Banks get nod to lend up to 80 pct on deposits

September 01, 2011 | 17:39

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Commercial banks may lend over 80 per cent of their deposits, under a new circular issued by the State Bank of Vietnam. The new regulation would also allow non-bank credit institutions to lend up to 85 per cent of their deposits.

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Circular No 22/2011/TT-NHNN aims to reform regulations on capital adequacy ratios (CAR) included in last year's Circular No 13. The old regulation had triggered a number of concerns from banks and experts over whether it required too much money to be held idle in provision against risk.

The new circular, lightening the restrictions on bank deposits, was issued following a meeting last week between the State Bank and representatives of 12 major commercial banks, held in an effort to bring lending interest rates to within an average of 17 – 19 per cent per year this month as promised by newly-appointed State Bank Governor Nguyen Van Binh.

The new circular was expected to help banks circulate more funds on the interbank market and increase overall returns on capital, while limiting overall credit growth for the year to 20 per cent or less.

Other regulations aimed at boosting commercial banks' ability to make use of idle capital – including new credit limits for specific customer groups, new rules on classification of equity, and new reserves ratios – would follow in the wake of Circular No 13, the State Bank said.

VNS

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