On October 12, 2021 afternoon in Hanoi, the State Bank of Vietnam (SBV) organized a Press Conference under the chairmanship of First Deputy Governor Dao Minh Tu to disseminate the results of the monetary policy management and the banking operations in the nine months of 2021, and the orientations for the tasks during the remaining months of the year.
First Deputy Governor Dao Minh Tu chairs the conference
Also attending the Press Conference, there were representatives from the SBV entities, commercial banks in operating Vietnam, Vietnam Bank for Social Policies, Deposit Insurance of Vietnam, etc.
Banking operations conducted comprehensively and consistently
Implementing the directions of the Government and the Prime Minister as stated in Resolution No. 01/NQ-CP dated January 1, 2021 on the major tasks and solutions for realizing the socio-economic development plan and the State budget estimates in 2021 (Resolution 01), in the third quarter and during 9 months of 2021, in the context of the complicated developments of the COVID-19 pandemic, the SBV had continued to operate the monetary policy in a proactive, flexible and prudent manner, in close coordination with the fiscal policy and other macroeconomic policies in order to control the inflation within the set target, maintaining the stability of the currency and the foreign exchange markets, supporting the macroeconomic stability and contributing to the recovery of the economic growth.
SBV Deputy Governor Dao Minh Tu speaks at the Conference
Speaking at the Conference, the SBV First Deputy Governor shared that the SBV had ensured flexible and prompt operations in implementing the directions of the Government and the National Assembly, showing full consistency and meeting the requirements for performing effectively its duties as a think tank to the Government and the Prime Minister in order to come up with appropriate decisions in the finance, monetary and banking areas. Over the recent months, the SBV's operating policies have reflected the consistency, dynamism and creativity of the SBV. The orientations and goals set out at the beginning of the year had been determined in a scientific manner and continued to be maintained, serving as a solid and reliable basis for the confidence of the market, as well as the businesses and the people. This consistency had conveyed a message to the economy and the businesses that the Government's top priority is to ensure the domestic currency stability, control the inflation, and maintain the macro-economic stability. In addition, the SBV had also focused all resources on accompanying and supporting the businesses and the people, as well as reforming the mechanisms and institutions in the direction of developing and improving the governance capabilities of the commercial banks; applying Industry 4.0 technology innovations to the banking activities.
Reporting on the results of the monetary policy management, an SBV representative provided the information that, as of October 7, 2021, the total means of payment (M2) had increased by 5.65% as compared to the end of 2020. Since the first outbreak of the COVID-19 pandemic, the SBV had thrice cut down the key interest rates, with the total reduction of 1.5-2.0% p.a.; reduced the cap for the mobilizing interest rates by 0.6-1.0% p.a. for below 6-month term deposits; reduced the cap for the lending interest rates by 1.5% p.a. on short term loans for the priority sectors and fields (currently at 4.5% p.a.); ensured readiness to provide liquidity support for the credit institutions; created favorable conditions for the credit institutions to access the SBV's financial resources at a lower cost. Moreover, implementing Resolution No.63/NQ-CP of the Government dated June 29, 2021, 16 commercial banks, through Vietnam Banks’ Association (VNBA), have agreed to reduce their lending interest rates, applicable from July 15, 2021 until the end of 2021, with the total reduced interest amount estimated at VND 20,613 billion.
According to the reports by the credit institutions, by end of September 2021, the credit institutions had provided new loans with lower interest rates as compared to the pre-COVID time with an accumulated amount since January 23, 2020 of VND 5,200 trillion for 800,000 customers; exempted and reduced interest rates for over 1.7 million customers, with a total loan outstanding of over VND 2,500 trillion. According to the accumulated estimates from January 23, 2020 to end of September 2021, the total amount of interest which has been exempted or reduced by the credit institutions for their customers was VND 27,000 billion, in which, the accumulated total amount of profit cuts as committed by 16 commercial banks (accounting for 75% of the total loan outstanding of the economy) from July 15, 2021 to end of September 2021 was VND 11,813 billion, fulfilling 57.31% in comparison with their pledges. The foreign currency market had been quite stable with the liquidity ensured for smooth operations; the legitimate demands for foreign currencies had been promptly and fully met.
About the credit operations, the SBV had continued to conduct the credit measures in order to control the credit growth in line with the set targets, while improving the credit quality and controlling the inflation, creating favorable conditions for bank loan access. Thanks to the consistent measures, in 9 months of 2021, despite the negative impacts of the COVID-19 pandemic, the credit growth had increased steadily right from the beginning of the year at a higher growth rate than the same period of 2020 (up by 5.48% against the same time of 2020).
Regarding the results of rescheduling debts for the COVID-19 affected customers in accordance with Circular No.01/2020/TT-NHNN, by end of September 2021, the credit institutions had restructured debt repayment terms for 278,000 borrowers with the total outstanding loan of VND 238,000 billion; the accumulated debts of which payment had been rescheduled and debt classifications maintained since January 23, 2020 were about VND 531,000 billion.
