On June 16, 2020 in Ho Chi Minh City (HCMC), the State Bank of Vietnam (SBV) held a press conference on the banking sector’s performance during the first 6 months of 2020. The conference was chaired by SBV Deputy Governor Nguyen Thi Hong. Also attending the meeting were leaders of the SBV Monetary Policy Department, the Department of Credit for Economic Sectors, the Payment Department, the Communication Department, the Banking Supervision Agency, the SBV branch in HCMC.
Deputy Governor Nguyen Thi Hong speaks at the Conference
At the Conference, the representatives from the SBV departments shared information on the results of the monetary policy management and the banking operations in the first six months of 2020. Accordingly, following the directions of the National Assembly, the Government and the macroeconomic developments of the domestic and foreign markets, the SBV has operated the monetary policy in a proactive, flexible and prudent manner, in close coordination with the fiscal and other macroeconomic policies in order to control the inflation, stabilize the macro-economy, the money and foreign exchange markets, meanwhile still supporting the economic recovery under the complicated impacts of the Covid-19 pandemic. As of May 29, 2020, total M2 payment instrument increased by 3.4% compared to the end of 2019; the liquidity of the credit institution (CI) system was ensured for smooth operations.
In managing the interest rates, since the beginning of 2020, the SBV has twice reduced the key interest rates, with the total reduction of 1.0-1.5% p.a with a view to supporting the liquidity of the credit institutions (CIs), facilitating CIs to access low-cost capital from the SBV; cut down by 0.6-0.75% p.a on the interest rate cap for bank deposits of below 6–month terms, and reduced 1% p.a on the ceiling interest rate for short-term loans in the priority fields, which currently stands at 5.0% p.a, in order to reduce the borrowing costs for businesses and people. Accordingly, the average interest rates in the market have tended to decrease as compared to the beginning of the year.
Regarding the management of the exchange rates, despite the complicated developments in the international market, the domestic exchange rates and foreign currency market have remained quite stable, with liquidity ensured for smooth operations, and the CIs have kept on purchasing net foreign currencies from their customers; all legitimate demands for foreign currencies of the economy have been met fully and promptly.
About the implementation of measures of supporting the Covid-19 affected businesses and people, after two months, all of the credit institutions, including the finance companies and the foreign banks, have been robustly involved. By June 8, 2020, the credit institutions have rescheduled debt payments for 249,108 borrowers with the loan outstanding of VND 172,365 billion; waived and reduced the interest for 403,177 borrowers with the loan outstanding of VND 1,227,349 billion; provided new loans with preferential interest with the accumulated amount since January 23, 2020 of VND 978,529 billion for 225,514 borrowers, at the interest rates lower than the common rates of 0.5 to 2.5% compared to pre-Covid-19 time.
Vietnam Bank for Social Policies (VBSP) has extended debt payment for 152,796 borrowers with the loan outstanding of VND 3,856.2 billion; adjusted loan maturities for 75,209 borrowers with the loan outstanding of VND 1,567.6 billion; provided new loans to 826,473 borrowers with the loan outstanding of VND 31,149.2 billion.
In addition, the SBV has promptly issued Circular 05/2020/TT-NHNN dated May 7, 2020 with a view to specifying the implementation of Resolution No. 42/NQ-CP of the Government and Decision No. 15/2020/QD-TTg of the Prime Minister providing guidance on loans for refinancing with zero interest of the VND 16 trillion package to the VBSP, so that VBSP can provide zero interest loans to employers facing financial difficulties to pay their employees, whose jobs had been suspended due to the pandemic impacts.
In particular, the SBV has directed credit institutions to simplify their lending procedures, accelerate the administrative reforms, and promote the solutions to increase accessibility to capital for people and businesses. Recently, the SBV received the highest score of 95.4/100 for PAR Index 2019 and continued to achieve the first rank. This was the fifth consecutive year that the SBV has ranked the first out of the central Government ministries and agencies in the PAR Index.
In the payment field, the legal framework for payment operations has continued to be reviewed, amended, and been creating more favorable conditions for the development of non-cash payments. In the first months of 2020, although affected by the Covid-19 epidemic, the payment operations have still achieved significant growth compared to the same period of last year. Financial communication and education programs such as “Smart money”, “Wise money”… have made an important contribution to improving the knowledge and skills in using financial products and services, enhancing the public access to banking services.
As a result, non-cash payments have developed robustly. Payments via bank cards, the internet and mobile banking in the first 4 months of 2020 all achieved strong growth compared to the same period of 2019: (i) Domestic payments via bank cards increased by 26.2% in volume and 15.7% in value; (ii) Internet payments increased by 3.2% in volume and 45.7% in value; (iii) Mobile payments increased by 189% in volume and 166.1% in value over the same period of 2019. Payment trends in the economy have shifted towards using more non-cash payment instruments. Cashless payments for public services have continued to be widely implemented. The SBV has promptly directed the banks and payment intermediaries to coordinate for the implementation of the electronic payments on the National Public Service Portal.
Also at the Conference, answering reporters’ questions about the credit growth rate for the first six months of 2020, which was lower than that of the same period of 2019, Deputy Governor Nguyen Thi Hong shared that due to the impacts of the Covid-19 pandemic, the capital demand from businesses and people was relatively low, and thus the actual credit growth rate was appropriate. The demands for capital from those businesses meeting the terms and conditions have still been fully met.
Regarding Circular 01, the SBV Deputy Governor shared that, based on the comments and feedbacks of the businesses, the people and the authorities, the SBV will review and amend Circular 01 toward creating more favorable conditions for the businesses and people to access support policies and packages of the banking sector.
Le Hang