They will also be allowed to count their deposits at the State
Treasury and loans on a three-month or longer term basis with other
credit institutions as part of their reserves for lending. These
regulations are congruent with Circular No19/2010/TT-NHNN issued by the
State Bank of Vietnam last night to supplement Circular No 13.
The original circular would have restricted banks from issuing loans
from non-term deposits lodged by the State, State entities, the social
insurance fund or commercial credit organisations.
Banks now will also be allowed to lend funds raised from bonds and
deposits certificates. These moves are expected to free up the
inter-bank market and provide more capital to banks.
These regulations will come into effect on October 1.
Other regulations in the Circular No13 are kept unchanged as it
continues to prohibit banks from lending more than 80 percent of their
deposits. It also sets a 250-per-cent risk coefficient for all loans
secured against securities or real estate.
The capital adequacy ratio, CAR, for Vietnam 's banks is lifted to 9 percent – from 8 percent.
The central bank reported last Friday that 10 of 12 banks in Hanoi
have already raised their CAR to 9 percent. The other two would try to
meet the requirement before Friday.
National
Financial Supervisory Council deputy chairman Le Xuan Nghia said in an
economic seminar last week, "It's appropriate that the regulations in
the circular are close to the Basel 3 standards but it is unnecessary
for them to be stricter than Basel 3."
Basel
3 sets CAR at 8 percent and risk coefficient for all loans secured
against securities or real estate at 150 percent.
Deputy chairman Nghia worried that implementation of Circular No 13
would have a detrimental effect on the capital, securities and property
markets.
The Government said the purpose of Circular
13 was to ensure financial market stability and well-managed capital
circulation in the latter part of this year and early next year.
Some banks pledged at a meeting of the Vietnam Banks Association in
HCM City last week to simultaneously cut deposit interest rates 0.4
percentage points to 11 percent as soon as next Friday and no later than
October 15 if the amended circular came into effect.
Circular 13 is intended to address shortcomings in various risk-management provisions.
The Fullbright Economics Teaching Programme's Professor Huynh The Du
argues the changes proposed in the circular are necessary to Vietnam
's financial system.
The 9 percent CAR and a 250
percent risk coefficient would improve financial stability and prevent
banks from entering too deeply into risky lending, he said.
But Nghia said that the solutions to the pivotal problems of Vietnam
's financial market were not confined to a higher CAR but accurate
accounting, financial statements and the valuation of assets.
The Prime Minister first ordered the central bank to review the
Circular 13 which is intended to govern bank reserves about six weeks
ago./.
