Banking operation should benefit businesses, people: PM
Banks’ support for the economy would help realize the GDP growth target of 6-6.5% for this year.
An efficient banking sector is fundamental for overall economic performance, as such, the main goal of banking operation is to benefit people and businesses.
|Prime Minister Pham Minh Chinh at the meeting. Source: VGP|
Prime Minister Pham Minh Chinh stressed while working with the State Bank of Vietnam (SBV), the country’s central bank, on February 8.
Chinh expected in the coming time the sector would continue contributing to the stability of the macro-economy and foreign exchange market, control the inflation rate and ensure the efficient implementation of the upcoming socio-economic recovery program.
“Every bank should create favorable conditions for businesses and people to access preferential loans to recover,” Chinh said, adding more solutions are needed to promote public-private partnership (PPP) in infrastructure investment for further economic development.
According to Chinh, the SBV in this context is responsible for maneuvering both monetary and fiscal policies efficiently to aid Vietnam’s rapid and sustainable development.
He urged the central bank to continue providing a favorable environment for banks to lower lending rates, tighten loans into high-risk fields and control the issuance of corporate bonds.
“The banking sector must continue restructuring weak banks and address bad debts to avoid severe consequences,” Chinh continued.
“These efforts would help Vietnam speed up the recovery process to realize the GDP growth target of 6-6.5% for this year, and keeping an average inflation rate of around 4%,” he said.
At the meeting, SBV Vice Governor Dao Minh Tu said the banking sector is committed to supporting economic growth as well as businesses and people affected by the pandemic.
Tu added the SBV is working on an action plan for the soon implementation of the credit support package worth VND40 trillion (US$1.76 billion) for businesses and the people that is part of the recovery program approved by the National Assembly (NA).
In addition, Tu suggested the Government permit for state-owned banks to raise registered capital in a bid to better realize its leading role in carrying out state policies for investing in major infrastructure projects.
To ensure greater efficiency in addressing bad debts, Tu suggested the Government seek the NA’s approval for extending the validity period of resolution 42 on settling bad debts until 2025, along with drafting a law on addressing the issue.
Tu expected bad debts to continue rising due to the pandemic impacts on enterprises, as such, the target of keeping the bad debt ratio below 3% remains challenging.
“While the restructuring of debt payment schedule as well as waiving and freezing of lending rates are essential to support the businesses, it also poses higher risks of bad debts and losing liquidity in mid-term,” he added.
This was because the banking system is the main source of credit supply for the economy, especially in the medium and long term, Tu said.
Under the NA resolution, the state budget would subsidize part of the lending rates for businesses and people affected by the pandemic, with the maximum subsidy being 2% for the 2022-2023 period, or a total of VND40 trillion ($1.76 billion).
Since the first outbreak of the pandemic, the banking sector has restructured debt payment for 600.000 customers with total outstanding loans of over VND280 trillion ($12.32 billion); nearly two million others with outstanding loans of VND4,000 trillion ($176 billion) were subject to lower and waive lending rates; 1.2 million customers received new loans of total VND7,000 trillion ($308 billion) with preferential rates compared to the pre-pandemic period.
- Global minimum tax set to take effect in Vietnam in 2024
- Vietnam’s local bond market hits US$109 billion: ADB
- Vietnam not a currency manipulator, says US Treasury
- ADB, SBV joint efforts to support digital banking in Vietnam
- Hanoi Cashless Streets to foster digital transactions
- Vietnamese Government considers extending VAT reduction to mid-2024
- The Green Economy Forum 2023 to take place in November
- Greening finance accelerates Vietnam's SDG implementation
- DHL Express partners with ACB to cut carbon emissions using sustainable aviation fuel
- Vietnam joins the ASEAN Regional Payment Connectivity
Launch of Resource Mobilization Plan for Vietnam’s low carbon journey
Hanoi Times Weekly Podcast - December 2
Vietnam’s e-commerce market set to hit US$20.5 billion
AI to help Hanoi accelerate smart city development
Data mining drives smart city building: vice chairman
Planning essential to promote smart city development
Amended Capital Law to develop Hanoi’s cultural industries
Vietnam advised to use cultural heritage as material for creative industries
Hanoi, British cities exchange experience in branding Creative City