An embroidery workshop in Bình Định Province. The Prime Minister asks credit flow to be directed to production and business. — VNA/VNS Photo Trần Việt

Prime Minister Phạm Minh Chính has asked the Ministry of Public Security to coordinate with the State Bank of Việt Nam (SBV) to develop measures to prevent and handle cross ownership and manipulation at credit institutions.

This is one of the highlights of Directive 14 on the implementation of monetary policies in 2024 issued on Thursday focusing on removing difficulties for production and business, accelerating growth and stabilising macro-economy.

Scrutinising cross ownership and manipulation at credit institutions aim to ensure system safety as well as financial and monetary security.

Cross ownership is a situation in which one bank holds shares in another bank. In many cases, a group of shareholders hold together more than 51 per cent of stakes at a bank, thereby manipulating the bank’s operation.

What had happened at Sài Gòn Commercial Bank (SCB) was a clear example in which 90 per cent of the bank’s equity capital belonged to the group of shareholders led by Trương Mỹ Lan, Chairwoman of Vạn Thịnh Phát Group Joint Stock Company. SCB was manipulated, causing subsequent losses to the financial market and the entire economy.

The amended Law on Credit Institutions, effective from July 1 with some provisions to take effect from January 1, 2025, tighten regulations on the ownership ratio of individuals and organisations at banks.

Accordingly, the share ownership ratio is limited to 5 per cent for individuals and 10 per cent for organistions, down from 15 per cent of the old law. A shareholder and relevant persons are not allowed to own more than 15 per cent of a credit institution’s charter capital and 5 per cent in another credit institution.

Previously, Governor of the SBV Nguyễn Thị Hồng said that it is difficult to handle the cross ownership at credit institutions by just a law but a combination of regulations.

Besides putting cross ownership under scrutiny, the PM asked the SBV to enhance inspection and supervision of the lending of credit institutions.

The PM also requested the inspection to be carried out immediately on the gold market, operation of gold businesses and gold stores.

The SBV must manage monetary policies proactively, flexibly, promptly and effectively, especially ensuring the harmony of interest rates and exchange rates. Credit growth must be reasonable and in line with stabilising macro-economy, controlling inflation, accelerating economic growth and ensuring the banking system's safety.

The credit flow must be directed to production and business. The PM also asked for efforts to further lower lending rates.

Besides, the PM asks the Ministry of Finance to continue the implementation of expansionary fiscal policy in harmonisation with monetary policies and other macro-economic policies to promote economic growth, control inflation and ensure major balances of the economy.

Reviews must be carried out to improve regulations on securities and corporate bonds while promoting the development of the stock market into an effective medium and long–term capital raising channel for businesses.

The draft decree on Direct Power Purchase Agreement (DPPA) must be submitted to the Government within this month.

The PM also asks the Ministry of Industry and Trade to hasten the effort to diversify export markets and supply chains.

The Ministry of Natural Resources and Environment was requested to speed up the issuance of detailed guidance for the implementation of the Law on Land together with completing the information system about the land to be connected with the information system about the housing and real estate market.

The Ministry of Construction must speed up the issuance of guidances for the implementation of the Law on Housing and the Law on Real Estate Business.

The construction ministry must cooperate with the central bank and relevant ministries, agencies and local authorities to effectively implement the project of developing one million social housing units and increase disbursement of the credit package worth VNĐ120 trillion.

The Ministry of Planning and Investment is in charge of improving the business environment to facilitate investment flows. — VNS