Directive 02/CT-NHNN enhance the prevention and control of Covid-19

THE STATE BANK OF VIETNAM      THE SOCIALIST REPUBLIC OF VIETNAM

No.: 02/CT-NHNNIndependence - Freedom - Happiness

Hanoi, March 31, 2020

DIRECTIVE

On urgent solutions applied by the banking sector to enhance the prevention and control of coronavirus disease (Covid-19) and overcome difficulties caused by the disease

In response to the adverse impacts of the complicated developments of coronavirus disease(Covid-19) (below referred to as the disease) on the domestic economy, the entire banking sector has over the recent time taken the initiative in formulating plans on prevention and control of the disease so as to ensure safe, uninterrupted and effective operation of the banking system. The State Bank of Vietnam (below referred to as the State Bank) has promptly applied such solutions and policies as flexibly regulating monetary and exchange-rate policy instruments, rescheduling loans, granting interest exemption or reduction, retaining categories of bank loans, and simultaneously reducing regulatory interest rates in order to support production and business activities and exempt or reduce payment charges. These solutions have been drastically applied, initially helping remove difficulties for borrowers. The entire banking sector has contributed more than VND 160 billion to prevention and control of the disease, showing its high sense of responsibility in social welfare activities.

However, the disease now still sees complicated and unpredictable developments which will continue to greatly affect production and business activities and lives of people in the time to come. Therefore, the tasks of preventing and controlling the disease and redressing difficulties caused by the disease become very urgent. In furtherance of the instructions of the Party Central Committee’s Political Bureau and Secretariat and of the Prime Minister on drastic measures to prevent and control the disease, the State Bank Governor requests units under the State Bank, credit institutions and foreign bank branches (below collectively referred to as credit institutions), attached non-business units and enterprises, and associations in the banking sector to strictly, expeditiously and timely perform the following tasks and solutions:

I. GENERAL TASKS

1.The entire banking sector will follow the guideline “fight the disease like combating the enemy” with higher determination and consensus from the central to local level, and from the State Bank to credit institutions in order to effectively implement urgent solutions for preventing and controlling the disease and surmounting difficulties caused by the disease to the economy.

2.To concentrate efforts on drastically, proactively and effectively implementing solutions to prevent and control the disease and provide support for redressing difficulties caused by the disease in the new situation under the Party Central Committee’s Political Bureau’s instructions in the Party Central Committee’s Secretariat’s Notice No. 172-TB/TW of March 21, 2020, of the conclusions in Official Letter No. 79-CT/TW of January 29, 2020, of the Prime Minister’s instructions in Directive No. 11/CT-TTg of March 4, 2020, Directive No. 13/CT-TTg of March 11, 2020, and Directive No. 15/CT-TTg of March 27, 2020, and of the State Bank Governor in Official Telegram No, 02/CD-NHNN of March 11, 2020, and Circular No. 01/2020/TT-NHNN of March 13, 2020 (below referred to as Circular No. 01/2020/TT-NHNN). To timely acquire and update official information about the disease’s developments with a view to proactively applying effective measures to prevent and control the disease, ensuring safe and uninterrupted banking operations.

3.To be determined to achieve the objectives set out in the State Bank Governor’s Directive No. 01/2020/CT-NHNN of January 3, 2020; to focus on implementing solutions to curb inflation, maintain the monetary and foreign exchange market stable and stabilize the macro economy; to reserve credit for priority sectors and production and business activities; to timely and fully allocate funds to the economy, especially funds for restoring and maintaining production for the sectors stricken by the disease.

4.Leaders of authorities at all levels, cadres, civil servants and public employees in the entire banking sector must be aware of their role and responsibility, raise the sense of observing discipline, promoting their initiative and coordination in their operation, and promoting the sense of sharing difficulties through monetary, banking credit and social welfare activities.

II. FOR THE UNITS AT THE CENTRAL BANK

1.To regularly acquire information about the disease and make forecasts and evaluations of the disease’s impacts on the economy; to closely monitor information about domestic and foreign market developments for updating and adjusting scenarios on regulating monetary and credit policies as appropriate; to take the initiative in synchronously and flexibly regulating monetary policy instruments and regulating open-market operations with appropriate terms, volumes and interest rates, and preparing support plans in cases of necessity to ensure market liquidity, timely allocate funds, and reduce loan interests rates for the economy, provide support for economic growth, and control inflation based on the set targets.

2.To provide refinancing for credit institutions for implementation of programs under the direction of the Government and Prime Minister, and support the restructuring of credit institutions and settlement of non-performing loans in the forms of refinancing on the basis of special bonds of the Vietnam Asset Management Company (VAMC), on-lend loans based on credit dossiers and provide loans secured by valuable papers, and provide refinancing in other forms under regulations.

3.To closely monitor market developments, apply regulatory exchange rates in a flexible and appropriate manner, and further apply monetary policy measures and instruments for stabilizing the foreign currency market. To get ready to make interventions in the market when necessary in order to valorize the foreign currency market, thus helping stabilize the macro economy.

