Directive No. 02/2007/CT-NHNN on Strengthening Measures to Improve the Quality of Statistical Reports in the Banking Sector

DIRECTIVE

On strengthening measures

to improve the quality of statistical reports in the banking industry

__________________

Decision No. 477/2004/QD-NHNN dated April 28, 2004 of the Governor of the State Bank of Vietnam on the issuance of the Statistical Reporting System applicable to units under the State Bank and credit institutions has been effective since January 1, 2005 (hereinafter referred to as Decision No. 477) and Decision No. 1747/2005/QD-NHNN dated December 1, 2005 on amending and supplementing certain articles of the Statistical Reporting System applicable to units under the State Bank and credit institutions issued together with Decision No. 477 has been effective since June 1, 2006 (hereinafter referred to as Decision No. 1747). Up to now, the implementation of the two Decisions shows that the Statistical Reporting System is basically in line with the requirements for modernizing banking technology and the guidance and management of the State Bank. With the efforts and proactive resolution of difficulties regarding organizational data bases and the application of information technology by the State Bank and credit institutions, the statistical work of the sector has made fundamental changes, gradually contributing to improving the quality of statistical reports of the sector, reducing duplication, and creating favorable conditions for information-providing units.

However, from the perspective that information is an effective tool serving the guidance and management of the State Bank, the quality of information reported periodically by credit institutions to the State Bank still has certain limitations in terms of accuracy, completeness, and timeliness. The results of a survey on the implementation of credit activity reporting by some credit institutions in Ha Tay, Hung Yen, Phu Tho, and Hoa Binh provinces in Quarter III/2006 show that the classification of industries of credit institutions is not consistent, the report on credit disbursement and recovery includes phantom amounts due to transfers between loan categories, and the credit reporting according to loan categories at some credit institutions (especially the Vietnam Agricultural and Rural Development Bank) does not comply with the provisions of Decision No. 493/2005/QD-NHNN dated April 22, 2005 of the Governor of the State Bank on the issuance of regulations on loan classification, provision for and utilization of reserves for credit risk management in banking operations of credit institutions, ...

The main cause of the above situation is that many credit institutions have not truly paid attention to information reporting to the State Bank, thus lacking close supervision during the implementation process, statistical staff have not been adequately cared for, many statistical staff have not grasped the reporting requirements, data entry is still done based on intuition. Therefore, the quality of statistical reports still depends largely on the awareness of data entry staff. Many credit institutions have not proactively coordinated closely with functional units under the State Bank to correctly understand the nature of statistical reporting indicators and reporting requirements for these indicators. In addition, many units under the State Bank have not performed their role of monitoring, urging, and guiding credit institutions to implement the statistical reporting requirements of the State Bank well. Furthermore, in the context of international economic integration, the financial market dynamics are increasingly complex, requiring the quality of information serving macroeconomic management, state management in the monetary field and banking activities, as well as monetary policy management to be continuously improved.

Therefore, to improve the quality of statistical reports, resolve all issues related to the reporting requirements stipulated in Decision No. 477 and Decision No. 1747 of the Governor of the State Bank, and fulfill the role as a comprehensive, complete, and timely information channel to meet the guidance and management requirements of the State Bank, the Governor of the State Bank requests:

1. General Directors (Directors) of credit institutions: to direct the unit to implement the following contents:

a) Strictly implement the statistical reporting requirements of the Governor of the State Bank stipulated in Decision No. 477 and Decision No. 1747. Identify improving the quality of reporting information as one of the key tasks of the unit in 2007.

b) Evaluate the implementation status of Decision No. 477 and Decision No. 1747 of the unit up to March 31, 2007, including the implementation progress, IT conditions, personnel, difficulties and obstacles encountered during the implementation, solutions to overcome them, recommendations, etc. The evaluation report must be submitted to the State Bank (Department of Monetary Policy) before May 5, 2007.

c) Eliminate phantom amounts and newly generated amounts due to transfers between loan categories, ensuring accurate reflection of actual credit disbursement and recovery amounts. Report to the State Bank (Department of Monetary Policy) no later than April 25, 2007 about the measures and ability to eliminate those phantom amounts. d) Guide the entire system to classify loans in accordance with the current regulations of the State Bank to accurately reflect the quality of credit through statistical reports.

e) Assign specific responsibilities to departments in checking the accuracy of reporting indicators before transmitting them to the State Bank, and resolve the issue of submitting incorrect unit values (such as in the case of the Social Policy Bank).

g) Pay appropriate attention to the statistical staff at the unit (including both direct data entry staff and responsible staff):

- Develop training plans and conduct training for direct data entry staff. All staff assigned to statistical work must attend training sessions to understand the nature of statistical indicators, serving as the basis for properly implementing the Statistical Reporting System for the State Bank.

- Specify the responsibilities, rights, and obligations of statistical staff.

- Specify in detail the responsibilities, rights, as well as obligations of statistical officers.

h) Notify the State Bank of Vietnam's Policy Department of the list of officials responsible for preparing reports according to each set of indicators and forms prescribed in Decision No. 477 and amended by Decision No. 1747 (the list must clearly state the name of the official directly preparing the report, the supervisor, the unit they work in, and their phone number) so that relevant units within the State Bank can proactively exchange information, check, and verify data when necessary. The list must be sent to the State Bank (Policy Department) before April 25, 2007.

