Governor of the State Bank of Vietnam (SBV) Nguyen Thi Hong has issued Directive No.01/CT-NHNN on organising the implementation of the key tasks of the banking sector, with a focus on improving credit quality and tightly controlling loans to potentially risky industries.

Accordingly, the Governor has required banks to take necessary measures for controlling credit size and growth, focusing loans on production and priority fields in accordance with the Government's policy to support economic recovery and development, while strictly controlling loans for potentially risky areas such as real estate, the stock market, Build-Operate-Transfer (BOT) and Build-Transfer (BT) transport projects.

Banks must accelerate the implementation of measures to control and limit any newly arising bad debts and maintain the bad debt ratio below 3 per cent, the Governor said, adding the SBV’s authorities would strengthen the inspection and supervision of banks' operations, especially in the areas with high potential risks.

According to the SBV, the banking industry this year might suffer a stronger impact of bad debts due to the pandemic. If including debts, which had repayment terms restructured or interest rates reduced according to the SBV’s Circular 01/2020/TT-NHNN, the bad debt ratio of the banking system is about 7.31 per cent to date.

Current policies on restructuring and delaying the debt payment time are a temporary and necessary solution in the short term, but extending the restructuring time will be risky for the banking system in the medium term.

Under the directive, the Governor also said it was necessary to continually implement measures to restructure credit institutions, especially weak ones, to help the banking system operate healthily, effectively and transparently, meeting international standards.

Besides, the Governor has directed SBV’s agencies to manage the monetary policies proactively and flexibly in order to control the inflation in line with the Government’s target of about 4 per cent for 2022.

According to the SBV, its monetary policy management in 2022 will be greatly influenced by inflationary pressure, especially in the context that a loose monetary policy has lasted for the past few years.

“The measures must contribute to maintaining macro-economic stability, supporting economic recovery, and adapting to international and domestic market developments,” the Governor noted.

The SBV sets the credit growth this year at 14 per cent, but said it might be adjusted in accordance with the actual situation.

The Governor said the SBV would also continually promote non-cash payments and digital transformation in banking operations. — VNS