Speaking at the government’s regular online meeting held on April 1, 2020, Governor Le Minh Hung emphasized that until recently, banking activities had been smooth, liquidity situation of the market, as well as the exchange rate, was quite stable. However, the international market was very volatile, and the currencies of other countries, especially neighbouring countries in the region, fluctuated sharply. Still, the State Bank of Vietnam (SBV) actively operated following the scenario and the proposed plan, thanks to which the exchange rate had been maintained relatively stable and the liquidity of the foreign currency market was plentiful, the foreign currency demand of the economy was adequately provided.
SBV had not yet used foreign exchange reserves to stabilise and intervene in the market, which showed that SBV had been quite successful in managing monetary policy and exchange rates.
Regarding credit activities, in March alone, there was a relatively good increase in balance, proving that the economy had better access to credit and had positive movements compared to the first two months of the year.
Regarding the urgent solutions of the government and the prime minister in the prevention of the covid-19 epidemic, SBV had issued a Directive requiring credit institutions to continue vigorously implementing the direction of the prime minister and the SBV Governor to overcome difficulties, especially in debt restructuring activities, without transferring debt groups. This was the most critical measure to create cash flow and liquidity for borrowers (including businesses and individuals who borrowed money to repay debts with both principal and unpaid interest). This was also an important content of Circular No. 01/2020/TT-NHNN of SBV, which had recently been implemented responsibly and decisively by commercial banks at the request of SBV.
Regarding interest rates, SBV had reduced the operating interest rates, implemented market regulation, and flexible daily liquidity. That was a fundamental basis for credit institutions to operate stably and continue to reduce lending rates sharply. SBV asked credit institutions to focus on reducing operating costs, especially salaries and bonuses. Also, in this year, cash dividends would not be paid to concentrate all necessary resources to sharply decrease interest rates.
Governor Le Minh Hung further reported that when SBV met 20 credit institutions (accounting for about 75 percent of the total balance of the economy), all of which highly agreed to minimise at least two percent loan interest rate compared with the time before the epidemic. This showed the great responsibility of credit institutions to the difficulties of businesses, customers, and borrowers. In order to contribute to overcoming the economic challenges, SBV would continue to drastically direct the implementation of restructuring the repayment term, keeping the debt group as well as reducing lending interest rates shortly.
About banking activities, conducting the prime minister’s Directive No. 16, SBV also instructed credit institutions to abide by the prime minister’s Directive strictly. In any case, credit institutions must ensure sufficient activities of providing banking services for the economy, people, and businesses. Commercial banks had to arrange staff to work appropriately, absolutely to ensure smooth and safe banking activities.
From January 23 to March 28, credit institutions had initially restructured the repayment period, kept the debt group for more than 12,000 customers with a balance of 13.5 trillion dong and had been considering exemption and reduction of interest for nearly 36,000 customers with a loan balance of over 91 trillion dong (mainly for whom in the sectors like accommodation, dining, agriculture, forestry and fisheries, construction, transport, warehousing, retail and industrial wholesale, processing industry, manufacturing, education). Besides, credit institutions also offered special credit product packages with interest rates lower than the normal interest rates from 0.5 percent to three percent (about 250 trillion dong), in which disbursement had been made by nearly 80 trillion dong.
In order to create conditions for the banking industry to continue stable operation, along with carrying out the prevention and control of the Covid-19 pandemic, the Governor of SBV requested the minister of Justice to pay attention to the operation of notary public offices. Apparently, banking transactions, especially lending transactions, were directly related to the confirmation and procedures at notary public offices. Still, currently, some localities had instructed the notary public office to suspend operations. Therefore, the Governor expected the Ministry of Justice to have specific directions for businesses’ access to loans and non-congested borrowers.
Along with that, Governor Le Minh Hung proposed the Chair of Hanoi People’s Committee and HCM City People’s Committee (due to the majority of credit institutions’ headquarters in the area) to cooperate with SBV to ensure the smooth operation of credit institutions in providing banking services to people and the whole economy.
In drafting the government’s Decree on tax extension, the Governor of SBV proposed that credit institutions were also entitled to tax extension and extension of corporates’ income tax payment. Recently, credit institutions had participated in a very responsible and exemplary way in deploying to solve difficulties for borrowers. Therefore, it should be considered to ease the payment of corporate income tax to create credit flow and liquidity for credit institutions to support and provide capital for the economy.
Also, Governor Le Minh Hung proposed that the government should consider and approve the credit growth limit for Vietnam Bank for Social Policies to quickly deploy lending to support the poor and policy beneficiaries.
