Banks to keep tight monetary policies

In the short term, the State Bank has set a target to increase the total money supply by between 14-16 per cent and credit growth by 12 per cent.

The State Bank directive requires its headquarters to draft regulations on monetary and banking activities in accordance with international practices, standards and Vietnamese conditions.

The State Bank directive 01/CT-NHNN promulgated directive 01/CT-NHNN regarding the implementation of currency policies and assurances to ensure the safety and effectiveness of banking performance in 2013.

Under the directive, State Bank Governor Nguyen Van Binh called for the completion of guidance documents on the Law of the State Bank and Law on Credit Institutions 2010, Law on Deposit Insurance and Law on Anti-money laundering.

Binh asked credit institutions to set their annual credit growth targets at around 12 per cent, but in line with their abilities and liquidity management.

He also asked credit institutions to take measures to support production and business performance and to handle bad debt in accordance with the regulations.

In the first quarter this year, credit institutions have to work with the Ministry of Construction to issue guidelines on lending for social housing buyers.

This year, commercial banks will set aside a volume of money supply at reasonable interest rate for the purpose.

The State Bank asks the banks to control exchange rates in a flexible manner in accordance with the movement of the market; to improve international balance of payments and raise foreign currency reserves.

The central bank will review legal documents to intensify control over foreign currency in order to lure more remittances from overseas in the form of Vietnamese and foreign investment while handling acts of violations.

Binh requires banks to complete policies on gold market stabilisation to ensure the local gold price is equal to the international gold prices.

The process to convert deformed gold bars into standard gold bar will be accelerated to assist credit institutions to have standard gold bars.

The central bank will conduct close inspections and supervision on gold trading companies.

To restrict ailing banks, the central bank will instruct credit institutions to develop and implement suitable restructuring plans as well as encouraging them to take the initiative of merging and acquiring.

The State Bank will also require credit institutions to report their restructuring plans before February 28 this year.