Banking system in the spotlight

In the year, the banking system encountered difficulties stemming from slow economic recovery and complicated changes in the global economy. Meanwhile, the domestic economic growth slowed down, inflation was on the rise, the macro-economy faced potential risks and commercial banks suffered from liquidity difficulties and bad debts.

However, it succeeded in surmounting the obstacles to meet over 80% of capital demand for the economy. Bank credits were effectively used for key economic sectors with impressive outcomes in the areas of agriculture, rural areas and export.

Especially, the SBV and the banking system followed the tight and flexible monetary policy and other solutions to make significant contributions to rein in inflation, stabilize the macro-economy, maintain economic growth and ensure social security.

The SBV instructed credit institutions to control credit growth and ensure safe liquidity, imposed tight punishments on infringements and held dialogues with commercial banks. 

On April 29, the central bank issued Decision 929/QĐ-NHNN to raise both the refinancing and overnight lending rates to 14%. Accordingly, interbank interest rate has decreased since May, especially in the areas of agriculture, rural areas and export production. In addition, credit structure followed positive trend in line with Government’s instructions and non-cash transactions.

The foreign exchange market was more stable after coping with sharp rises at the beginning of 2011. The disparity of exchange rates in the official and unofficial markets was narrowed. Foreign exchange reserve was estimated to be equal to 7.5 weeks of import, up from 3.5 weeks at the beginning of 2011.

The SBV also deployed a string of solutions to stabilize the domestic gold market such as introducing gold import quotas, establishing the group including five banks and one goldsmith company – SJC, and announcing SJC as the national gold brand.

* Top tasks for 2012   

In 2012, the domestic economy is projected to face a mountain of challenges, including unstable growth, high inflation and production difficulties. Meanwhile, the banking system is encountering such obstacles as unsustainable liquidity in credit institutions, increasing bad debts and credit risks, instability in interest rates and the foreign currency and gold markets, inefficiency supervision and punishment of infringements.

Therefore, the banking sector is asked to contribute importantly to reining in inflation, stabilizing the macro-economy, assisting economic growth and ensuring social security. 

Specifically, the sector will apply the monetary policy in a close, flexible and synchronous manner; control credit quality; adjust credit mechanism; and improve management work. The sector will restructure commercial banks in line with the national program on economic restructuring towards safety, healthiness and efficiency./.

By Hương Giang