Regulation on lending from deposit to be removed from Sep 1

The State Bank of Vietnam (SBV)’s governor on August 30, 2011 issued a Circular No 22/2011/TT-NHNN amending some contents in the Circular No 13 dated May 20, 2010 and Circular No 19 dated September 27, 2010 on capital adequacy ratio (CAR) in operations of credit institutions.
Accordingly, the Circular No 22 that will take effect from September 1 and will remove the regulation on lending from deposit as prescribed by Circular No 13 and 19 earlier.

Under the previous regulations, credit institutions must ensure the ratio on solvency and other safety ratios in using deposits for lending activities. At the same time, banks were not allowed to lend exceeding 80% of the total deposit and the ratio for non-banking credit institutions at 85%.

According to the press release of the working session between the central bank and 12 largest commercial banks, the current liquidity in dong of the wholly banking system is in surplus.

The removal of CAR regulation under the Circular No 13 and Circular No 19, according to the central bank, aims to create the capital rotation between the M1 and M2 markets, help credit institutions with capital shortage have conditions to reach credit growth in the limit of 20% and lower the lending interest rate.

In addition, in the Circular No 22, the central bank will also adjust the risk ratio for some assets in foreign currency when calculating the CAR.

The Circular No 22 will be effective as from September 1, 2011.

Tags: Vietnam banking industry, Vietnam finance, Vietnam financial

Posted by VBN on Aug 31 2011. Filed under Banking-Finance. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry