The Governor of the State Bank of Vietnam issued Instruction No. 01/CT-NHNN on January 10 on the implementation of monetary policy and safe and sound banking operations in 2017.
In implementation of Resolution No.23/2016/QH14 dated November 7, 2016 of the National Assembly on socio- economic development plan in 2017 and Resolution No. 01/NQ-CP of the Government on key measures in execution of the socio-economic development plan and state budgeting in 2017 dated January 01, 2017, the Governor of the State Bank of Vietnam (SBV) requires the SBV entities, and credit institutions and foreign bank branches (hereafter called credit institutions) to satisfactorily implement the measures of monetary policy management and banking operations in 2017 in order to curb inflation, stabilize macro-economy, and support economic growth at a proper rate as follows:
I. OVERALL OBJECTIVES AND TASKS
1. To manage the monetary policy in a prudent and flexible manner in close combination with the fiscal policy for the aim of controlling inflation target (at about 4% averagely), stabilizing macro-economy, supporting economic growth at a proper rate (about 6,7%), and ensuring liquidity of credit institutions and the economy. In 2017, it is oriented to increase the liquidity growth rate by about 16-18% and credit outstanding by around 18% with proper adjustments based on the practical condition. To take synchronous measures of monetary and banking management in order to create favorable condition for credit institutions to extent sufficient credit for the economy and ensure the quality of credit, and improve opportunities for enterprises, cooperatives and households to get access to bank loans.
2. To accelerate the supervision and inspection of banking performance in order to ensure the safe and sound operations for credit institutions. To continue consolidating the restructure of credit institutions and resolve non performing loans (NPLs) in parallel with remaining NPL at sustainable ratio of below 3% on total outstanding loans; increasing the prudent ratios of banking operations toward matching with international standards. To establish and develop debt trading market on the basis of completing legal framework and conditions for trading in line with market oriented mechanism.
II. For the entities at the SBV head office: to provide advice to the Governor and to proactively implement solutions under their jurisdiction and tasks, with a focus on the following key tasks:
1. To continue to complete the institutional framework and improve the effectiveness of legal regulation compliance in banking sector, of which focusing on reviewing, revising and promulgating legal documents in order to create a consistent and comprehensive legal framework including monetary policy management and payment operations, prudent policies and financial stability, restructure of credit institutions, NPL resolution and securing the safe and sound banking performance.
To cooperate with Ministry of Justice to formulate a consistent legal documents and propose the National Assembly for approval in order to conduct the restructure of credit institutions, resolve NPLs and accelerate the safety and stability for banking operations. Increasing the information and communication on legal regulations, especially the laws, resolutions that are newly approved by NA and take effect from 2017.
2. To closely watch the macro-economic and monetary movements to proactively manage monetary policy instruments in order to stabilize money market in collaboration with other instruments and measures to support the restructure of security and capital markets, the stabilization of forex market, and to manage credit and total liquidity growth in line with the set objectives, as follows:
a) To flexibly regulate the open market operations (OMOs) in accordance with the market movement, the liquidity condition of credit institutions and the monetary policy objectives for the aim of supporting for money and foreign exchange market.
b) To make refinancing with the reasonable quantity, interest rates and maturities vis-as-vis credit institutions to support liquidity and lending programs under Government approval and support the resolution of NPLs and restructure of credit institutions.
c) To manage the interest rates in line with the macro-economic, inflation and money market movement in order to stabilize interest rates; Basing on capacity to manage inflation the banking sector stabilizes the money market toward reducing interest rates for loans.
d) To continue to manage foreign exchange rates in a proactive and flexible manner on the basis of reference to exchange rates of interbank market and international market movements, the macroeconomic and monetary balances in line with monetary policy objectives.
e) To continue to complete legal regulations on derivative products in order to create conditions for credit institutions to diversify and expand products and services.
