Deputy Governor of the State Bank: Maximum support for banks to reduce lending interest rates

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Regarding interest rates, the State Bank (SBV) will create the most favorable liquidity for commercial banks to reduce lending interest rates.

Bà Nguyễn Thị Hồng, Phó thống đốc Ngân hàng Nhà nước.

Ms. Nguyen Thi Hong, Deputy Governor of the State Bank.

– Madam, credit growth in the first 9 months is still slow. What solutions will the SBV have to help the economy recover?

– The State Bank of Vietnam always commits to fully meet the capital needs of the economy. Earlier this year, when Covid-19 had not affected the economy, the credit growth target set by the State Bank was 14%. However, the pandemic has had a strong impact on all production and business sectors, making the demand for loans from businesses and people very low. Credit growth as of September 16, 2020 increased only 4.81% compared to the end of 2019.

Recently, the State Bank has loosened the credit room for a number of credit institutions that have demand and credit growth potential higher than the limit approved by the State Bank at the beginning of the year. In the near future, any credit institution wishing to adjust the credit growth limit, we will continue to consider in the spirit of both creating conditions for credit institutions to extend credit to people and businesses. But still must follow the principles of ensuring safety and efficiency.

It must also be added that, at present, a large part of the customers of credit institutions are small and medium enterprises with very thin potential. In order to increase credit to this business sector, it is very necessary to have guarantee policies, guarantee funds for small and medium enterprises to enter so that banks can lend peacefully.

Recently, many banks simultaneously reduced deposit rates. Will the State Bank further cut interest rates in the coming time, ma’am?

– In terms of policy, the State Bank wants and will try to continue to reduce the lending interest rate level. Therefore, in operation, we will regulate the liquidity to create the most favorable conditions for credit institutions, ready to provide refinancing loans, if credit institutions have a need to ensure credit institutions have cheap capital for businesses and people to borrow.

The State Bank also supports credit institutions to reduce costs and direct credit institutions to continue to balance their financial resources, save costs, including salary and bonus, pay cash dividends, cheap capital to support borrowers.

In the coming time, we will closely monitor the macroeconomy, “health” and liquidity of the system to make decisions to adjust monetary policies, including interest rates, to both support the economy controlling inflation and ensuring the safety of the banking system.

– In the context of difficult credit growth, many banks are pushing to buy real estate bonds, although real estate credit is still tightly controlled by the State Bank. Is this worrying?

– Regarding credit, the policy of the State Bank is to expand with safety and efficiency. Over the past years, the Governor of the State Bank of Vietnam has always instructed credit institutions to strictly control credit in risky areas such as real estate, traffic , because these are fields with long-term loans, while their mobilized capital. Credit institutions are mainly short-term, leading to great risks of term.

As for corporate bonds, especially real estate businesses, the State Bank is still closely monitoring banks’ bond buying activities. The State Bank of Vietnam is calculating the outstanding balance of buying corporate bonds into the overall credit growth balance of credit institutions – this is also a control of the State Bank of this sector. In addition, the SBV’s authorities regularly monitor the credit institution’s reports, if any institution has a high rate of concentration on risk areas, including bonds, it will immediately be warned.

-Facing Covid-19’s lingering negative impact on the economy, the Government plans to offer a second package of support to people and businesses. What more policies will the State Bank add to support the economy and businesses in this support package?

– The Bank is one of the industries that took part at the earliest in providing solutions to support people and businesses. Circular No. 01/2020 / TT-NHNN restructures the time limit for debt repayment, exemption, reduction of interest and fees, keeping the group of debts that the banking industry has successfully offered and in accordance with actual needs. The State Bank is also very proactive, after issuing Circular No. 01/2020 / TT-NHNN for a few months, it has organized survey teams in a number of provinces and cities to grasp problems, from which draft amendments.

Due to the amendment of Circular No. 01/2020 / TT-NHNN related functions and tasks of a number of ministries and branches, during the revision process, it is necessary to consult with the Ministry of Finance, most recently. Once agreed, the SBV will soon issue a revised circular. At the same time, as mentioned above, the State Bank will create the most favorable conditions for liquidity, support credit institutions to further reduce costs in order to have cheap capital for people and businesses to borrow.

Regarding the second economic support package of the Government, at the recent consultation meetings, finance and banking experts all appreciate the agility, timeliness and specific effectiveness of monetary policy. However, compared to other countries, Vietnam’s support packages are small. Therefore, most of the respondents said that it is necessary to have more drastic policies to support the people, especially the fiscal support policy.

In the latest assessment of Covid-19 and the response policy of Vietnam, the International Monetary Fund (IMF) said that the monetary policy solutions of the State Bank over the past time are appropriate, but the policy space currency is gradually shrinking. The IMF recommends that Vietnam should have a greater policy dose from the fiscal policy.

On the side of the bank, we will try to offer solutions to support people and businesses, but we cannot ignore the work of ensuring system safety.

Source: – Translated by