At the Prime Minister’s Meeting with the enterprises, which was organized in the morning of May 9, 2020, on behalf of the State Bank of Vietnam (SBV) and the whole banking industry, Governor Le Minh Hung shared information about the monetary policy management, the banking operations and lendings to enterprises over the past time. In addition, the SBV Governor also provided feedback on several questions and requests from the domestic and foreign business communities.
Governor Le Minh Hung speaks at the Meeting (source: VNA)
Governor Le Minh Hung asserted that over the past months, as a companion to the business community, the banking sector has been following closely and making projections of the situations, and taking emergency measures to remove the the difficulties for the borrowers.
The SBV has proactively assessed and conducted practical solutions to support the people and the enterprises
Firstly, about the monetary policy and the banking operations, the SBV has managed in a flexible and effective manner, controlled the inflation, stabilized the exchange rates, ensured the liquidity of the economy, reduced the interest rates, maintained the macro-economic foundations, and a favorable and stable business environment, thereby facilitating the mitigation of the Covid-19 impacts.
Secondly, the SBV has promptly issued Circular No. 01/2020/TT-NHNN, which took effect from March 13, 2020, creating the legal framework for the credit institutions to remove difficulties for their customers, specifically: (i) Borrowers are allowed to restructure the due principals and interest on their loans to a more appropriate time without being re-classified as non-performing loans; during this period, borrowers are not required to pay the principals and the interest on their loans, and there is no interest penalties for late payment; (ii) Borrowers, whose loans have been restructured and their loan categorisation remained unchanged, are further allowed to access more loans for production and business operations; (iii) Creating the legal framework for the credit institutions to waive and reduce the interest and fees. These are effective measures to help reduce the pressure of paying due debts on the enterprises, thereby they can focus their finance on production and business operations.
Moreover, the SBV has proactively proposed to the Government to provide refinancing loans with zero interest, and the maximum amount of VND 16,000 billion through the Vietnam Bank for Social Policies (VBSP). The goal is to help the enterprises to have finance to pay their employees and workers, whose jobs have been suspended due to Covid-19. Recently, the SBV has issued Circular No.05, which took effect from May 7, following closely the spirit of Resolution No.42 of the Government and Decision No.15 of the Prime Minister.
Deputy Governors Dao Minh Tu & Nguyen Thi Hong attend the Meeting on the SBV’s side
Over the past months, the SBV has submitted to the Prime Minister to issue a Decision on the pilot implementation of Mobile Money (using mobile phone accounts to pay for small-valued services), and has been finalising the procedures to submit to the Government for the issuance of a new Decree amending and supplementing the Decree on enhancing cashless payments.
By May 8, 2020, the whole banking sector had rescheduled the debt payment dates for over 215,000 borrowers with the loan outstanding of VND 130 trillion; waived and reduced the interest for 260,000 borrowers with the loan outstanding of over VND 1,000 trillion; provided new loans with the accumulated amount of VND 630 trillion for 182,000 borrowers (since January 23, when the Prime Minister officially declared a nationwide outbreak), with the interest rates lower than the rates before the outbreak by 0.5-2.5%; waived and reduced the fees for payment with the amount of VND 1 trillion. Among those receiving the assistance from the credit institutions, businesses accounted for nearly 80%.
Banks reducing costs and profits to lower lending interest rates
Based on the actual results and recommendations from the businesses, the SBV Governor shared that the SBV will continue to operate the monetary policy in order to stabilize the macro-economy, facilitate for the recovery of the economy after the pandemic is over; stabilizing the exchange rates and standing ready to intervene the market in order to ensure the supply of foreign currencies to the economy. The SBV is committed to supplying sufficient capital to the economy. In addition, the SBV has been considering to adjust the credit growth targets for the commercial banks at levels higher than those set out from the beginning of the year.
Deputy Governors Nguyen Kim Anh and Doan Thai Son attend the Meeting on the SBV’s side
Regarding the interest rates, the SBV has made plans to make proper adjustments, and in the coming time will consider to further cut the key interest rates; drastically direct the credit institutions to cut down on costs and reduce profits in order to lower the lending interest rates.
At the Meeting, Governor Le Minh also provided feedback on several questions and requests related to Circular 01 on the subjects, scope, procedures and conditions for lending, the internal procedures and the implementation by the credit institutions. The SBV Governor affirmed: “All institutions, individuals, households are eligible for the application of Circular 01; not depending on the scales and types of the enterprises. Circular 01 is applicable to all loans, regardless of whether they are in VND or in foreign currencies. In addition, the CIs will not distinguish among different loan categories when restructuring, waiving and reducing the interest”.
The SBV has also directed to establish a hotline for receiving feedbacks in order to handle with any difficulties and obstacles from the businesses, and at the same time, strictly resolve all cases of neglience, causing troubles for the enterprises.
Finally, Governor Le Minh Hung noted that the policies to support the businesses in the spirit of sharing difficulties and accompanying the borrowers have been conducted from the banking industry’s own resources. This credit program has been implemented by the credit institutions from with sources from the mobilized deposits of the individuals and institutions; therefore, the SBV Governor requested the credit institutions to ensure the loan and operational safety, so as not to cause negative impacts on the whole economy. The whole banking system is committed to continuing to accompany the business community to overcome the difficulties, promote the business and production activities, and contribute to achieving the growth target under the Government's direction.
Le Hang