2. Heads of units at the headquarters of the State Bank of Vietnam:

a) Focus on resolving all issues related to implementing the reporting requirements stipulated in Decision No. 477 and Decision No. 1747, with the goal of improving the quality of statistical reports as a key task in 2007. Assign officials directly responsible for the information managed by their unit to regularly cross-check and identify the root causes of credit organizations failing to implement or properly implement the indicators managed by their unit.

b) Continuously operate and utilize the statistical reporting software and promptly report technical issues to the State Bank's Information Technology Department to address them in a timely manner, avoiding delays due to lack of system operation or inspection.

c) For information reported to the State Bank of Vietnam by provincial and municipal branches of the State Bank, functional units should actively coordinate closely with the State Bank's Information Technology Department to resolve issues related to technology for data entry, transmission, receipt, and utilization through networks, addressing difficulties faced by reporting units to ensure full, accurate, and timely data transmission.

d) Based on the actual needs of information required for the performance of the unit's functions and tasks, review the information needs of the unit, eliminate unnecessary reporting requirements to reduce the reporting burden on credit organizations. The review results must be sent to the Policy Department before May 20, 2007 for consolidation and drafting amendments to Decision No. 477 and Decision No. 1747.

e) The Banking Inspection Department will cooperate with relevant units within the State Bank to develop plans and conduct inspections to handle units that have been reminded but continue to repeatedly violate the reporting regulations stipulated in Decision No. 477 and Decision No. 1747.

g) The Monetary Policy Department will cooperate with the Ministry of Planning and Investment to organize training sessions for units to guide the uniform classification of credit according to Vietnam's economic sector system issued by Decision No. 10/2007/QĐ-TTg dated January 23, 2007, of the Prime Minister.

h) The Credit Institutions Department will cooperate with the State Bank's Information Technology Department and related units to evaluate the software completed and implemented by the Central Credit Fund to support funds in effectively performing reporting duties to the State Bank.

i) The Commercial Banks and Non-Bank Financial Institutions Department will promptly notify the Monetary Policy Department and the State Bank's Information Technology Department of lists of newly licensed credit organizations, revoked licenses, special supervision credit organizations, dissolved, merged, or converted credit organizations, etc., to update the list of credit organizations in the reporting program in a timely manner.

k) The State Bank's Information Technology Department:

- Coordinate with provincial and municipal branches of the State Bank and relevant units within the State Bank to ensure smooth reception and processing of information, resolving technical issues for reporting units under Decisions No. 477 and No. 1747.

- Collaborate with the Monetary Policy Department to promptly update the list of currently operating credit organizations in the reporting program.

3. Governors of provincial and municipal branches of the State Bank directly under the central government:

a) Strictly perform the function of monitoring and urging units to submit reports in accordance with the reporting regulations stipulated in Decision No. 477 and Decision No. 1747.

b) Proactively conduct inspections and checks on credit organizations within their jurisdiction regarding compliance with reporting regulations of the State Bank as stipulated in Decision No. 477 and Decision No. 1747, determine the fundamental reasons for poor implementation of the reporting regulations by credit organizations, and report to the State Bank for coordinated handling. Initially, inspect the March 2007 reporting of credit organizations within their jurisdiction and compile and report the inspection results to the State Bank (Monetary Policy Department) in May 2007 for coordinated handling..

c) Review the statistical reporting indicators within the responsibility of provincial and municipal branches of the State Bank to ensure timely submission to the headquarters of the State Bank, meeting all requirements and ensuring accuracy. Before transmitting the report to the State Bank's Information Technology Department, cross-check with related departments to ensure the accuracy of the reported data.

d) Review the statistical reporting information program according to Decision No. 477 and Decision No. 1747 and promptly report technical issues to the State Bank's Information Technology Department for correction.

4. Rewards and penalties

- General Directors (Directors) of credit organizations shall establish mechanisms for rewarding and penalizing units, departments, and individuals who achieve good results or violate the reporting regulations stipulated in the Statistical Reporting System to motivate staff engaged in statistical work.

- The reward for individuals and units achieving outstanding results in implementing the reporting requirements of the State Bank stipulated in Decision No. 477 and amended by Decision No. 1747 shall be carried out in accordance with the Reward and Commendation Regulations of the Banking Industry issued together with Decision No. 40/2006/QĐ-NHNN dated August 17, 2006, of the Governor of the State Bank.

- Units and individuals violating the implementation of the reporting requirements stipulated in Decision No. 477 and amended and supplemented by Decision No. 1747 shall be subject to penalties as prescribed in Government Decree No. 202/2004/NĐ-CP dated December 10, 2004 on administrative sanctions in the field of currency and banking activities.

5. Implementation organization

a) This Directive shall take effect fifteen days from the date of publication in the Official Gazette.

b) The Director of the Office, Heads of the Monetary Policy Department, Heads of units under the State Bank, Governors of the State Bank branches in provinces and centrally-administered cities, General Directors (Directors) of credit organizations are responsible for implementing this Directive./.