Besides, the banking sector had also actively conducted several support programs to help the affected people and businesses to overcome the difficulties caused by the COVID-19 pandemic. About the program of providing loans to employers for paying work suspension benefits and wages/salaries to recover their production and business operations (in line with Resolution No.68/NQ-CP and Decision No.23/2021/QD-TTg), the SBV had disbursed VND 462 billion from the refinancing fund to Vietnam Bank for Social Policies (VBSP), which had extended debts for 918 employers with the total outstanding loan of VND 461 billion to pay benefits and wages/salaries for 130,741 employees (as of end of September 2021).
Implementing the policies on supporting the aviation industry, the SBV had refinanced several commercial banks, which had disbursed VND 4 trillion to Vietnam Airlines (VNA).
Regarding the results of removing difficulties for rice purchasing and consumption, after more than 1 month since the issuance of the SBV’s direction in Document No. 5747/NHNN-TD, loan outstanding for rice purchasing and consumption in the Mekong Delta had increased by nearly VND 5,000 billion, the targets of credit extension had increased by VND 1,500 billion.
Payment activities and financial technology had continued to develop robustly. The legal and policy frameworks had continued to be developed in order to enhance non-cash payments, facilitating the people's transactions in time of social distancing measures. During 8 months of 2021, the total amount of transactions via the electronic interbank payment system had increased by 3.32% in volume and by 41.37% in value as compared to that of the same period of 2020; transactions via the Internet channels had increased by 54.13% in volume and by 30.70% in value; transactions via the mobile phone channel had increased by 74.98% in volume and by 93.69% in value; QR Code payments had increased by 66.81% in volume and by 133.12% in value.
An overview of the Conference
Continuing to operate monetary policy proactively and flexibly
Sharing about the orientations of the monetary policy and banking operation management in the coming time, Deputy Governor Dao Minh Tu said that, based on the objectives of the National Assembly and the Government in the socio-economic development plan for 2021, the SBV would continue to operate the monetary policy proactively and flexibly in close coordination with the fiscal policy and other macroeconomic policies in order to control the inflation, maintain the macroeconomic and market stability; Continuing to implement the policies and the solutions that are currently on-going to address the difficulties caused by COVID-19; ensuring readiness to meet the capital needs for the economic recovery, etc.
Specifically, the SBV would focus on ensuring the stable liquidity in the money market; operating the interest rates in line with the macro balances, the inflation, the market movements and the monetary policy objectives; encouraging the credit institutions to reduce costs to continue reducing their lending interest rates in support of the production and business recovery; continuing to direct and monitor the implementation of the commitments for reducing the interest rates by the credit institutions. In the immediate time, the SBV would continue to maintain the current key interest rates, and would closely monitor the developments of the pandemic, the macro-economy and the market situations in order to appropriately manage the interest rates in the coming time.
In addition to that, the SBV would continue to closely monitor the macroeconomic situation, the money market and the developments of the COVID-19 pandemic to conduct measures to control the credit growth appropriately, focusing on production and priority areas, while strictly controlling credit for potentially risky areas; continuing to implement the solutions to remove difficulties and creating favorable conditions for the businesses and people to access bank loans; closely monitoring the domestic and international market developments, and regulating the exchange rates in a flexible manner in line with the actual situation, and coordinating synchronously the monetary policy measures and tools to maintain the stability of the forex market.
Representatives of the SBV Departments answer questions at the Press Conference
Also in the credit field, the SBV would continue to monitor the performance of the credit institutions in terms of debt rescheduling, interest and fee exemption and reduction, maintaining the debt classifications for the COVID-affected customers in accordance with Circular No.01/2020/TT-NHNN and Circular No.03/2021/TT-NHNN, as well as Circular No.14/2021/TT-NHNN amending and supplementing Circular No.01/2020/TT-NHNN; continuing to urge and monitor the interest rate reduction by the 16 credit institutions in line with their commitments for the implementation of Resolution No.63/NQ-CP and Decision No.1284/QD-NHNN, as well as the commitments made at the VNBA’s meeting on July 12, 2021.
The SBV would also continue to coordinate with the relevant ministries and agencies to implement the policy credit program; providing credit to help avoid disruptions to the supply chains, or the production and commodity circulation chains; assessing the difficulties of the economy to implement appropriate solutions. Beside that, the SBV would continue to implement the Bank-Enterprise Connection Programs in order to help promptly address any difficulties and support the businesses; continuing to direct the credit institutions to focus on meeting the capital needs for the production, processing, circulation, consumption and export of agricultural products.
Continuing to implement the support policies for payment activities, promoting digital transformation of the banking industry; keeping on removing the difficulties and providing more convenient services to enhance non-cash payments, as well as to ensure safety and security in the payment activities.
Continuing to inspect, supervise and ensure the safe and sound banking operations; preventing bad debts in the process of restructuring and rescheduling debts; monitoring the compliance with the requirements for risk provisioning to ensure the safety of the financial resources as well as the financial capacity of the commercial banks.
Le Hang