A stabilisation in deposit interest rates and a cut in input costs are required to be able to help credit institutions cut lending rates. — Photo vietstock.vn

HA NOI (Biz Hub) — Monetary policies from now until the year end must give top priority to ensuring the safety of the banking system and controlling inflation while still trying to support businesses.

This new directive was issued by the State Bank of Viet Nam (SBV).

Under Circular 04/CT-NHNN issued late last week to regulate the operations of the banking system from now until the end of the year, SBV Governor Le Minh Hung said relevant agencies must closely monitor the movements of the macro economy, the monetary market and operations of credit institutions to take flexible measures aimed at assisting the liquidity and capital sources for credit institutions. However, the agencies must at the same time ensure the Government's target to control inflation under 5 per cent this year is not jeopardised.

"Credit institutions must balance their capital mobilisation sources and lending to ensure liquidity. Credit growth rates must be controlled in accordance with capital mobilisation and lending quotas allocated by the central bank to ensure safe credit growth and to help businesses with easier access to credit," the directive said.

According to the directive, close supervision and warnings must be issued for credit institutions that have witnessed high growth and large lending in industries with high potential risks, such as real estate, Build-Operate-Transfer (BOT) and Build-Transfer (BT) projects.

Measures taken from now until the end of the year can be implemented through Open Market Operations (OMO) and refinancing for credit institutions with a reasonable tenure, volume and interest rate.

Experts said that the measures could indirectly create favourable conditions for credit institutions to cut lending rates to aid businesses.

A stabilisation in deposit interest rates and a cut in input costs are required to be able to help credit institutions cut lending rates.

Under the directive, the governor also reaffirmed the central bank's message to stabilise the foreign exchange rate this year.

"The central bank's daily reference rate will continuously be applied in accordance with the monetary policy and macro economy targets," the directive said.

The relevant agencies must also prepare a project to restructure credit institutions and resolve bad debts for the 2016-20 period.

A boost must be given for resolving bad debts according to the market mechanism, developing bad debts trading market and encouraging the participation of foreign and domestic investors, according to the directive. — VNS