% to end 2010, of which the cash in circulation was estimated to be down by 16.11% in comparison with the previous month and up by 7.86% p.a as compared to end 2010.
sbv
|
