Facilitate access to credit capital

(Baonghean) - The State Bank implements monetary policy and ensures safe and effective banking operations. Accordingly, in 2016, the State Bank (SBV) will operate monetary policy proactively and flexibly, closely coordinating with fiscal policy and other macroeconomic policies to control inflation according to the set target (below 5%), stabilize the macro economy, contribute to supporting economic growth at 6.7%, ensure liquidity of credit institutions and the economy.

Checking the amount of money transacted at VietinBank Vinh branch - Photo Thu Huyen

Synchronized management of credit solutions

The results of monetary policy management and banking operations in the first months of 2016 show that, with flexible and synchronous management, monetary policy tools have regulated the amount of money reasonably, creating conditions to stabilize interest rates, striving to reduce lending interest rates, supporting exchange rate stability and the issuance of government bonds, increasing state foreign exchange reserves while still ensuring inflation control.

By July 29, 2016, total means of payment increased by 9.45%, capital mobilization increased by 9.94% compared to the end of 2015. Liquidity of credit institutions (CIs) continued to be guaranteed and had surplus, interbank interest rates decreased compared to the end of last year.

Based on the macroeconomic, monetary and inflation developments, the State Bank of Vietnam maintains stable operating interest rates and, through monetary policy tools, ensures liquidity, creating conditions for credit institutions to maintain stable deposit interest rates. Since the end of May 2016, the State Bank of Vietnam has directed credit institutions to implement capital balance measures to maintain stable deposit interest rates, reduce operating costs, and improve business efficiency to create conditions to reduce lending interest rates.

The State Bank of Vietnam has also issued a circular amending regulations on limits and safety ratios in the operations of credit institutions, in which the ratio of short-term capital sources used for medium- and long-term loans is adjusted to gradually decrease according to the roadmap, contributing to reducing interest rate pressure for credit institutions.

Deputy Governor of the State Bank of Vietnam Nguyen Thi Hong affirmed: “With the synchronous implementation of solutions, the interest rates of credit institutions have basically stabilized. From the end of April 2016 to now, State-owned commercial banks and some joint-stock commercial banks have reduced short-term lending interest rates by 0.5% per year and brought medium- and long-term lending interest rates to a maximum of 10% per year for customers borrowing capital for production and business purposes, while actively implementing lending programs with preferential interest rates.”

In the process of synchronously implementing credit solutions, aiming to control reasonable credit growth to support economic growth while still ensuring credit quality, the State Bank of Vietnam has stepped up strict control of credit in risky areas. Accordingly, the State Bank of Vietnam has set out credit growth orientations and notified each credit institution to implement them, while closely monitoring credit developments to have appropriate handling measures. From June 1, 2016, the State Bank of Vietnam has allowed credit institutions to consider and decide to resume lending in foreign currencies to meet domestic short-term capital needs for production and business of export goods until December 31, 2016; At the same time, the State Bank of Vietnam has directed credit institutions to continue to closely coordinate with local authorities to implement the bank-enterprise connection program, creating favorable conditions for accessing credit capital.

To ensure the credit quality of the credit institution system, the State Bank of Vietnam issued a circular adjusting the risk coefficient of receivables for real estate business, with a roadmap to be applied from January 1, 2017, to strictly control real estate business activities, not applying to the demand for purchasing houses for final consumption; gradually adjusting the ratio of short-term capital for medium- and long-term loans but with a roadmap to be applied in accordance with actual conditions, gradually enhancing the stability and safety of credit institutions.

Continue to control inflation, support reasonable growth

With a higher credit growth rate than the same period, by July 29, 2016, economic credit increased by 8.54% compared to the end of 2015, the credit structure actively supported production and economic growth. Credit programs and policies for industries and sectors were effectively implemented with the resources of the State Bank, contributing to economic development and ensuring social security.

Credit capital actively supports businesses in developing production (Illustration photo).

Effective management of the foreign exchange market, overcoming the dollarization in the economy, creating conditions to improve the State foreign exchange reserves in accordance with reality, improving the international balance of payments... makes the management of the gold market according to Decree 24/2012/ND-CP. Domestic gold prices have been relatively stable and closely following the world gold price, the supply and demand of gold bars are relatively balanced, the "goldification" situation has been gradually limited, the use of gold as a means of payment has been prevented.

The SBV leader also said that by the end of June 2016, the bad debt ratio of the entire system was 2.58%, down from 2.78% in May 2016. According to data reported by credit institutions and the Asset Management Company of credit institutions (VAMC), the total bad debts handled in the first 6 months of 2016 reached 59.71 trillion VND (down 14.55% compared to the same period last year).

Regarding the orientation of monetary policy management and banking operations in the coming time, the State Bank will continue to operate monetary policy proactively and flexibly, closely coordinating with fiscal policy to control inflation, ensure macroeconomic stability and support reasonable economic growth, implement solutions to remove difficulties for businesses but not be subjective with inflation developments. In particular, the State Bank will focus on implementing regulation mainly through open market operations, refinancing with reasonable terms, volumes and interest rates to support liquidity and capital sources for credit institutions but ensure the target of controlling inflation.

Continue to direct credit institutions to implement measures to balance capital sources and capital use, maintain stable mobilization interest rates, reduce operating costs, improve business efficiency to create conditions to reduce lending interest rates. Focus credit on production sectors, especially agriculture, rural areas, exports, supporting industries, small and medium enterprises, high-tech enterprises, and business startups; control credit in some industries and fields with potential risks; continue to implement solutions to create favorable conditions for accessing credit capital.

Red River