Directive No. 06/CT-NHNN on measures to manage monetary policy, credit, and banking operations in the last months of 2012 and the first months of 2013.

DIRECTIVE

On measures to manage monetary policy, credit, and banking operations in the last months of 2012 and the beginning of 2013

Implementing the directives of the Government in Resolution No. 01/NQ-CP dated January 3, 2012 on major solutions to guide the implementation of the socio-economic development plan and state budget estimate for 2012 and Resolution No. 13/NQ-CP dated May 10, 2012 on some solutions to address difficulties in production and business, support markets, and the banking system, which have been and continue to implement resolutely measures to manage monetary policy strictly, prudently, and flexibly, focusing on addressing difficulties in production and business activities, supporting markets to curb inflation, contribute to macroeconomic stability, ensure social welfare, and maintain economic growth at a reasonable level. The results of managing monetary policy and banking operations over more than ten months of 2012 have basically achieved the goals according to the Government's guidelines, liquidity in the banking system has been ensured and shows a trend of improvement, interest rates have significantly decreased, credit structure continues to shift towards prioritized sectors, the foreign exchange market remains stable, state foreign exchange reserves have increased, the program to restructure credit organizations has been implemented resolutely, systemic risks have gradually been controlled, and the operations of credit organizations are fundamentally safe.

However, managing monetary policy and banking operations in the future will still face challenges that need continued attention and resolution, such as inflation, although it has been curbed at a low level, still poses a risk of rising again. Production and business activities have shown positive changes but still face difficulties due to weak domestic and external demand, high inventory levels, low bank credit growth, and high bad debt levels in banks. To continue effectively implementing measures to manage monetary policy, credit, and banking operations in the last months of 2012 and the beginning of 2013, in line with the Government's directives on measures to curb inflation, stabilize macroeconomics, support economic growth at a reasonable level, and ensure social welfare, the Governor of the State Bank requests:

1. The banking system to continue to implement resolutely, comprehensively, and effectively measures to manage monetary policy, credit, and banking operations according to the Government's directives in Resolution No. 01/NQ-CP and Resolution No. 13/NQ-CP, and the State Bank of Vietnam's Directive No. 01/CT-NHNN dated February 13, 2012, and related documents.

2. For credit institutions and foreign bank branches (hereinafter referred to collectively as credit institutions):

2.1. To implement comprehensively and effectively measures to mobilize capital, proactively balance sources of capital and their use to ensure liquidity and promptly meet the credit needs of the economy, especially during the Lunar New Year and Tet holiday in 2013.

2.2. To implement effective measures to expand credit to support reasonable economic growth and contribute to curbing inflation as directed by the Government, strengthen credit quality control to enhance business efficiency and ensure system safety:

- Manage credit activities in accordance with laws and based on assessing the current situation and the ability to expand credit to improve business efficiency and ensure credit safety; allocate funds to promptly meet the credit capital needs of the economy; prioritize funding for agriculture, rural areas, export-oriented production, supporting industries, small and medium-sized enterprises, labor-intensive projects, and effective plans.

- Study and consider implementing credit product packages based on production-to-consumption chains to enhance effectiveness and reduce loan operation costs, support borrowers' investment, production, and consumption, such as loans for seafood farming, processing, and export chains, and loans linking project investors, construction contractors, material suppliers, and home buyers.

- Organize and implement credit programs and policies according to the Government's and Prime Minister's directives, such as: Credit policies for agriculture and rural areas as stipulated in Decree No. 41/2010/NĐ-CP dated April 12, 2010; lending policies for livestock breeding and catfish farming as directed by the Prime Minister in Circular No. 1149/TTg-KTN dated August 8, 2012; support policies to reduce post-harvest losses for agricultural and aquatic products as stipulated in Decision No. 63/2010/QĐ-TTg dated October 15, 2010 and Decision No. 65/2011/QĐ-TTg dated December 2, 2011 of the Prime Minister; loans for purchasing and temporary storage of rice, coffee...