3. To manage credit solutions for the aim of controlling credit credit extensions in line with set objective of lending and improving credit quality, creating favorable condition for customer to get access to bank loans.
a) To plan and implement credit solutions in accordance with the targeted credit growth rate for the whole year of 2017 in close combination with increasing credit quality. To continue to allocate the annual credit growth rate for credit institutions on the basis of assessment of financial and credit extension capability.
b) To continue taking measures to assist credit institutions to increase credit extension effectively focusing prioritized capital resources for priority fields including the agricultural and rural sector, exporters, supporting industries, small and medium enterprises, high-tech enterprises.
To strictly control the provision of loans to risky fields such as medium and long term lending, lending to big customers, real estate, BOT, BT in transportation sector in order to propose effective solutions for risk management and ensuring the safe and sound banking operations.
c) To continue strictly control the borrowing demands in foreign currencies in line with the guidance of the Government on mitigating the dollarization and stabilization of the money market; Permitting licensed credit institutions and foreign bank branches to decide to provide foreign currency loans to resident borrowers to meet the demands of short–term capital in the domestic market in order to implement the plan on production and for the business of exported goods until December 31, 2017 in line with Resolution No.35/NQ-CP dated May 16, 2016 of the Government.
d) To continue conducting solutions to promptly resolve difficulties and obstacles in accessing bank loans for enterprises, especially for SMEs. To work closely with the relevant ministries and insurance agencies to increase the chances for SMEs to access bank loan via the Vietnam Development Bank and the Development Fund for SMEs. Accelerating the program for connecting banks and enterprises and the lending program for price stability in provincial locations.
e) To work closely with the relevant ministries to formulate and complete policies and mechanism to conduct effectively the credit programs for fields and industries in line with the guidance of the Government, including several credit programs such as:
- To continue implement Credit policy serving for rural and agricultural development under Degree No.55/2015/NĐ-CP dated June 9, 2015; the lending program for ship building or upgrading under the Degree No.67/2014/NĐ-CP dated July 7, 2014; the credit policy for replanting cafe; Credit supportive policy to mitigate losses in the post – harvest seasons of agricultural and aquatic products; and other credit policies in line with the guidance of the Government.
- To watch closely to promptly resolve difficulties and obstacles in implementation of refinancing lending policy vis-à-vis home purchasers in line with the Resolution No.02/NQ-CP dated January 7, 2013 of the Government.
- To continue supporting and create favorable conditions for the Vietnam Bank for Social Policies in implementation of preferential credit policies and programs. To accelerate the conduction of of the tasks and assignments of Banking sector to implement the set objectives of National program of rural development and sustainable reduction of poverty during 2016 – 2020, and implement the Green growth program until 2020; and the program of preventing climate change.
4. To carry out synchronous measures to manage exchange market in order to stabilize forex market and to strengthen the international reserve in line with practical condition. To innovate and submit to the Government the Scheme of anti-dollarization and goldization; strictly manage the oversea lending and borrowing of domestic enterprises without guarantee of the Government in consistence with the objective of managing oversea debts of the State. To conduct the Scheme of oriented roadmap for liberalization of capital transactions of Vietnam. To review and take the stock of the implementation of Degree No.24/2012/NĐ-CP on gold market management in order to mobilize gold resource for economic development.
5. To enhance supervision, inspection of banking operations with focus on supervision of potentially risky sectors. To organize the implementation of supervision plan of 2017 in decisive and effective manner; to combine the risk supervision with the compliance supervision of credit institutions in order to strengthen the safety and soundness of banking operations.
6. To continue implement decisive measures to restructure credit institutions for period of 2016 - 2020 in line with the orientation and objectives of the Strategy of the credit institution development; To research the application of Basel II in banking sector in order to improve the transparency and matching with the international standards and the practical condition of banking performance in Vietnam.
To synchronously implement the Scheme of NPLs resolution for the aim of maintaining NPLs ratio below 3%.
7. To enhance and improve the efficiency of cash management and provision as well as money quality in circulation and vaulting security. Gradually renovate mechanism of supplying and regulating cash in circulation to meet the demand of the economy. To make research on and change measures of preventing counterfeit money and protecting Vietnamese currency.
