Vietnam Approves Development Strategy for the Banking Sector till 2025 – Major Objectives

On August 8th, 2018, Vietnam issued Decision No.986/QD-TTg (“Decision 986”) on the Development Strategy of Vietnam Banking Sector to 2025, with a vision to 2030. The strategy aims to increase independence and accountability of its central bank, the State Bank of Vietnam (SBV) to ensure efficient management of monetary policies, inflation control, and increase support for economic stability.

In addition, it also focuses on increasing the transparency of local banks and ensuring that the sector functions in accordance with international norms. Currently, the country has nine wholly-owned foreign banks, four state-owned banks, and 31 joint-stock banks.

Major objectives

According to Decision 986, below are the major objectives the government aims to achieve to strengthen the banking sector.

  • Increase the SBV’s independence and accountability with respect to monetary policies and inflation control to ensure sustainable economic growth;
  • Reduce the number of foreign exchange transactions and achieve a ratio of foreign currency deposits of less than 7.5 percent by 2020, and five percent by 2030. In addition, Decision 986 also aims to completely stop foreign currency lending by 2030;
  • Increase the efficiency and capacity of inspection and supervision by the SBV and include credit institutions within the ambit of the SBV’s supervision. By 2025, inspection and supervisions should be in accordance with the Basel banking supervision rules;
  • Promote non-cash payments and increase ATM/POS (Point-of-sale) networks. By the end of 2020, the cash to total liquidity ratio should be less than 10 percent, and less than eight percent by the end of 2025;
  • Increase the access to banking and financial services offered by credit institutions among citizens and enterprises, especially in the rural and poor areas; and
  • Develop the credit institutions in accordance with the socio-economic conditions and develop “green credit” for an environment-friendly economic growth.

 

This text is part of a more complete analysis available for free.

Read the full article on Vietnam Briefing.

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