The SBV is seeking opinions on the draft Circular amending and supplementing Circular No. 22/2019/TT-NHNN stipulating the limits and ratios to ensure safety in the operation of banks and foreign bank branches.
Accordingly, the draft Circular amends and supplements Clause 5, Article 16 as follows: Banks and foreign bank branches must comply with the ratio of short-term capital used for medium and long-term lending of up to 40%.
This level is significantly higher than the 30% ceiling currently applied from October 1, 2023 according to Circular 22/2019/TT-NHNN amended by Circular No. 08/2020/TT-NHNN.
Previously, the roadmap stipulated that this rate would gradually decrease from 40% in the period 2020-2021, to 37%, to 34%, before returning to 30%.
This ratio reflects the level of use of banks' short-term capital sources to finance medium and long-term loans. According to current regulations, the ratio is calculated by taking the total outstanding balance of medium and long-term loans minus medium and long-term capital sources, then dividing it by short-term capital sources. The higher the ratio, the greater the difference in terms between mobilized capital sources and loans, which means a higher liquidity risk.
In addition, the draft Circular also amends and supplements point a, clause 4, Article 20 as follows:
Deposits of domestic and foreign organizations (including deposits of credit institutions, other foreign bank branches), except for the following amounts: Margin money and specialized capital deposits of customers; Non-term deposits of the State Treasury; 80% of the balance of term deposits of the State Treasury or another ratio decided by the Governor of the State Bank of Vietnam in each period.
