On April 22nd, 2021 in Hanoi, The State Bank of Vietnam (SBV) organized a Press Conference to disseminate information on the results of the banking operations in the first quarter of 2021 and the celebration of the 70th Anniversary of Vietnam Banking Sector. The press conference was chair by First Deputy Governor Dao Minh Tu, and attended by representatives from the SBV entities, commercial banks, Vietnam Banks’ Association, Vietnam Bank for Social Policies and correspondents from several media agencies.
Proactively, drastically implementing measures of monetary policy management to support the economy
Speaking at the press conference, First Deputy Governor Dao Minh Tu informed that, despite the complicated conditions of the first quarter of 2021 with the impacts of the COVID-19 pandemic, during the first months of 2021, with a strong determination to implement the directions of the Government in Resolution No.01/NQ-CP dated January 1st, 2021 of the Government on the major tasks and solutions for the implementation of the Socio-Economic Development Plan and the State Budget Estimates in 2021 (Resolution 01), the SBV has operated the monetary policies in a proactive and flexible manner in close coordination with the fiscal and other macroeconomic policies in order to control the inflation, maintaining the macro-economic stability, contributing to the economic recovery, maintaining the stability of the money and forex markets.
According to Mr. Pham Thanh Ha, Director General of the Monetary Policy Department, the SBV's flexible and consistent management of the monetary policy instruments has helped to ensure the liquidity for the sector, stabilize the money market, enabling the credit institutions to cut down their operational costs. This has contributed to reducing the pressure on the banks' mobilizing and lending interest rates. By April 16th, 2021, the total M2 liquidity increased by 2.9% as compared to that of end of 2020, and by 15.66% in comparison with that of the same period of 2020. The liquidity of the credit institution (CI) system was ensured for smooth operations.
In managing the interest rates, since the beginning of the year, the SBV has remained the key interest rates in order to allow the credit institutions to get access to the SBV’s resources with low interest rates, thereby creating favorable condititions for them to cut down their lending rates. The common mobilizing and lending interest rates in February 2021 decreased by 0.1% p.a as compared to those of December 2020.
The exchange rates and the forex market have been regulated in line with the macroeconomic developments, the inflation target and the monetary policy objectives; the forex market has been stable, the liquidity has been ensured for smooth operations; all legitimate demands for foreign currencies have been met fully and promptly.
The restructuring of credit institutions in association with resolving the NPLs has continued to be strongly implemented. The financial capabilities of the credit institutions have been strengthened. The quality of governance and management of the credit insitutions has been gradually improved approaching the international best practices.
Participants at the press conference
Mr. Nguyen Tuan Anh, Director General of the Department of Credit for Economic Sectors, further shared that the SBV has directed the credit insitutions to continue conducting various measures to remove difficulties for the COVID-affected people and enterprises based on the spirit of accompanying and sharing with the clients. As of April 16, 2021, the credit outstanding rose by 3.34% as compared to that of the end of 2020. By April 5, 2021, the credit institutions had rescheduled debt maturities for about 262,000 borrowers with the loan outstandings of nearly VND 357 trillion; waived and reduced the interest for over 663,000 borrowers with the loan outstandings of over VND 1,270 trillion; provided new loans with the interest rates lower than the common pre-COVID rates with the accumulated amount since January 23, 2020 of over VND 3,160 trillion for over 456,600 borrowers.
According to Mr. Pham Tien Dzung, Director General of the Payment Department, the legal framework for payment operations has continued to be reviewed and improved, and been creating more favorable conditions for the development of non-cash payments. Cashless payments for public services have continued to be widely implemented (e.g. 92.3% of transactions related to the collection for the state budget has been done via banks, 94.35% of electricity bills are currently paid via banks). In the first months of 2021, the cashless payment operations have achieved a significant growth. By end of March 2021, there were over 79 internet-based and 44 mobile payment service providers. In comparison with the first quarter of 2020, payments via the internet had increased by 55.9% in volume and 28.4% in value; mobile payments increased by 78% in volume and 103% in value; QR code payments rose by 83% in volume and 146% in value.
Also at this conference, Mr. Dang Van Toi, Acting Director General of the SBV Office, provided some information on the activities to celebrate the 70th Anniversary of Vietnam Banking Sector.
Orientations for monetary policy management and banking operations in the next months of 2021
Based on the targets set by the National Assembly and the Government for the socio-economic development in 2021, the SBV would continue to manage the monetary policy following the orientations in Directive 01/CT-NHNN in a proactive and flexible manner, closely monitoring the macroeconomic developments and developing macro and market outlooks in order to control the average inflation at 4%, support the macroeconomic stability, contributing to the economic growth recovery, ensuring the liquidity and maintaining the stability of the money and forex markets. The specific orientations are as follows:
Managing the interest rates in line with the macro balances, the inflation, the market developments and the monetary policy objectives; continuing to closely monitor the macro economic developments in the international and domestic markets, the exchange rates, forex supply and demand to regulate the exchange rates appropriately; conducting consistently the measures and monetary policy instruments in order to maintain the stability of the money and the forex markets, contributing to the macroeconomic stability.
Closely following the macroeconomic developments, the disease situations to manage the credit appropriately in the direction of extending credit for the priority sectors, production and business; controlling credit for the potentially risky areas such as real estate, BOT projects, securities; continuing to conduct consistent measures to remove difficulties for the COVID-affected people and enterprises in order to recover their production and business operation; directing the credit insitutions to continue creating favorable conditions for the people and enterprises to get access to bank loans, meeting the people's legitimate demands for credit, contributing to limiting “black credit” enhancing the cooperation with the local stakeholders to accelerate the bank-enterprise connection programs, etc.
Reviewing the Scheme 1058 and implementing the Scheme of restructuring the credit insitutions in association with NPL resolution for the 2021-2025 period; directing the credit institutions to enhance the credit quality control and implement risk provisioning in line with the applicable laws; actively implementing measures to control and limit newly arising NPLs; closely coordinating with the ministries, agencies and local authorities to resolve any difficulties and obstacles in the implementation of Resolution 42 of the Government.
Continuing to improve the legal frameworks to meet the requirements for new business models and new technology-based products and services, focusing on the formulation and finalization of a new Decree on non-cash payments and the guiding Circulars; coordinating with the relevant ministries and agencies to implement on pilot scale the use of telecommunication accounts to pay for small-valued commodities and services (Mobile Money); supporting the digital transformation in the banking sector; continuing to enhance the financial communication and education in order to promote non-cash payments and financial inclusion…
Le Hang