Enhancing PAR in banking sector, bringing benefits to people and businesses

In his opening remarks at the meeting, SBV Deputy Governor Dao Minh Tu emphasized: “Implementing the Government's directions as well as derived from the viewpoint to make a real reform of the SBV Governor, the SBV has directed to implement PAR extensively and actively in the banking sector on all aspects and contents regarding the reforms of the administratiion and administrative procedures. In particular, the SBV considers the goal of improving the business environment in the monetary and banking sector, supporting businesses and the people to access bank loans conveniently to be the core focus, with a view to making an important contribution to improving the business environment as well as improving the national competitiveness.

According to the SBV Deputy Governor, recently, the Government also organized a meeting on accelerating the implementation of Resolution No.02/NQ-CP on improving the business environment, improving the national competitiveness, emphasizing that this is a key task of the Government. Deputy Prime Minister Vu Duc Dam urged the ministries and agencies to tighten public disciplines and orders in implementing Resolution 02 in order to create substantial changes. In that spirit, immediately after the issuance of Resolution No. 35 of the Government, the SBV issued Decision No. 1355 promulgating the Banking sector's Action Plan to improve the business environment and the national competitiveness, support and promote businesses in the 2016-2017 period, with vision to 2020. Subsequently, since 2016, the SBV has continuously issued plans to supplement new tasks according to the annual Resolutions of the Government, the most recent of which was Resolution No. 02.

“Action plans not only set out specific tasks, but also assign units to take charge of the implementation with timeline requirements and targeted outcomes in each stage. This reflects the SBV’s sense of responsibility toward the credit institutions, and of the credit institutions toward the businesses and the people; in other words, this is also the common responsibility of the banking sector to the whole society. With the positive and effective efforts of the whole banking system, Vietnam's credit accessibility index has improved significantly over the years, and in 2018 Vietnam’s credit accessibility index was 1 of the 2 indicators (along with the Index of electricity accessibility) that came on par with the ASEAN-4 group. And 2018 was also the fourth consecutive year that the SBV has achieved the first rank in PAR Index” – said SBV Deputy Governor Dao Minh Tu.

However, the banking sector still has to conduct a lot of dialogues between the banks and the businesses, as well as lots of work to be done to eliminate the barriers regarding the administrative procedures and information obstacles in the relationship between the banking system and the enterprises. In order to review the achieved results, discuss and analyze the causes of the limitations and shortcomings in order to come up with effective solutions, create clear breakthroughs and innovations in improving the business environment, supporting business development, the SBV organized a webminar on enhancing PAR in the banking sector, improving the business environment and the Credit Accessibility Index, accelerating the implementation of Resolution No.02/NQ-CP of the Government in 2019.

The conference received many frank comments from the participants, who are directly involved in policy-making and/or policy execution, in order to further revise and improve the solutions of the banking sector to support the businesses in the coming time.

Overview of the conference

The SBV has been implementing drastically and achieved positive results in all of the 6 areas of the master program on PAR. The SBV has submitted to the Government for promulgation Decree No.16/2019/ND-CP and issued Circular No.17/2018/TT-NHNN on reducing and simplifying 31% of the business conditions in the areas of banking operations. The SBV has also issued Circular 24/2018/TT-NHN to cut down 20% of the periodical reporting regime for the credit institutions. All administrative procedures of the SBV are now conducted in accordance with ISO 9001:2008, ensuring transparency and creating favorable conditions for both individuals and organizations to supervise the process of handling administrative procedures. The reception, processing and management of documents of the SBV are now carried out entirely on the electronic environment; the online television system has been actively utilized during the operations, training, seminars... contributing to improving the work efficiency, significantly reducing papers, travel and meeting costs.

The system of credit institutions has actively reviewed, cut down and abolished many administrative procedures to facilitate the access to loans and banking services of the people and businesses. In 2018, the system of credit institutions proactively reduced the lending rates to support the businesses to access loans with reasonable costs; at the same time, providing nearly 100 credit programs and products to support enterprises with preferential capital sources, of which 15 programs applied to small and medium enterprises and start-ups. Along with that is the active review and reduction of the overall charges, service prices and a variety of fees, including many services that have become completely free. The banks have continued to invest in upgrading the technology systems and Core Banking systems to improve their e-Banking services and have provided many new, modern and convenient online products to meet the e-commerce requirements of the enterprises... There have been over 420 meetings and dialogues between the banks and the businesses held nationwide; the banks have provided new loans to more than 50,000 businesses; rescheduled the debts and restructured debt repayment terms, lowered the interest rates for nearly VND 60 trillion of the old loans of more than 3,300 enterprises.

Bring benefits to people and businesses

The above-mentioned results have brought many benefits, not only for businesses and the people, but also for the SBV as well as the credit institutions.

