SBV manages credit appropriately, contributes to controlling inflation and supporting economic growth

Speaking at the press conference, First Deputy Governor Dao Minh Tu said that, following the content of the Resolutions of the National Assembly and the Government and the macroeconomic and monetary developments, in the first 6 months of 2023, the SBV has focused on implementing synchronously and drastically solutions to manage monetary policy and banking activities.

Specifically, in terms of interest rate management, in the first 2 months of 2023, the SBV kept the operating interest rates unchanged in the context that world interest rates continued to rise and remained at high levels, domestic and international inflation developments are still unpredictable.

To continue implementing the policy of the National Assembly, the Government and the Prime Minister to reduce lending interest rates and remove difficulties for the economy, businesses and people, from March to June 2023, the SBV reduced interest rates 4 times continuously with a reduction of 0.5-2.0%/year.

In which, reducing refinancing and discount rates by 1.5%/year, reducing overnight lending rates by 2%/year in inter-bank electronic payments and lending to cover capital shortfalls in payment clearing by the SBV of credit institutions and foreign bank branches.

Reducing 0.5-1.25%/year the maximum interest rate on deposits in VND with a term of less than 6 months; reducing 1.5%/year the maximum short-term lending interest rate in VND of credit institutions for borrowers to meet capital needs for a number of economic sectors and fields. At the same time, the SBV continues to encourage credit institutions to reduce costs to stabilize lending interest rates and support businesses to recover and develop production and business.

“With the management and direction measures by the SBV, up to now, the interest rate level has been basically stable, the new deposit and lending interest rates tend to decrease gradually. The average deposit interest rate of commercial banks is about 5.8%/year, equivalent to a decrease of 0.7% compared to the end of 2022. The average lending interest rate in VND is about 8.9%/year, down about 1.0%/year compared to the end of 2022" - Deputy Governor Dao Minh Tu informed.

Regarding exchange rate management, the SBV continues to closely monitor the market situation to manage the exchange rate flexibly and appropriately, coordinate monetary policy tools to stabilize the foreign currency market, contribute to controlling inflation and macroeconomic stability. The domestic foreign currency market and exchange rate are relatively stable, market liquidity is smooth, and legal foreign currency needs are fully met. The SBV can buy foreign currency from credit institutions to supplement the state foreign exchange reserves.

In credit management, Deputy Governor Dao Minh Tu said that the SBV has properly managed credit, contributed to controlling inflation and supporting economic growth.

Accordingly, on the basis of the economic growth target of about 6.5% in 2023 and inflation of about 4.5% set by the National Assembly and the Government, the SBV orients the credit growth this year to about 14-15%, with adjustments in accordance with developments and actual situations. Credit management meets the demand for credit capital for the economy in order to control inflation and support economic growth.

Require credit institutions to direct credit into production and business fields, priority fields and economic growth drivers according to the Government's policy; ensure safe and effective credit operations; strictly control credit in potentially risky areas; create favorable conditions for businesses and people to access bank credit capital; continue to implement with the utmost determination the policy of supporting 2% interest rate for enterprises, cooperatives and business households in a number of industries and fields according to Decree 31/2022/ND-CP of the Government.

In addition to credit management solutions, Deputy Governor Dao Minh Tu said that in order to enhance access to official credit and protect the legitimate rights and interests of people and businesses when borrowing from credit institutions, thereby contributing to limiting and repelling ursury, over the past time, the SBV has actively implemented many solutions.

Specifically, vigorously and extensively implement the program to connect banks and enterprises in order to promptly remove difficulties and obstacles in accessing bank credit capital; direct credit institutions to implement solutions to create favorable conditions for customers in accessing credit capital; diversify banking products and services, simplify lending procedures; promptly promulgate Circular No.02/2023/TT-NHNN dated April 23, 2023 providing for credit institutions and foreign bank branches to restructure debt repayment terms and maintain debt groups in order to support customers in difficulties under the direction of the Government in Resolution No.50/NQ-CP and Resolution No.59/NQ-CP.

At the same time, the SBV issued Directive No.02/CT-NHNN dated May 23, 2023 on strengthening credit work and implementing the policy of restructuring debt repayment term and maintaining the same debt group to support customers facing difficulties as prescribed in Circular No.02/2023/TT-NHNN; directing commercial banks to deploy a credit package of VND 120,000 billion from the capital of commercial banks with a lower lending rate of 1.5% -2% of the average lending rate of banks in the market in accordance with the direction of the Government for investors, buyers of social housing, worker housing, renovation and reconstruction projects of old apartment buildings...