8. To improve the quality of statistics, analysis and forecast of macro-economy, monetary and banking operations for monetary policy management. To provide information and statistics for the formulation of national overall financial strategy and the confirmation of national rating. To work closely with the relevant ministries and agencies in accordance with Cooperation regulations on macro-economic management.
9. To well perform the function of the representative of Vietnamese Government at the international financial institution; To enhance information exchange with international organizations, bilateral partners and central banks/monetary agencies with the focus on mobilizing technical assistance and supporting funds for Vietnam; To implement the leading activities for 2017 APEC in Vietnam, to enhance the efficiency of periodical work under the cooperation framework of ASEAN, ASEAN+, SEACEN and WTO, to continue participating in negotiating free trade agreements (FTA).
10. To implement scientific and technological activities of the banking sector on the basis of sticking to key tasks of the banking industry and Strategy of scientific and technological development for 2011-2020 period. To improve the publicizing and transparency of credit information, to coordinate with ministries and agencies to formulate information exchange mechanism. To cooperate with international credit information institutions and IFC to formulate and complete credit rating models. To develop new products related to credit information, to complete the electronic portal connecting with borrowers to facilitate borrowers to search individual credit points.
11. To continue the decisive and effective implementation of the Non-Cash Payment Plan in Vietnam in the 2016-2020 period. To complete and implement plan of centralizing and expanding foreign currency payment services of the inter-bank electronic payment system. To formulate and develop automatically electronic clearing system for retail payment transactions, and standards of domestic chip cards;
12. To renovate and enhance the effectiveness of the task of communication in the professional direction. To strengthen the coordination with mass media authorities, communication agencies, and economic and legal specialists in order to provide communication and information on mechanism, policies and directives of NA, the Government and the SBV about monetary and banking operations. To closely monitor public interested issues, to promptly handle with all the cases of inaccurate information on banking operations. To complete communications strategy in the form of establishing a communications network among the SBV, SBV branches and credit institutions.
13. To organize effectively the implementation of the assigned tasks and well prepare substances for the third and fourth sessions of 14th NA. To monitor, resolve and report promptly about issues related to monetary and banking operations in order to get high consensus from agencies of NA, delegates and the public. To provide information for serving the NA task in locations.
14. To proactively implement administrative reform plan for 2017 to ensure the consistence and effectiveness in the process of conducting Action Plan of the banking sector when implementing Resolution No.19-2016/NQ-CP dated April 28, 2016, Resolution No.35/NQ-CP dated May 16, 2016, Plan of implementing Resolution No.36a dated October 14,2016 on e-Government, thereby contributing to improving business environment, enhancing national competitiveness, supporting and developing enterprises. To regularly review, formulate and implement administrative procedures simplification to reduce conditions and elaborate inappropriate administrative procedures, in order to ensure the minimum reduction of 10% of the cost for complying with administrative procedures in 2017
15. To regularly and effectively implement the task of internal audit and control at the SBV entities to ensure the compliance with laws. To review and organize the tasks of accounting, management of finance, assets and construction investment in accordance with news regulations of Law on Accounting, Law on State Budget, Law on Public Investment and Law on Construction; to ensure strict management, effective usage of assets and resources for construction investment as well as assets purchase of the SBV.
16. To formulate and complete instruments of securing prudent safety to prevent systematic risks, mitigate negative effects on the economy. To complete regulations on system operations related to FSMIMS. To promulgate plan of applying IT to operations of credit institutions towards 2020, roadmap of applying international standards and practices to IT infrastructure and method of confirming e-transactions at credit institutions.
III. For SBV branches of provinces and the cities directly under the central government
1. To proactively guide the credit institutions in their locations to implement all monetary, credit and banking solutions of the SBV, to support socio-economic development of their locations in line with the advisory functions to assist the SBV Governor to execute the state management of monetary and banking operations in provinces and the cities directly under the central government.
2. To proactively follow the movements of socio-economic development and banking operations to be reported to the local governments and the SBV Governor together with the recommendations of the measures to manage operations and networks of credit institutions and revision of mechanisms and policies in line with the practical condition; to enhance the exchange of information with entities of the SBV head office.
