Reserve rule eased for rural loans

October 01, 2010 | 15:35

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HA NOI - The State Bank of Viet Nam has decided to lower compulsory reserves for banks which provide significant financing to farming productions and rural areas in a move to boost the development of this economic sector.

Under Circular No20/2010/TT-NHNN issued yesterday, compulsory Vietnamese dong reserves at banks whose loans to farming producers and rural areas make up more than 40 per cent of total outstanding loans may be lower than the common reserves ratio.

The circular will come into effect tomorrow.

The common reserves ratio for non-term deposits and less-than 12-month term deposits at credit institutions (excluding Agribank) is 3 per cent. The ratio lowers to 1 per cent for 12-month- or- more- term deposits.

The compulsory reserves ratio at banks whose loans to the relevant sectors make up more than 70 per cent of total outstanding loans may now equal one-twenty of the common ratio.

It may equal one-fifth of the common ratio at banks with relevant loans making up 40 per cent to less than 70 per cent of total outstanding loans.

Moreover, the central bank committed to supplying sufficient capital to refinance banks which lend to farming productions and rural areas.

The refinancing capital will enjoy prioritised terms and interest rates.

Currently, only Agribank has extended over 70 per cent of its outstanding loans to agriculture. If it cuts the reserve ratio to the allowed level, then the bank will have several trillion Vietnamese dong more to make loans for agriculture.

Interest rates for agriculture have also been slashed by several State-owned banks to 12 per cent per year.

vietnamnews.vnagency.com.vn

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