Chỉ thị 13/2000/CT-NHNN14

INSTRUCTION

ON THE STRENGTHENING OF THE CREDIT QUALITY AND SAFETY IN THE ACTIVITIES OF CREDIT INSTITUTIONS

In the first 11 months of the year 2000, the outstanding credit balance of credit institutions has increased by 21.44% compared to that of the end of the year 1999, speeding up the economic growth. There emerges, however, signs of unsoundness in the activities of some credit institutions that may lead to potential risks in coming period such as lowering of credit conditions, offering of priority interest rate

With the view to fostering and improving the credit quality, creating an environment of healthy competition, sound and effective operation, the Governor of the State Bank requests Departments of the State Bank of Vietnam, Chairpersons of the Board of Directors, General Directors (Directors) of credit institutions, General Managers of State Bank branches in provinces, cities to undertake following activities:

I. FOR CREDIT INSTITUTIONS

1. Credit institutions should create a good business environment, seriously comply with and carry out the cooperation and competition in accordance with provisions of Article 16 of the Law on credit institutions. Following unlawful acts of competition between credit institutions shall be strictly prohibited:

1.1 Unlawful promotion;

1.2 Provision of untruthful information (in any form) to the detriment of the interest of other credit institutions and customers;

1.3 Acts of speculation, manipulation in the money market, Gold market, foreign exchange market;

1.4 Other unlawful acts of competition.

2. In the implementation of the mechanism of interest rate in accordance with provisions of the Governor of the State Bank, credit institution should pay attention to following issues:

2.1 Stipulation of credit institutions in respect of interest rate on lending and funds mobilization are made in the relation to factors such as price, economic growth, market forces, funds absorption capacity, financial capability of each credit institution and in compliance with provisions on interest rate of the Governor of the State Bank.

2.2 Each credit institution should consider and have a mechanism to support branches that are facing difficulties, especially financial difficulties, in order to facilitate the implementation of the appropriate interest rate policy in the respective locality and in their system.

3. Based on the current credit mechanism, policy, each credit institution should review the credit process and procedures, consider the abolition of unnecessary procedures and must announce publicly borrowing procedures, conditions for customers information and implementation.

4. Credit institutions should have measures to increase the funds mobilization to expand the credit extension on the principle of lending to be initiated by effective production, business projects, plans and to ensure the funds recovery in accordance with the Regulation on lending and provisions on the loan security for credit institutions.

5. Credit institutions should provide a good service to customers in order to strengthen the credit relation with customers in the locality, assist customers to reduce costs and have more convenience in their business and production activity; and give respect, at the same time to the choice of customers in their credit relation with credit institutions.

II. FOR UNITS OF THE STATE BANK

1. Departments of the State Bank:

Departments of the State Bank shall, within their respective functions and duties, timely deal with obstacles, recommendations made by credit institutions and related agencies, create a favorable environment for the credit activity, ensure the close management of the State Bank.

2. State Bank branches in provinces, cities

2.1 General Managers of State Bank branches in provinces, cities shall regularly monitor and coordinate with credit institutions in their locality to have concrete measures, increase the autonomy in the business activity of credit institutions and prevent the unhealthy competition between credit institutions from happening.

2.2 To encourage the competition between credit institutions in respect of their culture of service, the improvement of their working style, the compliance with agreements in the business activity of credit institutions in the locality, not to annul and weaken their business motivation and cause economic damages to borrowing customers.

2.3 To control, supervise the performance of the compliance with lending mechanism and the mechanism of the loan security for credit institutions, to closely monitor the implementation of the provision on interest rate of the Governor of the State Bank and agreements on interest rate between credit institutions and branches of credit institutions.

2.4 To submit consolidated reports on the monthly basis (or at the request of the Governor) on the developments of these issues of the credit institutions in the locality to the Credit Department of the State Bank.

Above-mentioned are contents of the instruction of the Governor of the State Bank on the strengthening the credit quality and safety in the activities of credit institutions. Chairpersons of the Board of Directors, General Directors (Directors) of credit institutions; General Managers of State Bank branches in provinces, cities under the central Governments management and related agencies shall be responsible for the serious implementation of this instruction.

Any obstacle arising during the implementation of this instruction shall be reported by related units to the Governor for consideration and resolution.