SBV issues Directive on implementation of monetary policy and safe and sound banking operations in 2016

Accordingly, the SBV Governor required the SBV entities and credit institutions and foreign bank branches (hereafter called as credit institutions) to satisfactorily implement the measures of monetary policy management and banking operations in 2016 in order to curb inflation, stabilize macro-economy, and support economic growth at a proper rate as follows :

(i) The whole banking sector manages the monetary policy in a prudent and flexible manner in close combination with the fiscal policy for the aim of controlling inflation target (below 5%), stabilizing macro-economy, supporting economic growth at a proper rate (6,7%), and ensuring liquidity of credit institutions and the economy. In 2016, it is oriented to increase the liquidity growth rate by about 16-18% and credit outstanding by around 18-20% with proper adjustments based on the practical condition. To take synchronous measures of monetary and banking management in order to create favorable condition for enterprises, cooperatives and households to get access to bank loans for effective production and business; to create favorable condition for credit institutions to extent sufficient credit for the economy in a safe and effective manner.

The SBV entities and credit institutions take synchronous measures of institutional improvement and supervision to ensure prudent operations of credit institutions in line with law. To continue comprehensively restructuring the system of credit institutions. To strictly implement measures of resolving non performing loans (NPLs) in parallel with improving credit quality for maintaining NPL ratio below 3% in line with the standards of debt classification in Vietnam.

(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:

To review, formulate and promulgate the documents under their jurisdiction, submit to the Government and Prime Minister for issuing legal texts in line with legal document formulation plan of the Government, Prime Minister the SBV, of which focusing on promulgating legal documents in order to create a consistent and comprehensive legal framework for monetary policy management, restructuring credit institutions, NPL resolution and developing market for debt trading and ensuring safe and sound banking operations. To continue to review and promulgate the documents in accordance with the 2014 Law on enterprises, the 2014 Law on investment, the 2015 Civil Law …To organize the implementation of the 2015 Law on issuance of legal texts; to strictly monitor law implementation with focus on key substances in accordance with resolutions of the Government and plans on monitoring law implementation of the SBV in 2016. To strengthen the task of information and communication on law education with the focus on newly approved laws, ordinances, resolutions in 2015 or effective in 2016 and international treaties, of which Vietnam is a member.

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 stabilization of forex market, to manage credit and total liquidity growth and support economic development and the priority sectors in line with the set orientation of the Government.

To manage the flexible credit solutions toward increasing credit extension in combination with controlling credit quality and safety, ensuring sufficient capital provision for the economy, creating favorable condition for customer to get access to bank loans. To plan and implement credit solutions in accordance with the targeted credit growth rate of 18-20% in 2016 focusing credit capital on specific sector and fields.

To closely monitor the international financial market in order to proactively conduct proper measures for mitigating negative impacts from international integration and stabilizing money market. To conduct comprehensive measures with the aim of effectively managing forex market, mitigating the dollarization and attracting foreign capital flows and foreign currency resources in the domestic market in order to improve the state international reserves in line with practical situation.

To continue managing the gold market in accordance with Decree No. 24/2012/NĐ-CP on gold trading. To ensure the gold market management in a strict and comprehensive manner towards narrowing gold bullion market, continuing to prevent the goldization; to create favorable conditions for developing jewelry gold market for the domestic demand and export.

To enhance supervision, inspection and mornitoring money market and banking operations. To take severe and timely actions against all violations and risks; at the same time, to detect and recommend solutions to handle, revise and complete mechanisms and policies of the State and the banking sector.

To continue implement decisive measures to restructure credit institutions in line with the orientation and objectives of the Strategy of the credit institution development until the year 2020; Decisively and rigorously resolve weak credit intuitions, especially focusing on studying and proposing measures to manage, supervise, and support for restructuring the commercial banks purchased by the SBV. To synchronously implement the Scheme of NPLs resolution for the aim of maintaining NPL ratio below 3%; To combining NPL resolution with decisively preventing newly arising NPLs and improving credit quality.

To flexibly harmonize the cash in circulation to meet sufficiently the demand of the economy and cash reservation; To make research on and apply modern technology in bank vault and innovate management policy and supply of cash in banking industry.

To improve the quality of statistics and forecast in service of formulation and management of the monetary policy.

To well perform the function of the representative of Vietnamese Government at the international financial institution; To enhance the participation and the position of Vietnam in international and regional monetary and financial organizations; To effectively implement technical assistance projects and programs provided by the IMF, WB, ADB and other international and donor partners.