- Continue to implement resolutely measures to address difficulties in credit relationships between credit institutions and customers as directed by the Government and the State Bank of Vietnam to facilitate customers' access to bank credit in accordance with the law, while also supporting businesses and people to maintain and develop production and business activities, such as restructuring repayment terms (adjusting loan periods, extending loan terms), reducing or waiving interest on loans based on the financial capacity of credit institutions... In case difficulties arise due to mechanism and policy issues, report to the State Bank of Vietnam for timely consideration and resolution.

2.3. Regarding deposit and lending interest rates:

- Strictly implement regulations and directives of the State Bank of Vietnam on interest rates; apply reasonable lending rates based on deposit rates and the risk level of the loan; save costs, minimize management, advertising, promotional, and operational expenses to create conditions to reduce lending rates and share difficulties with borrowing customers.

- Not to collect any fees related to loans, except for certain fees prescribed in Circular No. 05/2011/TT-NHNN dated March 10, 2011 of the Governor of the State Bank of Vietnam on collecting fees for lending by credit institutions to customers.

- Closely monitor the implementation of the State Bank of Vietnam's regulations on deposit and lending interest rates, promptly detect any violations to take appropriate measures based on clearly defined responsibilities of organizations and individuals. Credit institutions violating interest rate regulations shall be handled according to the law and Circular No. 02/CT-NHNN dated September 7, 2011 of the Governor of the State Bank of Vietnam on rectifying the implementation of regulations on deposit interest rates in Vietnamese dong and US dollars.

2.4. Implement foreign exchange management and gold trading regulations:

- Strictly comply with regulations on listing exchange rates and foreign exchange management by the Government and the State Bank of Vietnam; properly implement the State Bank of Vietnam's regulations on gold deposits and loans.

- After obtaining the State Bank of Vietnam's license for buying and selling gold bars, credit institutions must promptly establish branch networks and locations for buying and selling gold bars according to plans and the provisions of Circular No. 16/2012/TT-NHNN dated May 25, 2012 of the Governor of the State Bank guiding certain provisions of Decree No. 24/2012/NĐ-CP dated April 3, 2012 of the Government on managing gold trading activities.

2.5. Implement measures to ensure safety in banking operations, proactively implement solutions to handle non-performing debts:

- Strictly comply with the State Bank of Vietnam's regulations on monetary, credit, and banking activities, risk ratios for safe banking operations, loan classification, and adequate risk reserve provisions according to the law; improve the quality and effectiveness of internal control and audit systems; closely supervise all business activities to prevent and promptly address any violations.

- Actively implement comprehensive solutions to limit the increase in non-performing debts, accelerate the handling of non-performing debts through risk reserves, debt sales, collateral asset disposal, and other methods prescribed by law; do not exploit regulations on debt restructuring and other operational measures to conceal non-performing debts or distort credit quality.

- Credit institutions that have not adequately established risk reserves according to the law shall not distribute dividends or profits for 2012 and shall not increase salaries, bonuses, or remuneration for staff. Joint-stock commercial banks must report their dividend distribution plans for 2012 at least 15 working days before implementation to the State Bank provincial branch where the bank has its headquarters for comments.

3. For units under the State Bank of Vietnam:

3.1. Units at the headquarters of the State Bank of Vietnam shall advise the Governor of the State Bank and proactively implement solutions according to the functions and tasks of the units, focusing on the following priorities:

- Complete the issuance of regulatory legal documents according to the 2012 and 2013 programs, particularly issuing new mechanisms for loan classification, risk reserve establishment, and safe banking operation ratios suitable for practical needs, regulatory requirements of the State Bank of Vietnam, and the activities of credit institutions.

