SBV Requires Banks To Reduce Interest Rates Due To Covid-19

The Governor of the State Bank of Vietnam (SBV) has just issued Document No. 5596/NHNN-VP on mission deployment in the last six months of 2020.

Specifically, SBV requires credit institutions (CIs) to reduce operating costs, labour costs, bonus and profits to continue lowering the actual lending interest rates for existing and new loans; supporting and accompanying businesses and people to overcome difficulties, contributing to the recovery of production and business after the epidemic.

In fact, in the first half of this year, banks have also cut costs, reduced profits to restructure debts for customers. In other words, Sai Gon Thuong Tin Commercial Joint Stock Bank (Sacombank) reduced profit by 1.5-2 trillion dong to support affected customers; Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) lowered its profit by two trillion dong; Vietnam Export Import Commercial Joint Stock Bank (Eximbank) by 150-200 billion dong; Nam A Commercial Joint Stock Bank (Nam A Bank) also reduced profits to support customers.

After the second wave of Covid-19 outbreak in Vietnam, SBV also requested CIs to promptly grasp and update official information on Covid-19, ensuring safe, smooth, and uninterrupted operation in all cases.

CIs continue to focus on drastically implementing credit expansion solutions for production and business sectors, especially priority areas and solutions to solve difficulties for businesses and people according to Circular 01/2020/TT-NHNN and Circular amending and supplementing Circular 01/2020/TT-NHNN after SBV issued.

CIs has to inspect and supervise the implementation of all branches in the system to ensure that the Circular 01/2020/TT-NHNN is properly and effectively implemented, also proactively balance between capital sources and usage to ensure liquidity.

The authority will urgently complete the amendment and supplement of Circular 01/2020/TT-NHNN, ensuring practical compatibility and creating conditions for businesses and CIs to solve difficulties and restore the economy.

SBV focus on directing CIs to strongly and drastically carry out measures to restructure debts, provide new loans, reduce interest rates, fees… specified in Circular 01/2020/TT-NHNN to provide timely support, more effectively for customers affected by Covid-19 overcoming difficulties, recovering production and business under the direction of the government and SBV.

Meanwhile, banks strictly control credit for high-risk areas, especially investment credit, real estate, securities, BOT, BT infrastructure projects, capital contribution, buy shares and invest in corporate bonds…

Allocate the necessary capital to develop loan products to serve the life, meet the legitimate needs of the people, contribute to limit usury.

In addition, CIs and consumer lending finance companies, Vietnam Bank for Agriculture and Rural Development (Agribank) strongly and effectively deployed consumer credit programmes and products with reasonable interest rates.

Strictly complying with the provisions of the law and instructions of SBV in consumer lending; strengthen inspection, control, detect and strictly handle violations of laws and internal regulations.

Consumer lending finance companies and people’s credit funds strictly comply with the provisions of law on mobilisation funding, lending, debt collection, transparency, security and operation safety.

Regarding the restructuring associated with bad debt handling, the Governor of SBV asked to continue closely monitoring and directing CIs to drastically and effectively carry out the restructuring plan associated with bad debt handling in the 2016-2020 period.

Focus on directing CIs with high rate of bad debts to take effective measures to handle bad debts and prevent bad debts from arising.

SBV branches in provinces and cities coordinate closely with the Executive committees, local government, competent agencies in the area, support CIs to handle and trade collateral, contributing to speeding up the process bad debt management, restructuring the credit institution system. To well perform the management, reorganisation and consolidation of people’s credit fund operations…

Concurrently, to evaluate the results of the implementation of the project “Restructuring the system of credit institutions associated with bad debt handling for 2016-2020″ combined with the estimation of the impact of the Covid-19 on real results. On that basis, to build a project to restructure CIs in association with bad debt handling in the period of 2021 2025.

 

Category: Finance, Vietnam

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