At the press conference on banking activities in the first six months of 2020, Ha Thu Giang, deputy director of Credit Department of Economic sectors (the State Bank of Vietnam (SBV)) said that as of May 29th, the outstanding credit increased by 1.96 percent compared to the same period of 2019.
Due to the impact of the Covid-19 pandemic, the credit growth in the first months of the year tended to be lower than the same period of the previous years. Particularly, the credit growth was 0.1 percent in January, 0.07 percent in February, 1.1 percent in March, and 1.42 percent in April 2020 compared to the end of 2019, with improvement over the months.
“Credit still focuses on production business sectors, priority areas such as lending to export (up by 4.94%), lending to high-tech businesses (up by 2.92%), and lending to supporting industries (up by 2.27%), said Giang.
In addition to promoting commercial loans, Giang said that the SBV continues to direct Vietnam Bank for Social Policies (VBSP) to carry out preferential policy credit programmes for poor households and beneficiaries of social welfare.
Accordingly, as of May 31st 2020, the total outstanding credit of policy credit programmes at VBSP reached 213.304 trillion dong, up by 3.14 percent compared to December 31st 2019 with more than 6.5 million customers with outstanding balance.
Particularly, the SBV quickly issued Circular 05/2020/TT-NHNN on May 7th 2020 to concretise Resolution 42/NQ-CP and Decision 15/2020/QD-TTg of the prime minister on guiding the refinance of 16 trillion dong of VBSP to offer loans at interest rate of zero percent to employers who are facing financial difficulties in paying employees with job discontinuation due to the impact of the Covid-19 pandemic.
At the press conference, Pham Quang Dung, director of Payment Department (the SBV) said that despite being affected by the Covid-19 pandemic, payment activities, especially non-cash payment, continued to have strong development with many new and modern banking products and recorded sharp increase in the number and value of payment.
In the first four months of 2020, the interbank electronic payment system operated stably, safely and smoothly. The total value of transactions through this system increased by 18.30 percent over the same period of 2019. The transactions via financial switching and electronic clearing rose by 73.36 percent in quantity and 129.47 percent in value compared to the same period of 2019.
During the time of social distancing under director 16/CT-TTG, the payment requirements of people and society were fully met; online banking services and ATMs operated steadily and smoothly. Particularly, the average transaction value via interbank payment system in the first 20 days of April 2020 grew up by 8.85 percent compared to the same period of 2019.
Payment via cards, the Internet and mobile phones in the first four months of 2020 all increased strongly compared to the same period of last year.
After two times the SBV directed Napas, banks and foreign bank branches to carry out fee exemption/ reduction policy for payment services, all banks have confirmed to carry out this policy for customers with small value transactions (from two million dong or less); and about 63 percent of customer payment transactions via 24/7 interbank payment via Napas enjoyed fee exemption or reduction.
It is estimated that the total payment service fees that bank exempt or reduce until the end of 2020 after two fee cuts will be about 1.004 trillion dong, said Dung.
The challenges in the last six months of the year
Dung also said that it is worth noting that the SBV has drafted a proposal on developing a Decree on a testing mechanism to control Fintech activities in the banking sector. It is currently posted on the SBV’s and government’s websites to collect comments widely.
Regarding the verification of the identity of e-wallet owners according to Circular 23/2019/TT-NHNN, according to Dung, it is to limit the risks related to money laundering, terrorist financing, frauds, counterfeiting, etc. in order to protect customers’ rights and increase the responsibility of payment intermediaries in the process of opening and using e-wallet services.
“Payment intermediaries are responsible for protecting customers’ payment information in accordance with the law,” said Dung.
Concerning the monetary policy orientation in the near future, Pham Chi Quang, deputy director of Monetary Policy Department (the SBV) mentioned that the key task is to flexibly manage the open market operations, reasonably regulate the liquidity of credit institutions (CIs) to stabilise the market.
In addition, the tasks are also refinancing CIs to carry out programmes under the direction of the government and prime minister, supporting the restructuring of CIs and settlement of bad debts, refinancing VBSP regarding the lending to employers to pay salaries to employees suffered job discontinuation due to the Covid-19 pandemic.
At the same time, the target is to regulate interest rates and exchange rates in line with macro balance, inflation, market developments and the objectives of monetary policy, be ready to intervene when necessary to keep the market stable.
In particular, the SBV will control the credit scales in line with orientation, improve credit quality, creating favourable conditions in accessing loans, keep abreast with the disease developments to adjust the credit growth targets of CIs in order to full and promptly meet the capital needs of the economy, harmonising the targets of controlling inflation and supporting the economic growth recovery.