- Strictly, prudently, and flexibly manage monetary policy to stabilize the money market, ensure liquidity for credit institutions, especially during the Lunar New Year and Tet holidays in 2013; adjust interest rates appropriately in response to macroeconomic trends and the money market; implement monetary policy tools to encourage expanded credit for agricultural and rural development as directed by the Government.

- Coordinate with the Ministry of Agriculture and Rural Development, relevant ministries, and credit institutions to evaluate achievements and difficulties encountered in implementing Decree No. 41/2010/NĐ-CP to consider amending and supplementing it to suit reality; address difficulties and issues related to credit activities in economic sectors.

- Manage the foreign exchange market and flexibly adjust exchange rates based on market signals, aligning with foreign currency supply-demand, interest rates, inflation, international balance of payments, to facilitate increased state foreign exchange reserves; closely monitor credit institutions' gold capital mobilization and utilization to resolve difficulties and ensure compliance with regulations; closely monitor gold market developments to promptly address and resolve difficulties faced by credit institutions authorized to buy and sell gold bars.

- Actively and proactively inspect and supervise the safety of banking operations regarding compliance with laws on monetary, credit, and banking activities, particularly closely coordinating with competent agencies to inspect and supervise compliance with interest rate regulations; strictly detect and penalize any violations of the law. Closely control expense items and profit distribution of credit institutions.

- Continue to implement the plan to restructure weak commercial banks according to the approved restructuring plan for the credit institution system from 2011-2015 by the Prime Minister in Decision No. 254/QĐ-TTg dated March 1, 2012. Promptly complete the proposal to establish an asset management company to accelerate the resolution of non-performing debts and enhance the credit supply capacity of the credit institution system for the economy.

- Proactively publicize and disseminate legal regulations, government directives, and the State Bank of Vietnam's instructions on managing monetary policy, credit, and banking activities.

3.2. The State Bank provincial branches directly under the central government shall perform tasks and implement solutions:

- Proactively study and guide credit institutions within their jurisdiction to implement monetary, credit, and banking activity solutions to contribute effectively to the implementation of monetary policy aimed at curbing inflation, stabilizing the macro-economy, ensuring social welfare, and resolving difficulties in production and business operations, supporting the market as directed by the Government and the State Bank of Vietnam.

- Strengthen inspection and audit work on the compliance with regulations on currency, credit, and banking operations of credit organizations within the jurisdiction. Closely monitor the compliance of credit organizations with the State Bank of Vietnam's regulations on interest rates and service fees, in line with focused solutions to address difficulties in production and business activities. Strictly handle violations by credit organizations within the jurisdiction; in cases where issues arise beyond authority, promptly report to the Governor of the State Bank of Vietnam for consideration and resolution.

- Monitor and provide comments on the dividend distribution plans for the year 2012 of joint-stock commercial banks headquartered within the jurisdiction, in accordance with legal provisions and directives from the Governor of the State Bank of Vietnam.

- Promptly implement necessary measures to establish a network of authorized gold bullion trading businesses within the jurisdiction in accordance with the Governor of the State Bank of Vietnam's directives.

- Understand the economic and social situation and banking activities within the jurisdiction to report and propose to local party committees, authorities, and the Governor of the State Bank of Vietnam on management measures, credit organization networks, and amendments to mechanisms and policies that align with actual conditions; enhance information exchange cooperation with units at the headquarters of the State Bank of Vietnam.

- Proactively publicize and disseminate legal provisions and directives from the Government and the State Bank of Vietnam so that enterprises and citizens understand and comply with legal regulations on currency, credit, and banking activities.

4. Implementation organization:

4.1. This Directive takes effect from the date of issuance.

4.2. The Director of the Office, Heads of the Monetary Policy Department, and Heads of units under the State Bank of Vietnam, Governors of the State Bank of Vietnam branches in centrally governed provinces and cities, Chairmen of the Board of Directors, Chairmen of the Board of Members, and General Managers (Directors) of credit organizations and foreign bank branches shall implement this Directive./.