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Banks face stricter risk fund rules
Banks can pay dividends or increase employee salaries only when they have made risk provisioning as stipulated by the central bank.
This is one of the main provisions of Directive No.06/CT-NHNN issued on November 9 by the State Bank of Viet Nam (SBV) to aid implementation of the monetary and banking policies until the beginning of next year.
It requires joint stock commercial banks to report on their 2012 dividend and profit distribution plans at least 15 working days in advance to the SBV.
Banks are also required to take all measures to ensure safe banking operations and proactively deal with non-performing loans.
Thus, they have to strictly comply with the SBV's monetary, credit, and banking, prudential-ratio, and loan-classification norms; make adequate risk provisioning in accordance with the law; improve the quality and efficiency of the control system and internal audit; and enhance supervision to preclude violations.
They must actively implement measures to limit bad debts and resolve NPLs by risk provisioning and debt sale.
They are warned not to abuse debt-restructuring rules and other measures to conceal bad debts or falsify credit quality.
With regard to interest rates, the SBV wants the banks to strictly comply with its regulations; offer credit at reasonable interest rates based on deposit interest rates and risk level; and minimise expenditure on overheads, marketing, and others to reduce lending rates.
The directive stresses that lenders should not collect any other charges on loans except prescribed fees.
The banks have to regularly monitor implementation of the central bank's rules on deposit and loan interest rates so that they can detect violations in time and take mitigative measures.
Those found violating interest-rate regulations will be penalised in accordance with the law.
The directive calls on banks to strictly comply with regulations on exchange rates and foreign-exchange management and gold deposits and loans.
The directive is expected to help the Government continue its policies to combat inflation, stabilise the economy, and sustain economic growth at a reasonable level to foster economic restructuring and social welfare
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