The SBV on February 14 announced credit growth quotas allocated to classified credit institutions and a plan to tighten credits in the ‘discouraged’ areas in order to prioritise capital for production and macroeconomic stability. SBV Deputy Governor Nguyen Dong Tien further elaborated on the management of credit institutions in 2012 in an interview granted to the media at a press briefing in Hanoi.
Could you tell us about SBV criteria for classifying credit institutions?
Controlling credit organisations within each group is no novelty. Experts say that credit growth rate controls should not applied for all credit institutions as they are not the same in terms of financial control and operational capacities.
We divide credit organanisations into four groups according to criteria such as the scale of capital assets, capacity to control risks, the quality of property assets, and violations of SBV rules.
Accordingly, the three groups including Group 1 (healthy banks), Group 2 (average banks), and Group 3 (below average banks) will be allowed credit growth rates of 17 percent, 15 percent and 8 percent, respectively. Group 4 (weak banks) which are not allocated any credit growth rates should be restructured. A detailed list of weak banks will not be made public.
After every six months, the SBV will adjust credit growth rates allocated to credit institutions in line with changes in the monetary and credit situation as well as banking activities. Group 4 (weak banks) should continue to operate and reclaim their debts.
In fact, another group consisting of foreign credit organisations which have just increased their charter capital will be allowed credit growth rates as equal as to their registered capital at maximum.
How many credit institutions are placed in Group 4?
Around 10 credit institutions which are considered weak will not be allowed any credit growth rates. Currently, credit organisations are fully aware of the policy.
For Group 4, the SBV will not announce the list of weak banks as this will affect depositors psychologically. Do you think of consequences these banks may cause to Vietnam’s banking system?
Banks should be responsible for building trust among depositors and shareholders. The SBV does not expect credit institutions to violate its regulations and has asked them to play the game seriously to create a healthy banking system. It has also set a six-month deadline for adjustment of credit growth rates.
Many experts are worried about bank liquidity. How can the SBV deal with the lack of systematic liquidity?
Banks have so far made do with their liquidity capacity as required by the Prime Minister. The SBV will prime the pump through open market operations (OMO) to help some banks through liquidity difficulties if need be.
In addition, the SBV will adopt monetary policies, pour or withdraw money, and regulate overseas remittance to ensure the liquidity of credit organisations.
Some people say that the SBV’s recent instruction aims to prevent the securities market from going to pot. What about the SBV’s point of view?
Solutions mentioned in the instruction focus on implementing the tasks of stabilizing macroeconomy with priority given to the fields of agriculture and rural development, export business, small and medium-sized enterprises, but not to real estate business and stock trading. Anyway, there will be some adjustment for those which have actively contributed to generating jobs.
The project to mobilize gold from people is drawing much attention from the public. How far has this project been implemented?
The SBV has developed this project to mobilize human resources for the national economy. In 2011, the government proposed stabilizing the gold and foreign exchange market. I think it is the Vietnamese people’s custom to trade in gold and jewelries, which has not affected the market. However, only a few people have benefited from gold speculation. Therefore, the State should have stable policies to protect investors and avoid the negative impact on the foreign exchange rates.