3. To take the lead in working with credit institutions and enterprises in their locations to remove difficulties, obstacles of credit operations and handling measures between credit institutions and customers. To actively tackle obstacles and recommendations from credit institutions and their customers; to proactively advise the local leaders and authorities in coordinating with the SBV branches of provinces and the cities directly under the central government to enhance the implementation of programs on connecting commercial banks and enterprises, and the measures of supporting banking operations safely and effectively. To strengthen cooperation among the banking sector and relevant entities in their local to implement national objectives for 2016-2020 period.
4. To formulate and implement the inspection and supervision programs in accordance with Supervision Plan for 2017 of the SBV; organize the effective implementation of supervision plan for 2017. To proactively monitor information and enhance supervision and inspection of credit institutions’ compliance with SBV regulations on monetary and banking operations, foreign currencies and gold jewelry trading and NPLs resolution. To strengthen supervision for the People’s Credit Funds, especially unhealthy people’s credit funds in order to handle with violations and ensure safe and sound operations.
5. To proactively provide information to mass media and disseminate regulations and directives of the Government and SBV’s directions on monetary and banking operations. Promptly resolve arising issues, and monitor inaccurate information relating to banking operations.
6. To regularly report to the NA delegations the results in monetary and banking operations in their locations. To actively participate in dialogues with the public in order to directly report and explain all the complaints related to the solutions of monetary and banking operations.
7. To well perform statistical report regime, proactively guide people’s credit funds in their local to implement statistical report regime fully and promptly in line with SBV requirements. To organize effectively the tasks of administrative reform; to apply and improve ISO quality management system, to implement one-way mechanism for administrative procedures.
8. To continue implementing regularly internal control in line with applicable laws. To instruct credit institutions in their locations to implement SBV’s regulations on cash provision to institutions and individuals. To comply with SBV’s regulations on vaulting safety, inspect the compliance with vaulting safety at credit institutions in their locations. To closely cooperate with authorities in their locations to prevent counterfeit money.
IV. FOR CREDIT INSTITUTIONS
1. To formulate and implement the 2017 operational plans in line with the solutions of monetary policy, credit and banking management of the Government and the SBV. To strictly comply with SBV regulations on monetary and banking operations. To direct their branches to strictly comply with the instructions of the SBV branches of provinces and the cities directly under the central government.
2. To take effective measures to extend credit at a proper level to contribute to economic growth, inflation control, facilitating for production and business, in particular:
a) To control credit growth rate in line with credit growth target for 2017 and credit control measures set by the SBV; to prioritize credit extension to the agricultural sector, exporters, supporting industries, small and medium enterprises, high-tech enterprises; to extend a proper amount of resources to the Scheme on restructuring the agricultural sector which was approved by the Prime Minister, key projects, efficient projects and key sectors …thereby contributing to the socio- economic development.
b. To restrict and drastly control the proportion of credit concentration and credit limits in potential risky sectors to secure loans and economic efficiency, restrict new occurring bad debt. Regularly review and assess the lending dossier in hidden risky fields as credit for real estate, loans secured by real estate, credit for group of big clients, credit for building - operating - transfer (BOT) projects, building-transfer (BT) transportation to set the proper management target, ensure safe and efficient in operation. To direct credit for real estate to invest in projects of social and commercial housing, meeting the real demand of people under the orientation of the Government.
c. To coordinate with the SBV branches and work directly with borrowers to remove difficulties in credit relationship between credit institutions and customers, aiming to facilitate customers to access credit capital resources of loans in accordance with laws. Proactively research and formulate credit programs with proper interest rates combined with efficiently implementing the solution in Action Plan of banking sectors enclosed with Decision No.1355/QĐ-NHNN dated June 28, 2016 to reform the process of lending, simplifying the borrowing procedures, improving the capacity in evaluating dossiers to shorten the time lending, facilitating enterprises to access the capital resources together with securing loans. Improving the credit information transparency, public announcement on Website the information on process, procedures, service time, interest rates, service fee; communicate and guide borrowers to help them acknowledge the sufficient information regarding to loans.
d. To implement efficiently the credit programs for sectors, fields and preferential credit under direction of Government, Prime Minister. Timely report the SBV to solve the incurred difficulties.