4.To regulate interest rates appropriate to the macroeconomic balance, market developments and objectives of monetary policies; to closely supervise credit institutions in the reduction of interest rates under the State Bank’s instructions and the Government’s policy in removing difficulties for production and business activities.

5.To direct credit institutions to reserve credit for priority sectors and production and business activities; to regularly monitor and evaluate developments and impacts of the disease on the credit growth of the entire banking sector so as to consider adjusting credit norms for credit institutions with a view to fully and timely allocating funds for production and business activities, especially for sectors affected by the disease; to create conditions for borrowers to get new loans for restoring production; to continue to strictly control credit for sectors with latent risks.

6.To hold working meetings directly with chairpersons of Members’ Councils/Boards of Directors/Directors General of credit institutions for effectively implementing solutions to remove difficulties for clients affected by the disease, such as rescheduling loans, exempting or reducing interests on existing loans and retaining categories of bank loans under Circular No. 01/2020/TT-NHNN and provide new loans with preferential interest rates; to regularly monitor and summarize information about the situation and results of implementation by credit institutions.

7.To organize periodical and unscheduled examinations and inspections of the implementation by credit institutions; to supervise the implementation of Circular No. 01/2020/TT-NHNN and regulations on exemption from or reduction of e-payment service charges, and relevant legal documents; to timely amend and supplement regulations, mechanisms and policies for improving the legal framework and settling problems faced by credit institutions and clients in the course of implementation.

8.To coordinate with functional units of the Ministry of Planning and Investment, Ministry of Finance and Ministry of Labor, Invalids and Social Affairs and related agencies in formulating, and organizing the implementation of, plans on use of appropriate monetary and credit policy instruments as support for controlling the disease after these plans are approved by competent authorities.

9.To coordinate with functional units of the Ministry of Finance in completing procedures for submitting the increase of charter capital for state-funded commercial banks to competent authorities for handling.

10.To review and formulate regulations on technology application for reducing direct transactions in the provision and use of banking products and services. To promptly coordinate with ministries and sectors in finalizing and submitting to the Prime Minister for issuance a decision on pilot use of mobile money accounts for payment for other small-value services, and a directive on stepping up non-cash payment in Vietnam.

11.To build scenarios to ensure uninterrupted and timely advisory, direction and administration activities of the units and departments of the State Bank; to ensure safety for all activities, especially for management work and transactions in the domestic currency and foreign currency markets as well as payment and information technology systems of the State Bank.

12.To strengthen public communication activities of the State Bank and closely coordinate with credit institutions in providing timely and adequate information about solutions and policies and results of implementation by the banking sector.

III. FOR THE STATE BANK’S PROVINCIAL-LEVEL BRANCHES

1.To heighten the role of state management agencies in charge of banking operations in localities, expeditiously and drastically direct the implementation of solutions for preventing and controlling the disease and removing difficulties for the disease-affected borrowers of credit institutions in localities as directed by the State Bank Governor and provincial-level People’s Committees.

2.To regularly urge the implementation by credit institutions in localities, and organize unscheduled inspections and examinations of the observance of regulations on rescheduling of loans, interest rate exemption or reduction, retention of categories of bank loans, or provision of new loans for credit institutions’ clients facing difficulties caused by the disease, and take responsibility before the State Bank Governor for implementation results. To take measures to strictly and timely handle entities that fail to observe policies, delay the handling of arising problems, intentionally cause difficulties or inconveniences, or show irresponsibility in implementing solutions to remove difficulties for borrowers under instructions of the Government, Prime Minister and State Bank Governor. At the same time, to conduct supervision for handling entities that abuse regulations to improperly implement the policy on providing support for removing difficulties caused by the disease.

3.To coordinate with related departments and sectors in grasping information about the disease’s impacts on the economy and the banking sector in localities; to advise provincial-level People’s Committees on how to effectively support the removal of difficulties in production and business activities, especially those of medium- and small-sized enterprises, households, sectors where essential goods are produced and sold, and priority sectors.

4.To take the initiative in providing information about banking credit programs and policies and solutions drawn out by the banking sector; to proactively handle arising problems and promptly propose problems falling beyond their competence to the State Bank Governor and provincial-level People’s Committees for handling.

5.Directors of the State Bank’s provincial-level branches shall organize the implementation of urgent policies and solutions devised by the baking sector in this Directive and relevant instructions. The State Bank Governor shall strictly handle directors of the State Bank’s provincial-level branches who show irresponsibility or delay in organizing the performance of assigned tasks. This will serve as an important basis for the Central Bank to evaluate the performance of tasks in the whole year.

IV. FOR CREDIT INSTITUTIONS

1.To strictly, drastically and effectively implement the tasks and solutions for preventing and controlling the disease and supporting clients affected by the disease under the State Bank Governor’s instructions in this Directive, Notice No. 35/TB-NHNN of February 7, 2020, Official Telegram No. 02/CD-NHNN of March11, 2020, and Circular No. 01/2020/TT-NHNN, and the State Bank’s instructions on exemption from or reduction of payment charges. To closely follow further instructions of the State Bank Governor as well as related authorities and sectors in order to timely update and implement them.

