Allowing the use of the state budget to increase charter capital for commercial banks is one of the recommendations of the State Bank of Vietnam (SBV), in order to handle problems in monetary and banking operations.
In service of the plenary session of the National Assembly Economic Committee on April 25 in Nha Trang, SBV has issued additional reports on the results of monetary policy and banking operations management in 2018 and the first months of 2019.
According to the report, in the first four months of 2019, the monetary and credit market has been relatively stable. By April 17, the total means of payment increased by 3.29 percent compared to the end of 2018. Capital mobilisation increased by 2.69 percent. Credit for the economy increased by 3.23 percent, of which credit in dong increased by 2.93 percent, credit in foreign currency increased by 7.62 percent.
Lending rates are mainly at 6-9 percent per year for short-term loans, 9-11 percent per year for medium and long-term loans.
Exchange rate and foreign currency market according to SBV’s assessment is stable and market liquidity is good. Accumulated from the beginning of the year to April 17, 2019, SBV has bought $8.35 billion from credit institutions to supplement the State foreign exchange reserve.
The gold market is also recognised by SBV as continuing the relatively stable trend of 2018. The fluctuation of the domestic gold price no longer adversely affects the exchange rate, the foreign exchange market and the macro economy. The attractiveness of gold bars declined, the sales and purchase volume in the market decreased compared to the previous period.
Regarding bad debt handling, according to the report, the internal non-performance loan (NPL) ratio continued to maintain at below three percent, by the end of February 2019, it was 2.09 percent.
From 2012 to the end of February 2019, the whole system of credit institutions handled 896.14 trillion dong of bad debt, according to the report.
SBV also said that it had taken steps to restructure and handle three compulsory repurchase banks and Dong A Joint Stock Commercial Bank (EAB) has complied with the law.
At the report, SBV stated a number of proposals and recommendations to boost economic growth in 2019 while ensuring inflation control. Accordingly, in addition to speeding up the disbursement of public investment capital, SBV proposed the government to accelerate the implementation of large projects such as the North-South expressway project to create a boost for the economy.
SBV also petitioned the government to direct ministries and branches to speed up the state divestment process in large corporations and companies, in order to increase the volume of goods in the market, helping investors have more opportunities. Investing in high quality goods supports stabilising investor sentiment and then minimising negative sentiment on the foreign currency market.
In order to deal with difficulties in monetary and banking activities, SBV proposed to submit to the National Assembly to study and amend the Criminal Code, to handle crimes of shadow banking with specific, clearer and stricter sanctions, to limit violations of shadow banking.
In order to raise capital for state-owned commercial banks, SBV proposed the Ministry of Finance to study and handle the problems of the Decree No. 32/2018 ND-CP, and coordinate with the Ministry of Planning and Investing in researching and removing legal obstacles, advising the prime minister to report to the government to submit to the National Assembly for consideration, amendment or issuance of a new resolution of the National Assembly in the direction of allowing the use of state budget to increase charter capital for commercial banks (except for compulsory commercial banks).
The Ministry of Finance was also proposed to submit to the government to amend the scope of additional investment of state capital stipulated in the Decree No. 91/2015 dated 13/10/2915 of the government, amended and supplemented by the decree No. 32/2108 on March 8, 2018.
This is not the first time to propose the use of budget to increase charter capital for state-owned commercial banks. Previously, at some conferences, SBV also proposed to allocate budget to raise capital for large commercial banks.
