In the report on policy recommendations to respond to Covid-19 epidemic recently published by the National Economic University, the authors stated that despite difficulties caused by the epidemic, credit institutions (CIs) still can take advantage of opportunities to develop new markets, products and distribution channels.
Specifically, banks can immediately develop specialised product packages for groups of corporate customers in industries that have relative business advantages during the Covid-19 epidemic, such as online business, foods, essential products, masks, hand wash gel, body temperature meters. Banks can provide a product package for these customers, such as credit limit, Letter of credit, payment for employees, payment channels for customers, corporate insurance, insurance for the business’s employees, capital management, etc.
At the same time, banks can help small and medium-sized enterprises to achieve sales target by export support activities, and support market regulation through domestic distribution channels. Businesses can apply for a credit limit or credit term before completing export sales or while pursuing overseas opportunities.
Banks can promote internet banking and mobile banking payments and ensure safety for these transactions. In the immediate future, banks should increase payment demand by reducing fees or offering free services for existing customers.
According to the analysis team, this is the time to accelerate consumer loans for individual customers in order to stimulate the economy. Increasing consumer demand of individual customers is the source for sustainable business and production development, breaking the vicious cycle of the economic downturn.
The report recommended that banks should focus on developing the low-income consumer market segment. This is a very potential customer market in Vietnam, as 69 percent of the population not yet own a bank payment account but the number of mobile and internet subscribers is high.
This is a good opportunity for CIs to assess the current operating procedures and personal system, in order to make adjustments (if needed) to optimise them. CIs can also identify the good staffs, the staffs that can be cut down, thereby optimising operational costs.
In addition, the epidemic is also an opportunity for banks’ management board to review policies to cope with risks, actively adjust or rebuild possible scenarios to have more effective plans to respond.
Banks should accelerate testing of the use of electronic Know Your Customers (e-KYC) in transactions so that customers do not have to directly go to transaction offices or branches.
To support businesses, CIs need to have a consensus and announce “common standards” to businesses in order to avoid capital appropriation and capital being used for wrong purposes.
In particular, it is necessary to specifically and transparently announce support criteria and processes for businesses and market to grasp. The support from banks can be divided into two options. The first option is a loan package (the 250 trillion dong credit package that banks commit to disburse and other packages if any) to support liquidity for businesses to survive through the epidemic. The second option is to restructure the debts which can potentially become bad debts, giving businesses more time to recover, such as repayment scheduling, reducing interest rates or keeping the debt group.