For the people and businesses, they have better access to information on finance and banking in general and banking processes, procedures and products in a transparent, clear, specific and equal manner. At the same time, knowledge and information on money and banks have become more universal and advanced. In addition, the people also enjoy the benefits of modern products and services; saving travel costs and time when using banking services and accessing bank loans more easily and quickly. The capital transfer time has been shortened, contributing to speeding up the development of production - business and working capital reinvestment cycle of the businesses and the people.

For the SBV – a State management agency in the monetary and banking areas, PAR results have helped the SBV to come up with more professional, methodical and effective policy directions and operations. The reduction of the business conditions has helped to reduce the time and manpower costs of the SBV in implementing the administrative procedures. Besides, by removing problems and difficulties in the monetary and credit fields, the banks have helped the monetary market and banking operations to become smoother, enabling the SBV to manage the monetary policy more effectively. At the same time, the results of the reform and renovation of the credit institutions have also helped the SBV to better perform the role of monitoring, supervising and the state management of credit institutions' operations.

For credit institutions, the pressure to reform their procedures and improve the business environment in the monetary and banking sector is the motivation for the credit institutions to comprehensively renovate their operations toward professionalism, transparency, publicity, cost reduction and customer-centered apporach, with many modern products and utilities to catch up with the international practices and standards. This motivation will help credit institutions to operate more effectively and accelerate the restructuring process in association with bad debt handling in the 2016-2020 period, and the subsequent phases. It can be seen that, at present, most banks have focused on investing strongly into information technology to develop online products, offering many new and convenient packages of products and services which are suitable to different customers segments. Most services provided to the customers are now automated, using technology with high safety and security standards. The transaction processes with customers are constantly being improved, perfected, ensuring cost reduction for customers and the credit institutions, while shortening the transaction time.

PAR orientations in the coming time

The meeting also set out PAR orientations for the SBV departments and the credit institutions in the coming time. Accordingly, the department leaders shall continue to thoroughly disseminate information on and attach high importance to the implementation of PAR tasks in accordance with the guidance of the Government, the Prime Minister and the SBV's Board of Management.

SBV Deputy Governor Dao Minh Tu chaired the Conference

More focus will also be given to tightening the administrative disciplines and orders, improving public and civil service morality; at the same time, strengthening public inspection and supervision work; continuing to improve the system of synchronous and uniform legal documents to ensure fullness and transparency for the operations of the credit institutions; continuing to improve the e-Government infrastructures; promoting the application of information technology to serve the direction and administration work of the SBV; applying strongly information technology in implementing the one-stop-shop mechanism and handling of administrative procedures; developing, improving and upgrading the national payment infrastructures, creating a basis for implementing new payment products and services; conducting researches and implementing models, applying new and modern technologies in electronic payment; strengthening the supervision of the payment systems, the payment intermediary service providers to ensure stability, safety and efficiency; implementing measures to ensure security and safety in electronic payments and card payments.

The SBV branches in the provinces and cities shall disseminate and urged the administrative reforms at all credit institutions and foreign bank branches in the locality; at the same time, following closely the directions and plans for implementing Resolution No. 01, Resolution No. 02 of 2019 of the local Party Committees and authorities to ensure that banking activities are in line with the socio-economic development strategy and support the businesses in the area.

The credit institutions shall continue to acquire and disseminate information thoroughly on the banking sector's action plans on administrative reforms, with a view to enhancing the business environment in banking operations, contributing to supporting the business development to improve the national competitiveness, focusing on the following specific tasks: Continuing to improve the financial capacity, focusing on raising the capital and improving the quality of equity, meeting the provisions of the international laws and standards; actively and proactively deploying synchronously and drastically solutions to control the credit quality, reducing bad debts, improving the asset quality; implementing effective credit growth solutions coupled with credit quality control; strongly transforming the business model towards diversifying non-credit banking products and services; actively balancing the financial ability to apply reasonable lending interest rates on the basis of deposit rates and the risk level of the loans, ensuring the financial safety; prioritizing credit for production and priority areas; strict controlling credit extension for potentially risky areas; actively coordinating with the SBV branches in the provinces and cities to effectively implement the banking-business connection program; fully disclosing on the official websites of the banks with information on the lending procedures, service provisions, fees and results of the renovation, the improvement of the procedures, standards currently applied in the operations and service standards; continuing to implement safety standards in accordance with the international practices (Basel II) in Vietnam; developing the management and business manpower for the banks with high professional qualifications, a good conscience of law compliance, good morality and professional responsibilities; continuing to upgrade the information technology systems and the internal payment systems; enhancing the application of information technology to the operations and management in order to analyze and prevent risks; at the same time investing and having appropriate solutions to ensure information technology security.

VA