With regard to the 2%/year interest rate support program for 2 years from 2022-2023 through the system of commercial banks for commercial loans to businesses, cooperatives, business households, the SBV and commercial banks have actively implemented synchronously with a fierce and urgent spirit (through conferences, guiding documents, answers, instructions, information, communication... continuously since the policy was issued until now). Credit institutions are still devoting resources from their resources to reduce interest rates, support customers to restore and develop production and business. On the basis of identifying difficulties and obstacles in the process of implementing the program leading to low implementation results, the SBV promptly summarized, assessed, proposed recommendations and reported to the Government.

By June 15, 2023, the credit balance of the whole economy reached about 12.32 million billion VND, up 3.36% compared to the end of 2022, up 8.94% over the same period last year. In particular, the credit structure continues to focus capital for the production and business sector, priority fields according to the policy of the Government, making a positive contribution to the GDP growth of the country. Credit for potentially risky sectors is controlled.

According to Deputy Governor Dao Minh Tu, the legal framework for payment activities and banking digital transformation continued to be perfected, and the whole industry actively implemented the plan of the Project on development of cashless payment in the 2021 to 2025 period and the Banking industry digital transformation plan to 2025, with a vision to 2030. Cashless payment continues to achieve positive results.

Specifically, the inter-bank electronic payment system, the financial switching and electronic clearing system, the ATM system in general operate stably, safely, smoothly, well serve the payment needs of customers. The indexes of the cashless payment increased in terms of transaction volume and value. In the first 5 months of 2023 compared to the same period in 2022: E-commerce transactions increased by 52.35% in quantity; through Internet channels increased 75.54% in quantity and 1.77% in value; through mobile phone channels increased 64.26% and 7.65% respectively; through QR code method increased 151.14% and 30.41% respectively; through POS increased 30.35% and 27.27% respectively in value; through ATM decreased by 4.62% in quantity and 6.43% in value, reflecting the trend of shifting to electronic cashless payment.

Regarding the implementation of Project 06 (Decision No.06/QD-TTg dated January 6, 2022 of the Prime Minister approving the project of developing the application of population data, identification and electronic authentication in service of national digital transformation in the period of 2022 - 2025, with a vision to 2030), on March 2, 2023, the SBV issued the 2023 Plan of the banking sector to implement Project 06. The banking industry has been actively integrating develop plans, connecting and exploiting population information in the National Population Database, chipped identity cards, electronic identification accounts (VNeID) for public and professional services credit information and money laundering prevention; serving socio-economic development in the banking industry. On April 24, 2023, the SBV and the Ministry of Public Security held a signing ceremony of the Plan to implement the tasks in Project 06, creating an important premise to contribute to the realization of the goals of the National Digital Transformation Program in general as well as banking digital transformation in particular.

“Currently, the SBV is actively implementing this Plan” - the SBV leader added.

Regarding the direction of monetary policy and banking operations in the coming time, Deputy Governor Dao Minh Tu said that the SBV will continue to closely follow market developments, domestic and foreign economic conditions to manage flexibly. Operate and synchronize monetary policy tools and solutions to control inflation, contribute to stabilizing the macro-economy, stabilize the currency and foreign exchange markets, and control credit growth according to the set orientation.

Specifically, operate open market operations flexibly, proactively, ready to support liquidity for the credit institution system. Refinance credit institutions to support liquidity, lend to programs approved by the Government and Prime Minister, support the process of restructuring credit institutions and dealing with bad debts; operate the compulsory reserve instrument in line with economic and monetary developments and other monetary policy management measures to achieve monetary policy objectives.

Along with that, operate interest rates in line with macro balance, inflation and monetary policy objectives; continue to encourage credit institutions to reduce costs and lower lending interest rates in order to support enterprises to recover and develop production and business.

Continue to closely monitor macroeconomic and market developments to adjust the exchange rate in line with market conditions, coordinate synchronously with monetary policy measures and tools to stabilize the foreign currency market, and contribute to control. inflation and macroeconomic stability.

The SBV will manage the growth in volume and structure of credit reasonably, meet the credit capital needs of the economy in order to contribute to controlling inflation, supporting economic growth, and directing credit to the manufacturing sectors, business production, priority areas and economic growth drivers according to the Government's policy, strictly controlling credit in potentially risky areas; create favorable conditions for businesses and people to access bank credit capital.

Continue to carry out the tasks assigned in the Project on Restructuring the system of credit institutions associated with non-performing loan settlement in the 2021-2025 period under the direction of all levels.

Continuing to promote digital transformation in banking and commerce activities, meeting the requirements of new business models, products and services on the basis of information technology, digital banking, and digital payment. Enhance security and safety in payment and digital transformation activities.

At the same time, connect and exploit population information at the National Population Database, chipped identity card, electronic identification account (VNeID) for public services and credit information use and prevention of money laundering; serving socio-economic development in the banking industry.

Communication Department