Central bank eases credit rules 

Last updated: 9/28/2010 12:30 

Local banks will be allowed to use up to 25 percent of their non-term deposits for lending

The State Bank of Vietnam has amended regulations on the use of deposits for lending by commercial banks following a request by the government.

The amended Circular 13 issued Monday now allows banks to use up to 25 percent of their non-term deposits for lending. It also allows banks to have their deposits with the State Treasury counted as part of their funds for lending.

Originally the circular banned banks from using the money in non-term accounts to fund loans. According to the Vietnam Banking Association, this regulation created a huge funding pressure as non-term accounts make up 15-20 percent of deposits at local banks.

Banks have welcomed the revised regulations, saying they would help improve liquidity and allow them to boost lending.

The amended circular, however, kept unchanged a provision that requires banks to increase capital adequacy ratio from 8 percent to 9 percent.

Despite some changes, Circular 13 will still take effect on October 1 as planned.

Since it was first announced in May, the circular has faced a lot of criticism from banks, who said the new safety requirements were too strict and difficult to implement by the deadline.

Prime Minister Nguyen Tan Dung last Friday asked the central bank to review the rules and ensure stability for the country’s financial and monetary market.

Source: Thanh Nien, Agencies

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