On June 21, 2023, the State Bank of Vietnam (SBV) organized a Press Conference under the chair of First Deputy Governor Dao Minh Tu to disseminate the results of the monetary policy management and the banking operations in the first half of 2023.
Mobilizing and lending interest rates are on a downward trend
Speaking at the Press Conference, First Deputy Governor Dao Minh Tu informed that, in the first 6 months of 2023, closely following the Resolutions of the National Assembly and the policy of the Government, as well as the macro-economic and the monetary situations, the SBV has focused on implementing strongly and synchronously the established measures to manage the monetary policy and the banking operations, with the encouraging results as follows:
About the interest rate management, for over two months in the beginning of 2023, the SBV had maintained the key interest rates in the context of hiking interest rates around the world and the unprecedented developments of the inflation both domestically and globally. In order to implement the policy of the National Assembly, and the directions of the Government and the Prime Minister on reducing the lending interest rates to resolve difficulties for businesses and the people, from March to June 2023, the SBV had cut down the key interest rates 4 times, with a reduction of 0.5-2.0% p.a.. Specifically, (1) the refinancing interest rate and the rediscounting interest rate have been reduced by 1.5 percentage points p.a.; the overnight rate for the inter-bank electronic payments, and the interest rate applied to loans to finance short-term balances in the clearing transactions between the SBV and the credit institutions have been lowered by 2 percentage points p.a.; (2) the maximum VND mobilization interest rates for time deposits of below 6–month terms have been reduced by 0.5 to 1.25 percentage points p.a.; (3) the interest rate cap applied to the VND short-term loans provided by the credit institutions and the foreign bank branches to borrowers to meet the capital demand in a number of priority sectors and areas has been reduced by 1.5 percentage points p.a. Moreover, the SBV has continued to encourage the credit institutions to cut down on their operational costs to have more space for reducing the lending interest rates, thereby helping to lower the lending interest rates for their customers in order to facilitate the recovery of production and business activities.
Thanks to the SBV management measures, the common interest rates have been stable, the mobilization and lending interest rates have been on a downward trend. The average mobilization interest rate at the commercial banks is now 5.8% p.a. (down by 0.7% p.a. as compared to that of the end of 2022); the average lending interest rate is now 8.9% p.a. (down by 1% p.a. as compared to that of the end of 2022).
About the exchange rate management: the SBV has continued to closely monitor the market situation to regulate the exchange rate in a flexible manner in association with the monetary policy tools in order to maintain the stability of the forex market, contributing to controlling the inflation and maintaining the macro-economic stability. The domestic forex market and the exchange rate were relatively stable, and the market liquidity was ensured for smooth operations; the legitimate demands for foreign currencies were fully met. The SBV has bought foreign currencies from the credit institutions to supplement the state forex reserve.
Creating favorable conditions for businesses and the people to access bank loans
According to the SBV Deputy Governor, ever since the beginning of 2023, the SBV has managed credit at an appropriate level, contributing to controlling the inflation and supporting the economic growth.
In order to enhance the accessibility to the formal credit and to protect the legitimate rights and interests of the people and businesses when borrowing from the credit institutions, thereby contributing to limiting “black credit”, the SBV has proactively conducted many specific solutions, such as: (i) implementing the Bank-Enterprise Connection Programs nationwide to promptly remove any difficulties and obstacles in accessing bank loans; (ii) directing the credit institutions to create favorable conditions for their customers in accessing bank loans; diversifying banking products and services, simplifying the lending procedures; (iii) issuing on a timely manner Circular No.02/2023/TT-NHNN dated April 23, 2023 on the rescheduling of debt payment and the maintenance of debt groups by the credit institutions and the foreign bank branches in order to support the customers in difficulties. Moreover, the SBV had issued Directive No. 02/CT-NHNN dated May 23, 2023 on enhancing the credit operations and implementing the policy on the rescheduling of debt payment and the maintenance of debt groups in order to support those customers in difficulties as stipulated in Circular No. 02/2023/TT-NHNN; (iv) directing the commercial banks to implement the credit package worth VND 120,000 billion through the commercial banks’ own mobilized capital to provide lending to projects of social housing, workers’ housing, renovation and reconstruction of old apartment buildings, with the lending interest rates of 1.5% - 2% lower than the average lending interest rates in the market.
About the implementation of the 2% interest rate support program during 2022-2023, as of June 15, 2023, the loan outstanding of the whole economy reached VND 12,320 trillion, up by 3.36% as compared to that of the end of 2022, and up by 8.94% in comparison with that of the same previous period. The credit for the potentially risky areas had been controlled.
