Dao Minh Tu, Deputy Governor of the State Bank of Vietnam. (Photo: VNA)
Hanoi (VNA) – This year, the banking sector will focus on providing maximum support for enterprises to resume production while pouring cash flow into priority fields in line with the Government’s direction, Dao Minh Tu, Deputy Governor of the State Bank of Vietnam (SBV) has said.
The unpredictable development of the pandemic, with the appearance of the Omicron mutation, makes the global economic outlook and inflation in 2022 difficult to forecast, posing difficulties for Vietnam's banking sector.
With this in mind, the SBV will continue to carry out monetary policies in a flexible manner, creating favourable conditions in supporting liquidity across the economy, Deputy Governor Tu told Vietnam Plus.
It will efficiently execute solutions to control inflation at the target of 4% for this year and stabilise the macro-economy and the exchange rate, as well as manage foreign exchange and gold market.
Tu emphasised that the SBV will strictly control credit for risky areas such as real estate, securities trading and bond issuance for businesses that do not ensure safety.
Attention will be paid to promoting digital transformation in banking and non-cash payment activities. This will improve the legal framework to facilitate the digital transformation of the banking industry, meeting the requirements of new business models, products and services on the ground of information technology, digital banking, and payment. Safety in payment and digital transformation activities will be enhanced as well.
For credit activities, the SBV will continue to focus capital on businesses in prioritised fields, especially for those facing difficulties due to COVID-19, he said.
Favourable conditions will be created by exploiting all resources in the economy, contributing to the realisation of national targets and preferential credit programmes.
Tu said that the banking industry will continue restructuring repayment terms and keep the debt group unchanged, adding that this is an important solution that should prevent businesses from being transferred to a bad debt group, and allow access to capital to restore production.
Illustrative image. (Photo: VNA)
Credit growth is set at 14% for 2022, but it could be higher or lower, depending on the capital needs of the economy as well as inflation control requirements. Especially at year-end, this credit growth target will be adjusted to suit the actual situation.
The 12% figure was the target for 2021. However, the SBV had a policy of loosening credit at the end of the year to ensure capital for businesses. As a result, credit growth reached about 13.5% - 14% last year.
According to Tu, there are many challenges for the banking industry this year, including the risk of inflation due to objective and subjective factors both domestic and foreign, the impact of trade and monetary tightening policy and the shift of investment capital flows of some big countries, along with many pressures from the domestic economy. The economy is expected to recover in 2022, resulting in a rise in consumption and investment demand, putting pressure on prices. This will affect the objectives of monetary policy.
The issuance of policy on restructuring and extending debt payment is a temporary solution that is necessary for the short term to support businesses and people facing difficulties during the COVID-19 pandemic. However, it also poses potential risks to the banking system in the medium term.
Regarding measures to handle bad debt, Tu said that the SBV has determined the scale of bad debt in 2022 and in the coming years to come up with solutions to both control the existing bad debts and prevent new bad debts from arising.
The pandemic over the past two years has brought many consequences to the economy, including slow capital turnover, interrupted cash flow, a decline in corporate revenue and an inability to pay due debts. These difficulties will have a stronger impact on banking operations in 2022, he said.
The SBV also submitted to the Government and the National Assembly to consider building the Law on Bad Debt Settlement based on Resolution 42/2017/QH14 piloting the bad debt settlement of credit institutions./.
