Press release on issuance Circular No.06/2016/TT-NHNN on revising and supplementing several contents of Circular 36/2014/TT-NHNN dated November 20, 2014 on stipulating prudent ratios in operations of credit institutions and foreign bank branches.
Press release on issuance Circular No.06/2016/TT-NHNN on revising and supplementing several contents of Circular 36/2014/TT-NHNN dated November 20, 2014 on stipulating prudent ratios in operations of credit institutions and foreign bank branches.
The State Bank of Vietnam (SBV) issued Circular No.06/2016/TT-NHNN dated May 27, 2016 on revising and supplementing several contents of Circular 36/2014/TT-NHNN dated November 20, 2014 on stipulating prudent ratios in operations of credit institutions and foreign bank branches.
Circular 06 includes 6 articles with several revised contents as follows:
+ Revise and supplement methodology of identifying and increase the ratio of using short-term capital resources to invest Government bonds applied to foreign banks (from 15% to 35%), state owned commercial banks (from 15% to 25%).
+ Revise and supplement methodology of identifying and reduce the ratio of short – term capital to be used for lending medium and long term loans, applied to credit institutions and branches of foreign banks with appropriate roadmap for the aim of managing liquidity risk and ensuring safe and sound operations of credit institutions, branches of foreign banks. The specific roadmap as follows: a) From the date this Circular takes effect to December 31, 2016: (i) Commercial banks: 60%, (ii) Branches of foreign banks: 60%; (iii) Non-banking credit institutions: 100%, (iv) Co-operative Bank of Viet Nam: 60%; b) From January 1, 2017 to December 31, 2017: (i) Commercial banks: 50%; (ii) Branches of foreign banks: 50%; Non-banking credit institutions: 90%, (iv) Co-operative Bank of Viet Nam: 50%; c) From January 1, 2018: (i) Commercial banks: 40%; (ii) Branches of foreign banks: 40%; (iii) Non-banking credit institutions: 80%, (iv) Co-operative Bank of Viet Nam: 40%;
+ Revise and add regulation on capital-to-risk weighted assets ratio on real estate loans with the orientation of encreasing from 150% to 200% to be applied from January 1, 2017.
+ In addition, several changes have been made for definition, detailed instructions on some provisions, methodology of specifying several ratios, forms and transitional regulation for some ratios.
Circular 06 is formulated on the basis of reviewing comprehensively the provisions in Circular No.36/2015/TT-NHNN and relevant legal regulations. The draft Circular was posted on the SBV website for getting referendum from credit institutions and foreign bank branches and other impementers affected by the Circular, concurrently it is consulted by relevant ministries and Associations.
Circular 06 will take effect from the date of July 1, 2016.
The State Bank of Vietnam
Translated by Thoa Le