About the restructuring of the credit institution system in association with the NPL resolution, the SBV has continued to conduct the tasks and solutions as stated in the Scheme on restructuring the credit institution system in association with the NPL resolution for the 2021-2025 period (Scheme 689). The state-owned commercial banks have continued to play a crucial role in the whole credit institution system in terms of capital volumes, assets, as well as capital and credit mobilization.
Overview of the press conference.
Enhancing digital transformation and cashless payment
According to Deputy Governor Dao Minh Tu of the State Bank of Vietnam (SBV), the digital transformation and cashless payment have continued to be further enhanced. The legal frameworks for payment operations and digital transformation have been continuously improved. The whole banking sector has actively implemented the Scheme on Cashless Payment Promotion in the 2021 - 2025 period, and the Plan for Digital Transformation of the banking sector by 2025, vision to 2030. The cashless payment has continued to achieve positive results. The interbank electronic payment system, the financial switching and electronic clearing system, the ATM system have all operated stably, safely and smoothly, meeting effectively the people’s demands for payment. The indicators of cashless payment have increased in terms of both transaction volumes and values, reflecting the trends of transitioning to electronic payment and cashless payment.
On January 06, 2022, the Prime Minister signed for issuance the Scheme on the development of the applications of the population database, the personal identification and e-KYC for the national digital transformation in the 2022 - 2025 period, vision to 2030 (Scheme 06). According to the SBV Deputy Governor, on March 02, 2023, the SBV issued the Plan for the implementation of Scheme 06 in the banking sector in 2023. The banking sector has actively developed plans, connected and exploited the population information in the National Database on Population, the chip-based ID cards, electronic identification (VNeID) in support of the public services, the provision of credit information, and the anti-money laundering, as well as to support the socio-economic development.
On April 24, 2023, the SBV and the Ministry of Public Security held a signing ceremony of the joint Implementation Plan of the tasks as stated in Scheme 06, creating an important foundation for the realization of the objectives of the National Digital Transformation Program in general, as well as the digital transformation in the banking sector in particular. Currently, this Plan is being implemented actively by the SBV.
Continuing to follow the market developments, operating the monetary policy in a flexible and consistent manner
Sharing about the orientations for the monetary policy management in the coming time, Deputy Governor Dao Minh Tu asserted that the SBV would continue to follow closely the market developments, the domestic and international economic situations in order to operate the monetary policy tools and solutions in a flexible and consistent manner in order to control the inflation, contribute to maintaining the macroeconomic stability, as well as the stability of the currency and the foreign exchange markets, control the credit growth in line with the established targets, specifically as follows:
Operating the open market operations in a flexible and proactive manner, standing ready to support the liquidity for the credit institution system; Providing refinancing to the credit institutions to support their liquidity situation and enable them to provide credit in alignment with the programs approved by the Government and the Prime Minister; Supporting the restructuring process of the credit institutions, and dealing with non-performing loans (NPLs); Operating the regulatory provisioning instrument in line with the economic and monetary situations; Conducting other monetary policy management measures to realize the objectives of the monetary policy management.
Regulating the interest rates in alignment with the macro balances, the inflation situation and the monetary policy objectives; Continuing to encourage the credit institutions to cut down on their costs and reduce the lending interest rates in order to support the recovery and development of production and business operations.
Continuing to monitor closely the macro-economic and the market developments in order to manage the exchange rate in line with the market conditions; Coordinating synchronously the monetary policy measures and tools to maintain the stability of the forex market, contributing to the inflation control and the macroeconomic stability.
Managing the growths in the volume and the structure of credit in a reasonable way, meeting the demands for credit of the economy, contributing to controlling the inflation, supporting the economic development; Directing credit to production and business, the priority sectors and areas, and the drivers of the economic growth in line with Government policy; Controlling strictly credit growth in potentially risky areas; Creating favorable conditions for enterprises and people to access bank credit.
Continuing to implement the tasks as assigned in the Scheme on restructuring the system of credit institutions in association with NPL resolution in the 2021 - 2025 period in line with the Government’s directions.
Continuing to promote the digital transformation and the cashless payment in the banking sector to meet the requirements for new business models, products and services on the basis of the information technology, the digital banking, and the digital payment; Enhancing the security and safety for the payment operations and in the digital transformation.
Continuing to connect and exploit the population information in the National Database on Population, the chip-based ID cards, the electronic identification (VNeID) in support of the public services, the provision of credit information, and the anti-money laundering, to support the socio-economic development.
At the press conference, Deputy Governor Dao Minh Tu also answered questions from the press agencies related to the monetary policy management and the banking operations in the coming time.
LH - LK