The Governor of the State Bank of Vietnam answers questions from National Assembly deputies.

(Baonghean.vn) -This afternoon, August 21st, under the chairmanship of National Assembly Chairman Nguyen Sinh Hung, the National Assembly Standing Committee held an online conference to question and answer questions from the Governor of the State Bank of Vietnam, Nguyen Van Binh.

Attending the meeting via video link from Nghe An were: Mr. Pham Van Tan - Deputy Head of the Provincial National Assembly Delegation; Ms. Dinh Thi Le Thanh - Member of the Standing Committee, Vice Chairman of the Provincial People's Council; leaders of the State Bank of Vietnam, Nghe An Branch, and representatives of several commercial banks in the area.

A view of the meeting at the Nghe An location.

During the questioning session, delegates focused on three main areas: solutions for handling bad debts and facilitating businesses' access to capital; and the implementation of the plan to restructure the system of credit institutions.

According to a report by the State Bank of Vietnam, from 2008 to the present, non-performing loans of credit institutions have tended to increase rapidly. As of March 31, 2012, non-performing loans amounted to VND 202,099 billion, accounting for 8.6% of total outstanding loans. Of this, non-performing loans of state-owned commercial banks totaled VND 125.8 trillion, and those of joint-stock commercial banks totaled VND 60.9 trillion.

To address bad debts, the State Bank of Vietnam has focused on directing credit institutions to strictly comply with legal regulations on lending activities, refraining from providing new loans to repay old debts with the aim of concealing old debts; restructuring debts appropriately to alleviate financial difficulties for businesses; and reviewing and improving regulations on debt classification, provisioning, and the appropriate use of risk reserves. Credit institutions, for their part, have proactively coordinated with customers to restructure debts, extend repayment periods, and consider reasonable interest rate reductions; increased provisioning and the use of risk reserves to handle bad debts according to regulations; and processed collateral assets of bad debts to recover capital…

In recent times, to facilitate businesses' access to capital, the State Bank of Vietnam has continuously adjusted down the policy interest rates and the maximum VND deposit interest rates for organizations and individuals at credit institutions; directed credit institutions to actively shift the credit structure towards concentrating capital in priority sectors; adjusted repayment terms and extended loans for customers with positive production and business activities and good repayment capacity; and adjusted down the lending interest rate of previous loans to a maximum of 15% per year.

During the questioning session, 35 National Assembly deputies registered to ask questions, 15 National Assembly deputies were asked questions directly, and 38 questions were posed to the Governor of the State Bank of Vietnam.

Governor of the State Bank of Vietnam, Nguyen Van Binh, clearly and thoroughly answered the questions raised by the delegates. He also frankly and seriously accepted responsibility for the shortcomings and limitations of the State Bank of Vietnam and the banking sector in general over the past period. He also expressed his determination to limit existing bad debts and prevent the increase of new bad debts. He also requested that commercial banks continue to support businesses in accessing capital to boost production and business, and open up the consumer market. Regarding the restructuring of credit institutions, the State Bank of Vietnam will focus on addressing weak commercial banks and propose many practical solutions to accelerate the restructuring process of the banking system as planned.

Concluding the session, on behalf of the National Assembly Standing Committee, Ms. Nguyen Thi Kim Ngan – Vice Chairwoman of the National Assembly, emphasized: This questioning session has provided more information to National Assembly deputies and voters, increasing public confidence in the banking sector. She requested the Governor of the State Bank of Vietnam to continue paying attention to and directing the implementation of solutions and the roadmap for restructuring the banking system, based on the principle of preventing credit failures beyond control. She urged the gradual improvement of financial management and operational capacity to develop a healthy, safe, and efficient system. She also requested continued adjustments to lower lending interest rates, creating conditions for farmers and businesses to access capital at low interest rates. She emphasized focusing lending on priority sectors. She requested the Governor to closely monitor monetary and credit policy to make appropriate adjustments, ensuring a reasonable increase in credit outstanding to both promote production and business and curb inflation. It is urgent to assess the current state of bad debts, analyze the trends of each type of bad debt, and implement measures to resolve bad debts and deal with weak banks, with appropriate roadmaps and timelines…

Quynh Lan