| THE STATE BANK --------- | SOCIALIST REPUBLIC OF VIET NAM Independence - Freedom - Happiness -------- |
| No: 03/2007/CT-NHNN | Hanoi, May 28th, 2007 |
DIRECTIVE
ON CONTROLLING THE AMOUNT AND QUALITY OF CREDIT AND LOANS FOR SECURITIES INVESTMENT AND TRADING, AIMED AT CONTROLLING INFLATION AND BOOSTING ECONOMIC GROWTH
In the early months of 2007, the State Bank continued applying a flexible monetary policy with a view to stabilizing interest rates and exchange rates, controlling inflation and boosting economic growth. Credit activities have been effectively expanded, the proportion of bad debts has been reduced; credit structure has gradually changed in response to the demands of the economy; loans for securities investment and trading have been controlled more tightly. However, credit capital trends to increase at a high rate compared to the same period of previous years and the whole year's target and, therefore, may exert adverse impacts on inflation control in this year and in subsequent years; the quality of credit for some branches and domains remains poor; loans for securities investment and trading involve potential risks as the securities market is in a bearish trend; and several shortcomings are seen in the collection of market information in service of assessment and administration work.
In furtherance of the Prime Minister's direction at the Conference on the realization of the 2007 banking tasks and the enhancement of the management and supervision of securities activities (the Government Office's Notice No. 17/TB-VPCP of January 26, 2007, and Notice No. 20/TB-VPCP of January 29, 2007), the State Bank Governor requests credit institutions and units within the State Bank to apply the following measures to control the amount and quality of credit and loans for securities investment and trading:
1. For credit institutions:
1.1. To continue applying in a coordinated and effective manner capital mobilization solutions in order to increase loans and investment in the economy in 2007 and subsequent years; to attach importance to adjusting the structure and terms of mobilized capital in consistency with credit structure and terms, ensuring safety for their business activities.
1.2. To effectively expand credit for the economy according to the following requirements:
a/ Evaluating credit activities in the early months of 2007 in order to properly adjust the amount and structure of credit as well as the credit growth rate to be commensurate with the capital mobilization capability, the structure of mobilized capital and the State Bank's orientations on the increase of credit for the economy in 2007 and subsequent years.
b/ Strictly observing by the State Bank's regulations on safety ratios in operation of credit institutions; tightly controlling credit quality in order to reduce the proportion of bad debts.
c/ Expanding while restructuring credit across various branches and domains so as to reduce risks and meet diversified capital demands of the economy; attaching importance to expanding credit to small- and medium-sized enterprises and production households.
d/ State-owned commercial banks, especially the Bank for Agriculture and Rural Development of Vietnam and the people's credit fund system, shall boost the expansion of credit for agriculture and rural development; other commercial banks shall expand their networks and reserve capital for expanding credit for agriculture and rural development.
e/ Raising the capacity of collecting information, recognizing, assessing, measuring, monitoring and controlling credit risks and other business risks; tightly controlling risks for loans for securities investment and trading, loans for real estate investment and trading, loans for consumption purposes and foreign currency loans.
f/ Continuing to apply solutions for expanding credit and raising credit quality as specified in the State Bank Governor's Directive No. 02/2006/CT-NHNN of May 23, 2006, on enhancing measures to prevent and limit risks in business activities of credit institutions and Directive No. 02/2005/CT-NHNN of April 20, 2005, on raising credit quality and credit growth in consistence with capital mobilization capacity, risk control and assurance of the system safety.
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