Speaking at the prime minister’s conference with businesses on May 9th, Governor of the State Bank of Vietnam (SBV) Le Minh Hung said that in the recent time, the banking industry has actively seized and forecasted the situation, implemented urgent solutions to remove difficulties for borrowers who are affected by the Covid-19 pandemic.
Accordingly, the SBV has operated the monetary policy flexibly and effectively, controlled inflation to prevent exchange rate fluctuations, ensured the liquidity of the economy, reduced interest rates, kept the macro foundation and business environment stable, creating the conditions to minimise the pandemic impact.
The SBV also issued Circular 01 which took effect from March 13th with a very strong mechanism, creating a legal basis for credit institutions (CIs) to overcome difficulties in loans for customers, such as appropriately rescheduling debt principal and due interests so that the debts are not classified as bad debts, during this time, customers do not have to pay principal and interests and interest rate penalty. In addition, customers, after the debt restructuring and debt group maintenance, can further borrow capital for production and business activities. Circular 01 also creates a legal framework for CIs to reduce interest rates and fees.
As a results, by May 8th 2020, CIs have restructured repayment terms for over 215,000 customers with outstanding balance of about 130 trillion dong; exempted/ reduced interest rates for 260,00 customers with outstanding balance of 1,080 trillion dong; offered new loans at preferential interest rates with accumulated figure of about 630 trillion dong from January 23rd until now for about 182,000 customers with interest rates being popularly 0.5 2.5 percent lower than the time before the pandemic. Moreover, CIs also exempted and lowered payment fees at a value of about 1.004 trillion dong.
The SBV has submitted to the prime minister the decision to pilot the use of telecommunications accounts to pay for other small-value services (Mobile Money) and is urgently completing the procedures to submit to the government for promulgation of the Decree amending and supplementing Decree 101 on promoting non-cash payment.
In the coming time, the SBV commits to ensure the regulation of monetary policy to stabilise the macro economy, creating favourable conditions to recover the economy after the pandemic; regulate the exchange rate stably; and be ready to intervene to ensure foreign currency liquidity for the economy, not for macro instability.
The SBV also commits to provide sufficient capital for the economy, and based on the capital needs for growth, the SBV will consider increase the credit growth limits for credit institutions. Regarding interest rates, the agency will consider further reducing operating rates such as refinancing, rediscounting, open market operation rates, etc.; and direct credit institutions to cut fees and lower profits to facilitate the lending rate reduction. The SBV will also consider the policy of extending the debt restructuring time if necessary.
