VINACHEM

Vietnam’s government has set target of bringing the bad debt ratio down to below 2% in 2019, local media reported.

Vietnam’s bad debt accounted for 2.4% of total outstanding loans in 2018, slightly down from the rate of 2.5% in 2017, the National Financial Supervisory Commission said last month, citing data reported by local banks.

Additionally, the State Bank of Vietnam (SBV), the country's central bank, is requested to support state-run commercial banks in increasing their respective charter capital, according to the government’s Resolution No.01 detailing key tasks and measures to realize Vietnam’s socio-economic development in 2019.

According to the government, the overall target for 2019 continues to be the stabilization of the macro-economy, controlling inflation, enhancing national productivity and competitiveness.

The monetary policy is expected to remain cautious but flexible, which should be in harmonization with the fiscal and other macro policies. Meanwhile, the gold and foreign-exchange markets must be stabilized.

Credit should be channeled into manufacturing and processing and priority fields, while measures are needed to tackle the growing black-market lending.

The government also requested significant improvements in the corporate governance of the banking system, for which most banks should be able to meet the requirements on capital adequacy ratio (CAR) following Basel II standards, scheduled for implementation on January 1, 2020.

The government will focus on expanding non-cash payment in daily transactions through new payment methods and fintech companies.

According to a plan on non-cash payment in Vietnam in the 2016 - 2020 period approved by the prime minister, by the end of 2020, the ratio of cash transactions will be reduced to below 10% and at least 300,000 point of sales (POS) will be installed nationwide.

As of present, 40% of citizens in Vietnam have bank accounts. However, 90% of daily transactions are conducted in cash, while the rate goes up to 99% for transaction worth under VND100,000 (US$4.34), said Dao Minh Tuan, deputy general director of state-controlled Vietcombank. - Hanoitimes -