Supporting the recovery 

Immediately when the COVID-19 pandemic broke out in Vietnam, the banking sector promptly applied public and business support policies. To date, as COVID-19 has been gradually brought under control, carrying out Resolution 11/NQ-CP dated January 30, 2022 of the Government on socioeconomic recovery and development program and further playing its leading role in the economy, the banking sector has actively promptly adopted appropriate and practical support and solutions for customers to overcome difficulties and accelerate recovery and development.

In early 2020, the State Bank of Vietnam (SBV) actively requested its branches and credit institutions to consider delaying or rescheduling debts for businesses affected by the COVID-19 pandemic. For example, Circular 01/2020/TT-NHNN dated March 13, 2020 of the Governor of the SBV (Circular 01) stipulates that credit institutions and foreign bank branches restructure loan repayment terms, exempt or reduce interest and fees, keep the debt category of customers affected by the COVID-19 pandemic. By the end of March 2022, credit institutions restructured repayment terms, exempted and reduced interest, and kept the debt category in response to Circular 01. Specifically, repayment terms were rescheduled for VND690 trillion borrowed by over 1.1 million customers. More than 770,000 customers who borrowed VND246 trillion had their debt classification categories kept unchanged. 482,000 customers borrowing nearly VND91 trillion were offered fee reduction and exemption while their debt categories were kept unchanged. Interest rates were slashed on over VND20.2 trillion indebted by 254,000 customers whose debt categories were unchanged. Meanwhile, interest rates were lowered for ordinary loans of VND46.7 trillion borrowed by customers hit by the COVID-19 pandemic as of April 4, 2022.

In addition to interest cut policies, credit institutions have introduced many programs to exempt and reduce payment service fees in support of people and businesses. For its part, the SBV has reduced transaction fees by 50% on the Interbank Electronic Payment System for credit institutions three times since 2020, with the first time from April 1 to December 31, 2020; the second from January 1, 2021 to June 30, 2021, and the time from September 1, 2021 to June 30, 2022. At the same time, the SBV refunded transaction fees to Vietnam Bank for Social Policies (VBSP) when it disbursed loans according to the Prime Minister’s Decision 15/2020/QD-TTg dated April 24, 2020.

In particular, due to the COVID-19 pandemic impacts, the SBV has actively and urgently applied policies and directed credit institutions and the National Payment Corporation of Vietnam (Napas) to exempt and reduce payment service fees for those affected by the COVID-19 pandemic, thus fostering non cash payments. In addition, Napas and credit institutions have implemented free payment service policies such as free online payment transactions and public services performed on the National Public Service Portal by central and local agencies; free money transfer to support COVID-19 control and drought and saltwater intrusion prevention; and free payment services for support aid recipients.

In the past two years, the banking industry has reduced 50% of interbank electronic payment system fees, 70-100% of electronic clearing and switching fees, and lowered public payment service fees. Banks slashed VND1,557 billion of fees for customers in 2021 (VND2,000 billion if the amount in 2020 was counted). According to the SBV, 80% of personal payment transactions on electronic channels are free of charge.

To facilitate people, especially those living in rural, remote and isolated areas, to access bank credits for livelihoods and to stay away from usuries, the SBV continued to review and complete regulations on lending for livelihoods and consumer lending; improve credit policies for agriculture and rural development, and credit policies for sectors and fields where borrowing demands are high. Simultaneously, the SBV directed credit institutions to promptly respond to borrowing demands for production and business, fund agricultural and rural development, and provide consumer credit for people and enterprises, especially when the COVID-19 pandemic was pushed back, and the domestic economy recovered. SBV urged accelerating scientific and technologic application, developing online payment and lending services, reforming administrative procedures, simplifying processes and procedures to give people easy access to official credit sources that carry reasonable interest rates.

In 2022, the SBV is determined that removing difficulties for those hit by the COVID-19 pandemic to soon bring the economy to a sustainable growth trajectory is a main task. Following the Government's Resolution and the Prime Minister's direction, the banking industry has actively and aggressively adopted key tasks right since the beginning of the year, especially focusing on reasonable monetary regulations and supporting system liquidity, to meet the capital needs of the economy.

In the coming time, the banking industry will further improve institutions, support people and businesses, and help economic recovery; actively and consistently administer monetary policy tools to stabilize the currency and foreign exchange markets; manage credit growth safely, effectively and appropriately to expand credit into production and business fields and priority areas classified by the Government, provide consumer loans and consumer credits with reasonable interest rates, ensure loan safety, support socioeconomic recovery and development; strictly control credit in potentially risky areas; and implement the credit institution restructuring project coupled with bad debt settlement in 2021-2025. In particular, the banking sector will further enhance communications on banking credit policies to people from all walks of life, help people and businesses understand credit from official channels, and make the most effective transfer of credit to borrowers.

