(VOVworld) – The banking system restructuring has resulted in positive changes, the most notable involving bad debts and interest rates. This year, the sector has built on these achievements to curb inflation and stabilize the macro-economy.

The State Bank of Vietnam recently coordinated monetary policies focused on interest rates to ensure reasonable credit growth and liquidity for credit institutions.

The State Bank of Vietnam (Photo: sbv.gov.vn)

And a project to restructure and settle bad debts continues as planned.

These actions have helped curb inflation and stabilize the macro-economy. Last year the central bank cut its interest rate slightly to accord with real inflation, easing difficulties for businesses.

The annual interest rate on deposits has dropped 1.5% to 2% , while the lending interest rate has been lowered about 2%.

The interest rate policy has helped credit institutions mobilize longer-term and more stable capital sources and create a more efficient allocation of capital in the economy.

SBV Deputy Governor Nguyen Thi Hong said: “all monetary criteria including the total amount of money, credit growth, the continued decline of interest rates, and a rise in foreign currency reserves have met the direction set in the monetary policy, leading to economic growth of 5.93%, higher than the set target of 5.8%. This is an important reason for Vietnam to receive higher and higher levels of trust by international rating agencies.”

The central bank has taken over several struggling banks and state assets and clients’ rights have been secured.

Its efforts have gradually reduced cross-holding of banks towards international standards.

As a result, international credit rating agencies like Moody’s and Fitch have acknowledged Vietnam’s efforts to stabilize the macro economy and improve the quality, safety, and transparency of its commercial banks.

Nguyen Quoc Hung, President of the members’ council of the Vietnam Asset Management Company (VAMC), said: “our ultimate mission is to buy bad debts at any costbut and in the most effective way. We’ll restructure debts for enterprises and credit organizations and settle the debts pursuant to the VAMC’s purpose which is to restructure businesses.”

This year the debt restructuring and settlement remain one of the key missions of the banking sector.

SBV Governor Nguyen Van Binh said: “under the targets set by the National Assembly and government, economic and credit growth are likely to be higher, leading to greater demand on capital and a greater pressure on interest rates. To deal with the situation, the State Bank of Vietnam has specified its management of monetary policy and money supply flexibly to curb inflation and stabilize the macro economy.”

Governor Binh noted that domestic credit institutions have now entered the second phase of the rearrangement and restructuring process, adding that the central bank will create optimal conditions for the Merger and Acquisition of credit organizations.