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Banking sector carries out major tasks in final months of 2011
The Governor of the State Bank of Vietnam (SBV) chaired a meeting with 12 commercial banks at the SBV head office in Hanoi on August 26. The meeting aimed at discussing key tasks for the banking sector in the remainder of 2011. Also present at this meeting were other members of the SBV Management Board, senior representatives of various SBV departments, and Chairmen and General Directors of the 12 leading commercial banks, namely the Joint Stock Commercial Bank for Foreign Trade of Vietnam, the Vietnam Bank for Industry and Trade, the Bank for Investment and Development of Vietnam, the Vietnam Bank for Agriculture and Rural Development, the Asia Joint-Stock Commercial Bank, the Vietnam Export – Import Joint-Stock Commercial Bank, the Sai Gon Thuong Tin Joint-Stock Commercial Bank, the Vietnam Technological and Joint-Stock Commercial Bank, the Military Joint-Stock Commercial Bank, the Maritime Joint-Stock Commercial, the Prosperity Joint-Stock Commercial Bank, the Vietnam International Joint-Stock Commercial Bank.
Following Governor Nguyen Van Binh’s keynote speech on the banking performance for the first eight months and the monetary policy directives for the rest of the year, representatives of commercial banks expressed their determination to strictly implement the directives of the Government and the SBV in monetary policy management in the final months of 2011. In regard to the interest rates, all commercial banks committed to strictly abide by the ceiling mobilizing rate of 14% p.a. and expressed their high consensus in cutting the lending interest rates for the ordinary productive sector down to 17-19% p.a. as of mid-September.
In his concluding remarks, the SBV Governor pointed out the measures of monetary policy management and banking operations in the final four months of 2011 as follows:
1. Commercial banks continue to control their credit growth rate of below 20% in compliance with Directive No. 01/CT-NHNN of the SBV dated March 1, 2011 on monetary measures and banking operations to control inflation, stabilize macro-economy and secure social protection. Presently, the VND liquidity of the whole banking sector is quite abundant, the SBV will temporarily not apply the regulations on capital utilization ratios stipulated in Circulars No.13/2010/TT-NHNN and No.19/2010/TT-NHNN in order to facilitate capital flow and harmonization between the primary and secondary markets and the capital-surplus and capital-deficit credit institutions, thus helping capital-deficit credit institutions to promote their credit growth rate of below 20% and reduce lending interest rates.
2. For the first eight months of 2011, the SBV flexibly managed the money supply in line with the target as adopted by the Government in the beginning of the year. From now to end 2011, depending on the market movement, especially the foreign exchange supply and demand, the SBV will continue to flexibly manage the money supply through different channels to meet the monetary policy targets.
3. From now to end 2011, the SBV will continue to maintain the VND ceiling mobilizing rate of 14% p.a. in order to help credit institutions cut their VND lending interest rates down to 17-19% p.a. for the ordinary productive and business sector; maintain in tact the foreign exchange ceiling mobilizing rates of credit institutions applicable to corporate and individual depositors in order to contribute to the anti-dollarization policy of the Government; and require credit institutions to properly manage and ensure adequate foreign exchange liquidity so as to restrict their risks and stabilize the forex market.
4. To control the credit growth of foreign currencies, the SBV will amend the regulations on foreign currency lending with stricter rules to require those customers without foreign exchange revenue from their production and business to repay their debts; and increase the foreign currency reserve requirement ratio for credit institutions together with the expansion of the applicable scope.
5. With the aim of managing a stable exchange rate, the rate will be adjusted by a maximum of 1 percentage point to end 2011. This policy is based on the actual development of the international balance of payment with possible surplus of USD 2.5 – 4.5 billion and the remarkable improvement of the international reserves over the past months. In any case, SBV can afford to intervene to stabilize the exchange rate and foreign exchange market.
6. In regard to the gold market, the SBV will aim at stabilizing the domestic gold price in line with the movements of the global gold price and fighting against speculation and price manipulation. The SBV will formulate and submit the plans to the Government on stabilizing gold price in the short term and gold mobilisation in the economy in order to increase the amount of international reserves, to protect the rights of the gold individual possessors , and enhance the state management.
7. The SBV will enhance supervision of credit institutions’ operations with the immediate focus on those credit institutions with high rates of foreign currency credit growth, and strictly and timely cope with errors of credit institutions in order to ensure the effective implementation of the monetary policy and safe and sound operations of the banking sector on the basis of high consensus among credit institutions. The application of the ceiling mobilizing rate should be controlled by credit institutions themselves. All the violations of this ceiling rate will be publicized and strictly dealt with.
8. Over the past months, the mass media have suggested that enterprises have faced difficulties in getting access to capital resources or getting loans at high interest rates due to the effect of the tight monetary policy, thus leading to a large number of bankrupt enterprises. Credit institutions should evaluate the financial capacity, financing structure and operations of their corporate clients to get public understanding of banking operations.
9. The SBV Governor asserted that a regular dialogue mechanism between the SBV and commercial banks, especially the 12 leading Vietnamese commercial banks (Accounting for almost 80% of the market share of the Vietnamese banking sector) will be maintained. Except extraordinary cases, the SBV will hold quarterly meetings with the 12 leading commercial banks to promptly update and discuss essential issues of the banking sector. The meetings will be held at the head offices of these 12 commercial banks on a rotation basis. The meetings are assisted by a secretariat led by the Director of the SBV Monetary Policy Department with the participation of 12 representatives of the 12 commercial banks. The Governor remarked that the participation of commercial banks in policy formulation will contribute to heightening their responsibility in the policy pursuance.
In conclusion, Governor Nguyen Van Binh spoke highly of the responsibilities, determination and consensus of the 12 leading commercial banks in implementing the solutions charted out by the SBV in the remainder of 2011.
SBV
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