To develop the strategy of the banking sector until the year 2025 and vision towards 2035; To study and propose measures to comprehensively develop and harmonize the development of banking industry with insurance market toward building up a stable financial market in Vietnam in 2016 and for period 2016 – 2020; To strengthen scientific research projects in the direction of improving the quality and application of the sientific research projects meeting the innovation requirement of science and technology in the banking sector.

To take stocking of the Non-Cash Payment Plan in Vietnam in the period of 2011-2015 and report the results to the Prime Minister; To focus on improving payment infrastructure and formulating legal documents for managing new payment instruments. To accelerate the extension of payment via POS and development of new payment services; to promote non – cash payment in rural areas through the extension of inclusive finance in rural and remote locations.

To enhance the IT application in functional activities in combination with simplification of administrative procedures at the SBV.

To enhance information and communication on the policies and solutions of monetary policy management and banking operations toward a professional and effective communication system; To provide adequate and timely information and data on policy mechanism, guidance of National Assembly, Government and the SBV about monetary and banking operations and operational results of the banking sector. To actively provide information and closely coordinate with mass media to promote information and communication of the management policies, and promptly handle inaccurate information related to banking operations.

To complete the plan on administrative reform of the SBV for 2016 with a focus on the institutional and structural reform, staffing and administrative reforms, of which the most concentration is implementation of e - Government; To innovate the financial and asset planning, and construction investment of the SBV on the background of IT application through FSMIMS Project.

(iii) For SBV Branches of provinces and the cities directly under the central government:

To proactively guide and supervise the credit institutions in their locations to implement all monetary, credit and banking solutions of the SBV in order 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.

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.

To take the lead in closely 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 handle appropriate mearsure and actively tackle the obstacles to extent credit relationship with their customers; to guide the credit institutions to effectively implement credit programs of the Government and the SBV in line with local socio – economic development plan.

To proactively formulate and implement the supervision programs of SBV branches in compliance with the SBV supervision program of 2016. To accelerate inspecting and supervising the compliance of the SBV’s regulations and the legal texts on monetary and banking activities, restructure of credit institutions and NPL resolution.

To proactively provide information to mass media and disseminate regulations and directives of the Government and SBV directions on monetary, credit and banking operations for local government, enterprises and the public community. To continue renovating and improving the quality of the tasks related to the National Assembly and local delegates in their locations, to actively participate in dialogues with the public in order to directly report and explain the solutions of monetary and banking operations; closely coordinate with SBV Office and relevant entities in the headquarter to well perform the tasks related to the National Assembly.

To enhance the IT application in functional activities in combining with simplification of administrative procedures at the SBV.

To effectively implement and accelerate the supervision on statistic report as required by the SBV under the Circular No. 31/2013/TT-NHNN.

 

(iv) For credit institutions

- To formulate and implement the 2016 operational plans in line with the solutions of monetary policy, credit and banking management of the Government and the SBV. To direct their branches to strictly comply with the instructions of the SBV branches of provinces and the cities directly under the central government.

- 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:

Firstly, to control credit growth rate in line with the maximum credit growth target and credit management measures set by the SBV; to prioritize credit extension to the supporting industries, high-tech industry, agricultural sector, exporters, small and medium enterprises, new enterprises; to regulate capital resources to extend a proper amount serving for 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;

Secondly, to strictly control the credit concentration and credit line in potential risky sectors like real estate and projects needed long time for recovering capital... To review and assess lending dossier in compliance with law and secure capital and economic effectiveness for the banks; to improve risk management and strictly supervise the lending process.

Thirdly, to implement credit policies and programs in line with the guidance of the Government and the Prime Minister, namely the credit policy for rural and agricultural development under the Degree No. 55/2015/NĐ-CP; the credit policy vis-à-vis offshore fishing in line with Degree No.67/2014/NQ – CP and Degree 89/2015/NĐ-CP; the credit policy vis-à-vis husbandry and fishery culture in Document No. 1149/TTg-KTN; the supportive policy to mitigate losses in the post harvest seasons of agricultural products in Decision No.68/2013/QD-TTg; to extend loans for purchase and temporary inventory of food , coffee…… and other credit policies and programs under the guidance of the Government and the Prime Minister. To promptly report to the SBV difficulties and arising obstacles for timely resolution.