3. To implement the mobilizing and lending rates:
a. To strictly implement the regulations and directions of the SBV on interest rates. Proactively balance the capital resources and capital utilization to ensure liquidity, stabilize mobilizing rate, orient toward decreasing lending rate.
b. To review and balance the financial capacity to apply proper lending rate on the basis of mobilizing rate and the risk of the loan; cut off the cost of operation, improve the effectiveness of business to create the condition to decrease lending rate in order sharing difficulties with borrower together with securing the operational finance.
c. Apply the appropriate fees promulgated by laws to share difficulties with borrowers; public posting all types of fees in compliance with laws.
d. To closely supervise the implementation of regulations of the State bank of Vietnam on interest rate of mobilization and detect violations in timely manner in order to have suitable measures to handle the violation. Credit institutions violate regulation on interest rate shall be decisively handled as prescribed by laws.
4. To comply seriously with regulations of the State Bank of Vietnam and other regulations of law on foreign currency trading, exchange rate quotation, management of foreign exchange and management of gold business activity; Proactively detect and strictly handle heads of branches, credit institution’s entities violating the regulations and report to the SBV.
5. To widely communicate and guide clients about derivative products and benefits, risks occurred from derivative products to let them proactively prevent risks in production and business. Improving, innovating banking services and products, enhancing enterprises’ accessibilities to the capital resources. Proactively deploying and applying modern payment services, meeting demand of enterprises and individuals; enhancing the information technology application in providing services; proactively cooperating with the SBV and SBV branches to timely solve difficulties, emerging issues.
6. To continue completing the model of organization, improving the quality of management of the internal control system and audit for the purpose of mitigating risks and violations of laws; raising the financial capacity, asset and credit quality, and NPLs handling; actively restructuring the assets and fund resources following the trend of reducing the gap between the term of fund and use of fund, raising the proportion of highly stable fund resources; Strengthening solutions for ensuring secured safe and sound IT system in banking activities.
7. To proactively research, formulate the plan of restructuring enclosed with handling NPLs for the period of 2016-2020 in accordance with the orientation, objective, direction and solution written in the Scheme of restructuring and handling NPLs for the period 2016-2020 of the banking sector approved by Prime Minister and by the SBV Governor. To continue deploying the plan of restructuring together with solution to handle NPLs, in which concentrating on solving bad debt with credit loss provision, selling NPLs to VAMC, accelerate debt collection, proactively solving secured assets, reporting any difficulty, query and proposing solutions to the State Bank of Vietnam during the process of restructuring and handling NPLs.
8. Seriously comply with the reporting regime in a sufficient, timely and correct manner the business information in accordance with applicable laws and at the request of the State Bank of Vietnam; timely, sufficiently and responsibly providing the information to the surveys in monetary-banking sectors conducted by the SBV in line with laws.
9. To fully exploit the data resources from Credit information Centre of Vietnam to classify the debts and making risk provision in line with the Circular No.09/2014/TT-NHNN dated March 18, 2014 and Circular No. 02/2013/TT-NHNN dated January 21, 2013; Fostering effectively the information utilization for credit information services and products thereby serving credit business and risk management.
10. To proactively continue rolling out the communication activities on banking operations and credit institution activities, closely coordinate with the SBV to communicate in timely and accurately the SBV’s messages to create the public common acknowledge on banking activities. Regularly coordinate with the SBV to control and handle incorrect information on mass media regarding to credit institution activities.
11. To closely coordinate with the State Bank branches in implementing the communication with National Assembly delegation in the locations; participate in meeting with electors and timely explain, handle occurring problems as requested by the SBV branches.
The Directive takes effect from the date of signing.
MH-LH-NG