Directive No. 04/CT-NHNN 2010 on monetary, credit and banking solutions, making contribution to stabilizing price and macro-economics

DIRECTIVE

ON IMPLEMENTATION OF MONETARY, CREDIT AND BANKING SOLUTIONS, MAKING CONTRIBUTION TO STABILIZING PRICE AND MACRO-ECONOMICS

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THE GOVERNOR OF STATE BANK OF VIETNAM

During the past 10 months of 2010, the management to monetary policy and activities of banks system has made contribution to ensuring big balances of the economy, macro-economics has been improved, the economy has been recovered and of which growth rate was rather high, better ensuring social security; monetary, foreign currency market was basically stabilized; growth speed of mobilized and credit capital was correspondent with the target ratio; ensuring the system s security. However, recently consumer price index has increased rather high; monetary and foreign currency market has not been stabilized firmly; growth ratio of total payment means and credit is likely to be higher than the target ratio.

With a view to implementing the Directive No. 1875/CT-TTg dated 11 October 2010 of Prime Minister on enhancing the implementation of measures for stabilizing market s prices in the last months of the year 2010 and ensuring the security and efficiency of banks system as well; in the last months of 2010 and early months of 2011, the Governor of the State Bank would like to request units of the State Bank of Vietnam and credit institutions to continue well performing targets, duties of monetary policy and banking activity as stated in the Directive No. 02/CT-NHNN dated 7 April 2010; at the same time, to focus on implementing following solutions:

1. For units at Head Office of the State Bank of Vietnam, within their functions and assigned duties, they will carry out following solutions:

a. To efficiently and timely perform activities of statistics, information and forecast about currency, credit, banking; international payment balance and macro-economics.

b. To actively, flexibly and cautiously manage instruments of monetary policy under the market principle to ensure the security of the system, to control the growth speed of credit and total payment means in line with the targets of 2010; to regulate the interest rates and rates at an appropriate level and in line with balances and the economy s conditions.

c. To carry out on-site inspection over payment capacity in Vietnamese dong and in foreign currency, credit quality and carry out prudential ratios in business activity of credit institutions in November 2010.

d. To speed up means of non-cash payment; to timely issue policies, mechanisms on technological development and to enhance supervision to ensure the security of payment system; to timely and fully supply number and structure of cash according to necessary, reasonable demand of the economy.

dd. To check, assess current regulations on monetary, credit management to have necessary adjustments under the principle of ensuring the security of credit-banking system, at the same time to promote the development of business and production.

e. To complete the mechanism and improve quality of information, communication activity about management of monetary policy and banking activity

2. For State Bank branches in provinces, cities under the central Government s management

a. To take initiative in grasping thoroughly, deploying, studying and clearly understanding operation policies, mechanism of banking industry, social-economic situation and banking activity in the locality; to inspect, examine and timely deal with difficulties, queries within their authority; to make report and proposals to executive committees, local government and Governor of the State Bank to deal with newly arisen issues related to money, credit and banking.

b. To take appropriate measures so as credit institutions to concentrate capital mobilized in the locality and other capital sources to provide loans for development of local economy.

c. To satisfy reasonable demand for cash of monetary circulation in the locality; to take initiative in coordinating and managing with credit institutions, State Treasury and other organizations to ensure payment capability, deal with abnormal development of monetary market.

3. For credit institutions

a. To intensify the domestic and foreign mobilization of capital through solutions in accordance with provisions of applicable laws; not to apply unfair competition forms to stabilize monetary market. To maintain structure of available capital (deposits at State Bank of Vietnam, cash, ...) at a reasonable level, ensuring high payment capability in the last months of 2010 and in the early 2011. To control speed, scale and structure of loans to balance with the mobilized capital; to perform provisions on prudential ratios in the operation. To provide loans in accordance with provisions of applicable laws; to strictly control guarantees for making payment inside and outside Vietnam; loans for trading in securities, trading in real estates and for consumption.

b. To satisfy demand for loan funds which is efficient for agricultural production and rural, export, small and medium enterprises, demand for capital to supply necessary goods and services for production, consumption in the last months of 2010 and early 2011. For provinces in central area of Vietnam which are suffering from typhoon, flood (Nghe An, Ha Tinh, Quang Binh, Khanh Hoa, Binh Thuan, Ninh Thuan, Phu Yen, etc), to consider restructuring debt payment period, exempting, reducing loan interest rate under provisions of applicable laws and consider providing new loan to recover, develop production and business.

c. To strictly control mobilization and lending in foreign currency, not to allow risk of liquidity and interest rate in foreign currency, risk of rate; to provide loans in foreign currency in accordance with provisions of applicable laws and requirements of the State Bank of Vietnam in the letter No. 3215/NHNN-CSTT dated 29 April 2010, the letter No. 4496/NHNN-CSTT dated 15 June 2010 on lending in foreign currency and the letter No. 4186/NHNN-CSTT dated 4 June 2010 on the lending for making payment of imported goods.

d. To determine interest rates applicable to mobilization and lending, selling and buying rate for foreign currency in line with provisions of applicable laws, guideline of the Government.

dd. To correctly and timely provide information of business activity of credit institution in accordance with provisions of applicable laws and requirements of the State Bank of Vietnam.

e. To timely deal with cases of lending with interest rate support, which are not in line with provisions of applicable laws, requirements of Government s Inspectorate, State Audit, Banking Inspection, Supervision Agency, findings by credit institutions.

g. To promptly invest, upgrade technology, enhance ability to administrate and manage business activity in line with provisions of applicable laws and safe, efficient requirements.

4. Implementing organization:

a. This Directive shall be effective from the date of signing.

b. Director of Administrative Department, Director of Monetary Policy Department and Heads of units of the State Bank, Manager of State Bank Branches in provinces, cities under the central Government’s management, the Board of Directors and General Director (Director) of credit institutions shall be responsible for the implementation of this Directive.

c. Units at Head Office of the State Bank of Vietnam, State Bank branches in provinces, cities under the central Government s management and credit institutions shall make report on their implementation of this Directive in their monthly reports to the State Bank of Vietnam.

d. Administrative Department shall preside over, coordinate with related units to examine and speed up, consolidate and make report to the Governor of the State Bank on the implementation of this Directive.