For their part, businesses and credit institutions also need to have adaptation plans for COVID-19 pandemic developments in Vietnam. Businesses need to have new active self-reliant business plans to overcome any hardship to stay resilient. However, bank loans are still necessary for them in the point of view.

With many practical support activities, the banking industry has helped stabilize the economy and the money market, ensured credits for businesses and people to flexibly adapt to the COVID-19 pandemic to revive production, business and consumption, promote economic growth, and ensure successful implementation of socioeconomic targets for 2022.

Consistent credit management solutions in 2022

Global and domestic economies are forecast to face complicated and unpredictable events due to COVID-19 pandemic impacts. World financial and currency markets can fluctuate complicatedly; interest rate hikes are expected to accelerate in developing countries in the wake of economic recovery and reopening. Estimated increases in world commodity prices and the slow recovery of international supply chains will have a strong impact on controlling inflation in other countries, thus posing challenges to operations of Vietnam’s banking industry.

In that context, the Government worked out and carried out the Master Strategy on COVID-19 Prevention and Control and the Program on Socioeconomic Recovery and Development to create an important foundation to realize goals in the 5-year socioeconomic development plan in 2021-2025. In Resolution 01/NQ-CP of the Government on main tasks and solutions for the implementation of the Socioeconomic Development Plan and the State Budget Estimate in 2022, the Government defines this year’s working theme as “Unity and discipline, active and effective adaptation, recovery and development.”

Mr. Dao Minh Tu, Standing Deputy Governor of the SBV, said, based on the Government's goals and key tasks assigned to the banking sector in 2022 in Directive 01/CT-NHNN dated January 13, 2022, the State Bank of Vietnam (SBV) has requested credit institutions to implement solutions to manage monetary policies and banking activities in 2022 in order to control inflation, strengthen macroeconomic stability, support economic recovery and growth and ensure safe and sustainable development of credit institutions in the coming time to achieve these goals. Accordingly, the SBV will focus on carrying out industry-specific credit management solutions: Further reviewing, amending and supplementing sector-specific credit documents based on actual economic context; promptly applying support policies on interest rates on corporate loans; managing credit growth safely, effectively and appropriately to expand credit into production and business fields and priority areas defined by the Government as well as consumer loans with reasonable interest rates, ensure loan safety and support socioeconomic recovery and development; strictly further controlling credit in potentially risky areas; further assessing credit performance, roles, resilience and sustainability in economic sectors and fields to direct credit institutions to introduce priority and support policies and channel credit for economic recovery and development. The SBV will coordinate with relevant bodies to remove obstacles in credit programs and policies under the direction of the Government and the Prime Minister; continue to direct credit institutions to deploy solutions to remove difficulties for customers affected by the COVID-19 pandemic; work with the Ministry of Labor, Invalids and Social Affairs to summarize and evaluate employer loan programs designed for wage payment for laid-off employees and business recovery according to Resolution 68/NQ-CP; direct credit institutions to create favorable conditions for people and businesses to access credit for their legitimate needs, and help limit "black credit"; strengthen coordination with localities to accelerate bank - business connection programs; implement credit programs backed by the Government and the Prime Minister for prioritized industries and fields. The central bank will promptly work with relevant bodies to handle difficulties arising in the course of implementation; accelerate the execution of the banking sector's tasks in national target programs (National Target Program on New Rural Development, National Target Program on Sustainable Poverty Reduction, National Target Program on Development of Ethnic Minority Areas) in line with decisions adopted by competent authorities. The agency will support and facilitate credit institutions and VBSP to implement credit programs and policies under the direction of the Government and the Prime Minister.

Recently, the Online Banks Conference on the implementation of a 2% interest rate support program for VND40 trillion of loans as per Decree 31/2022/ND-CP of the Government and Circular 03/2022/TT-NHNN of the State Bank of Vietnam. It can be seen that the 2% interest rate support policy is an additional solution, and in the coming time, it will go hand in hand with other ongoing solutions in the banking industry (including the 2% interest rate support policy applied in Vietnam Bank for Social Policies - VBSP) in order to create more favorable conditions for people and businesses to access soft credit, take advantage of opportunities to develop business in the new situation, and help stimulate both supply and demand to lay a stronger foundation for more sustainable economic growth.