Fourthly, to continue taking decisive measures to ease difficulties in the credit relations between credit institutions and clients to facilitate clients to get access to bank loans in line with law, including rescheduling the loans, exempt or reduce interest rates on the basis of the financial capacity of credit institutions and the guidance of the SBV; to simplify administrative procedures for lending. In case of arising difficulties and problems in terms of mechanism and policy, they should be reported to the SBV for timely resolution.

- For the mobilizing and loan interest rates:

Firstly, to strictly implement the regulations and guidance of the SBV on interest rates; to charge the proper loan interest rates based on the mobilizing rates and risky levels of the loans; to share difficulties with borrowers while ensuring financial safety for operations of credit institutions.

Secondly, it is not allowed to charge the costs related to loans, excluding the fees and charges already stipulated in the SBV regulations on loan fees charged to the borrowers. To apply proper fees in accordance with the applicable legal texts in order to share difficulties with borrowers; and to publicize fees in line with the applicable regulations; and to publicize fees in line with the applicable regulations.

Thirdly, to regularly monitor the implementation of the SBV regulations on the mobilizing and loan interest rates, to promptly discover all the violations for proper resolution based on the clarified responsibilities between institutions and individuals. Credit institutions in violation of the interest rate regulations will be punished in line with law. 

- To strictly comply with the SBV regulations and other legal regulations on foreign exchange trading, exchange rate quotation, and management of foreign exchange; and to strictly implement the SBV regulations and other legal texts on management of gold trading.

- To proactively apply and provide new payment services with focus on investment and improvement of technology and payment infrastructure in order to contribute in accelerating e – commerce development and meeting payment requirements of the customers, and ensure the smooth operation of payment system.

- To continue improving the organizational model, managerial efficiency, supervisory system and internal audit to mitigate risks and law violation. To improve the financial capacity, asset quality, and liquidity; to actively restructure assets and financial resources towards narrowing the gap of the maturities between the mobilizing and utilizing resources, increase the ratio of stable capital resource; to manage credit quality, and ensure credit growth inappropriate to the scale and structure of the bank capital resource. To improve the transparency of governance, management, restructuring and resolving NPLs. To strictly comply with the SBV regulations on monetary, and banking operations.

- To proactively implement the Scheme on NPLs resolution; to promptly report the SBV the difficulties and obstacles, and recommend measures of resolving NPLs. To formulate the scheme of restructure of credit institutions for the period 2016 – 2020.

- To focus on resolving NPLs and preventing arising NPLs, especially on making provisions, resolving mortgaged assets and selling NPLs to the VAMC in order to maintain the NPLs ratio of the whole banking sector at below 3%.

- To provide adequate, timely and accurate information of operations in line with law and the SBV regulations; to promptly report all difficulties and problems to the SBV head office and the SBV branches of provinces and the cities directly under the central government. To effectively implement information system for compliance with statistical reporting system of the SBV as stipulated in Circular No.31/2013/TT-NHNN and the plan of applying Circular No.35/2015/TT-NHNN on statistic reporting of banking system.

- To proactively provide information to the mass media on the implementation of the solutions of monetary policy management, banking operations and performance to obtain consensus and support of the public for banking operations. To innovate the process and procedure of providing banking services; to improve banking service quality; and enhance information and communication in order to help the public easily get access to bank products and services.

- To coordinate with the SBV head office and SBV municipal and provincial branches to report monetary and banking operations, to participate in dialogues with the public in order to resolve difficulties and obstacles related to monetary and banking operations, thereby contributing to developing socio-economy.

(v) Implementation

This Directive took effect on the date of signing.

SBV entities at the headquarter and SBV municipal and provincial branches are responsible for pushing ahead the implementation of the tasks in this Directive, and reporting the implementation results monthly and quarterly to the SBV Office.

The SBV Office takes the lead in coordinating with the SBV entities to monitor the implementation of this Directive to be consolidated in the monthly and quarterly reports to the SBV Governor and the Ministry of Planning and Investment before 20th of every month and quarter end in line with the guidance of the Resolution 01 of the Government. 

The Director General of the SBV Office, the Director General of the Monetary Policy Department, chiefs of the SBV entities, Directors General of the SBV branches of provinces and the cities directly under the central government, Chairmen of the Boards of Directors and General Directors (Directors) of credit institutions and foreign bank branches are responsible for implementing this Directive.

MH - TLH