2.To proactively devise detailed business scenarios (including standby business plans in response to the disease’s developments) for ensuring uninterrupted business activities in all circumstances. To work out solutions for providing banking services according to each scenario of the disease’s developments in conformity with disease control measures of the Government, Prime Minister and local administrations and, at the same time, increase the provision of e-banking services.

3.To early issue and implement internal regulations guiding Circular No. 01/2020/TT-NHNN. Chairpersons of Members’ Councils/Boards of Directors/Directors General of credit institutions shall personally direct the rescheduling of loans, exemption from or reduction of interests or charges, retention of categories of bank loans or provision of new loans for clients facing difficulties caused by the disease, and take responsibility before the State Bank Governor for implementation results. To strictly handle units, leading officials and officers engaged in professional operations who delay or intentionally obstruct, or show irresponsibility in or improperly implement regulations in the course of applying solutions to remove difficulties for clients.

4.To effectively implement solutions for extending credit for production and business activities and priority sectors, especially providing loans for maintaining and restoring the sectors affected by the disease. To closely control credit quality in sectors with latent risks.

5.To take the initiative in reviewing and reducing operating expenses, especially expenses on salaries and bonuses, and timely adjust business plans and financial plans to suit reality before shareholders ’meetings are held; in the immediate future, not to distribute dividends in cash so as to reserve resources for drastically reducing interest rates for existing outstanding loans and new loans.

6.To increase the capacity of Boards of Directors/Members’ Councils, Executive Boards and Supervisory Boards to administer and supervise the operation of credit institutions. To increase the efficiency of inspection and internal control, focusing on the inspection and supervision of the rescheduling of loans, exemption from reduction of interests or charges, or retention of categories of bank loans strictly under Circular No. 01/2020/TT-NHNN; to detect and resolutely handle acts of abusing   policies to seek profits and falsely report credit quality. To report on a weekly basis to the State Bank (via the Department of Credit for Economic Sectors) on results of implementation of the support solutions under Circular No. 01/2020/TT-NHNN.

7.To intensify coordination and information exchange among credit institutions to reach a high consensus in implementing solutions to remove difficulties for clients, especially solutions aiming to retain categories of bank loans upon the rescheduling of loans or exemption from or reduction of interests, etc. To fully and promptly provide information about solutions, policies, programs and products to borrowers for coordination.

8.To intensify non-cash payment; to diversify appropriate credit programs and products for providing more support for target entities and economic sectors; to step up the reform of administrative procedures and apply technologies for limiting direct transactions, facilitating credit access by clients. To further implement solutions for preventing and controlling the disease and remedial measures when staff members of the banking sector are infected with the disease, ensuring safe and uninterrupted operation of the banking system.

9.To engage in, and mobilize staff members of the entire system of credit institutions to engage in social welfare activities in order to provide support for other sectors and people to overcome consequences caused by the disease.

10.Chairpersons of Members’ Councils/Boards of Directors/Directors General shall totally take responsibility before the State Bank Governor for the implementation of policies and urgent solutions drawn out by the banking sector so as to prevent and control the disease and overcome difficulties caused by the disease. The State Bank shall strictly handle organizations and individuals that show irresponsibility, obstruct or delay the implementation of, or violate current regulations. In addition, the State Bank shall adopt mechanisms to encourage and commend credit institutions that properly implement these policies.

V.Associations in the banking sector shall continue to bring into play the role of connecting credit institutions and creating consensus and unanimity among member banks in implementing solutions related to interest rates, rescheduling of loans, or provision of new loans, etc., in order to remove difficulties for borrowers affected by the disease. Non-business units and enterprises in the banking sector shall, within the ambit of their functions and tasks, assist and coordinate with the units of the State Bank and credit institutions in synchronously and drastically implementing these solutions in the entire banking sector.

VI. ORGANIZATION OF IMPLEMENTATION

1.This Directive takes effect on the date of its signing.

2.The units in the headquarters of the State Bank, and the State Bank’s provincial-level branches shall, based on their assigned functions and tasks, organize the performance of the tasks mentioned in this Directive; and include contents on implementation of this Directive in reports on results of banking activities and send such reports to the Office of the State Bank.

3.The Office of the State Bank shall assume the prime responsibility for, and coordinate with the Department of Credit for Economic Sectors, Monetary Policy Department, Banking Supervision Agency and related units of the State Bank in, monitoring the implementation of this Directive and send sum-up reports to the State Bank Governor.

4.The units of the State Bank, directors of the State Bank’s provincial-level branches, chairpersons of Members’ Councils/Boards of Directors and Directors General (Directors) of credit institutions, and associations in the banking sector shall strictly implement this Directive.

State Bank Governor

LE MINH HUNG