May 27, 2018 04:23

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Banking Overview: Sustainable growth in prudence

11:44 | 14/05/2018

VCN- In recent years, monetary policy and banking system have been implemented effectively. Accordingly, the system is safe, healthy and sustainable. In addition, it contributes to the overall growth of the economy.

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The banking sector has many conditions for sustainable development, achieving higher growth.

To review the steps of the banking sector over time, the State Bank of Vietnam (SBV) jointly organized the Banking Overview Forum: "Bank in 2018: Towards Sustainable Development" on 8 May 2018 in Hanoi.

Speaking at the forum, the Deputy Governor of the SBV, Nguyen Kim Anh, said that the banking sector had been aggressively restructuring credit institutions associated with handling bad debts to ensure the safety, health and durability. This will create a firm foundation for restraining inflation, renewing the growth model and restructuring the economy in line with the policies of the Party, the National Assembly and the Government.

Regarding the results, Mr. Pham Thanh Ha, Monetary Policy Department under the SBV said that the interest rate level dropped sharply from 2012 and kept stable in 2017, the interest rate for priority sector continued to decrease. Credit growth is in line with the macro balance and credit quality, supporting GDP growth. Money market, foreign exchange are stable; and the inflation is controlled.

However, according to Deputy Governor, Nguyen Kim Anh, the banking sector still faces the risks of economic turmoil in the country and the world, characterized by capital flows. At the state-owned enterprises as well as private sector, the SBV raised the foreign exchange reserves, but on the other hand put pressure on neutralizing and regulating the currency.

In addition, the bad debt processing initially achieved the objectives and tasks, but the restructuring and treatment of bad debt were difficult.

According to experts, the shortcomings of the banking sector come from many sides: objective, banks and customers.

Speaking about the difficulties in restructuring and handling bad debts, Mr. Pham Huyen Anh, Deputy Chief Inspector of Banking Inspection and Supervision Agency, said that some competent agencies had not coordinated actively in the process of capturing capital.

In addition, State-owned commercial banks face difficulties in raising both legal and practical capital to meet Basel II standards. Because they are not yet retained to increase capital, while raising capital in the form of selling shares is limited by the provisions on the minimum shareholding percentage of the State.

In order to increase the effectiveness of banking restructuring and dealing with bad debts, at the Forum; Finance and Banking expert, Dr. Can Van Luc, said that the handling of collateral property still entangled in the transfer of property collateral. He suggested that the Ministry of Finance should coordinate with the Ministry of Natural Resources and Environment to solve the above mentioned problems.

In addition, the expert also said that competent agencies need to strengthen coordination, to have a synchronized implementation to develop market debt in the right sense, as well as creating stability for banks.

On the other hand, according to Mr. Nguyen Xuan Thanh, Director of Development Sector under the Vietnam's Fullbright University, loosening monetary policy should not be a policy priority in the current period, it will create a burden for the SBV and the banking sector. In particular, the banking sector has enjoyed a good growth but should be cautioned on the issue from good growth to overheating, especially asset markets.

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With the same opinion, Dr. Can Van Luc noted that the State Bank of Vietnam should not "keep" multiple targets, while maintaining stable monetary policy, and ensuring control of inflation, GDP growth. Instead, the State Bank of Vietnam should focus on long-term strategy to keep sustainable growth system.

By Huong Diu/ Hoang Anh