From August 15, 2022, will the loan-to-deposit ratio of Vietnam Development Bank change from the total mobilized capital to the total loaning capital?
What is the loan-to-deposit ratio to total mobilized capital in Vietnam?
Pursuant to Article 8 of Circular 07/2019/TT-NHNN stipulating as follows:
“Article 8. Loan-to-deposit ratio to total mobilized capital
1. The Vietnam Development Bank calculates the maximum loan-to-deposit ratio to total mobilized capital in VND, including VND and other freely convertible foreign currencies converted into VND. Nam according to the central exchange rate announced by the State Bank for the US dollar (USD) and the cross-calculation rate of the VND for a number of other foreign currencies in accordance with the State Bank's regulations on announcement. the central exchange rate of VND against the US dollar (USD), the cross rate of VND against a number of other foreign currencies, is determined on the last working day of the month according to the following formula:
In there:
- LDR: loan-to-deposit ratio to total mobilized capital;
- L: total debits specified in Clause 2 of this Article;
- D: total mobilized capital specified in Clause 3 of this Article.
2. Total debits includes:
a) Debits to support exports;
b) Debits for special programs of the Government;
c) Medium-term debits investment credit;
d) Medium-term debits for special programs of the Government;
dd) Long-term debits for credit;
e) Long-term debits for special programs of the Government;
g) Other debits;
h) Pending debits settlement.
3. Total mobilized capital includes:
a) Deposits of domestic and foreign organizations;
b) Loans from Vietnam Social Security, loans from the State budget, loans from domestic and foreign financial institutions and credit institutions;
c) Money raised from the issuance of bonds, promissory notes, certificates of deposit and other valuable papers.
4. The Vietnam Development Bank must maintain the maximum loan-to-deposit ratio to total mobilized capital according to the following schedule:
a) From the effective date of this Circular to the end of December 31, 2020: 100%;
b) As of January 1, 2021: 95%.”
Accordingly, the loan-to-deposit ratio to total mobilized capital of Vietnam Development Bank is currently implemented in accordance with the above regulations. In particular, the maximum loan-to-deposit ratio to total mobilized capital is implemented according to the schedule as prescribed above.
From August 15, 2022, will the loan-to-deposit ratio of Vietnam Development Bank change from the total mobilized capital to the total loaning capital?
Will there be no longer a loan-to-deposit ratio to total mobilized capital in the near future in Vietnam?
Pursuant to Clause 3, Article 1 of Circular 07/2022/TT-NHNN amended and supplemented as follows:
“Article 1. Amending and supplementing a number of articles of Circular No. 07/2019/TT-NHNN
…
3. To amend and supplement Article 8 as follows:
“Article 8. Loan-to-deposit ratio to total capital used for lending
1. The Vietnam Development Bank calculates loan-to-deposit ratio to total capital used for lending in VND, including VND and other freely convertible foreign currencies. to VND at the central exchange rate announced by the State Bank of Vietnam for the US dollar (USD) and the exchange rate of VND for a number of other foreign currencies in accordance with the State Bank's regulations on the publication of the central rate of the VND against the US dollar (USD), the cross-rate of the VND against a number of other foreign currencies, determined on the last working day of the month according to the formula after:
In there:
- LDR: loan-to-deposit ratio to total capital used for lending;
- L: total debits specified in Clause 2 of this Article;
- D: is the total capital used for lending, including mobilized capital as prescribed in Clause 3 of this Article and owner's equity as prescribed in Clause 4 of this Article.
2. Debits includes:
a) Debits to support exports;
b) Debits for special programs of the Government;
c) Medium-term debits for investment credit;
d) Medium-term debits for special programs of the Government;
dd) Long-term debits for investment credit;
e) Long-term debits for for special programs of the Government;
g) Debits with compulsory guarantee;
h) Debits of other loans (excluding the debit entrusted by domestic and foreign organizations and individuals that are not subject to risk);
i) Debits of pending loans.
3. The mobilized capital used for lending is the capital mobilized in accordance with the Government's regulations on financial management regime and performance evaluation of the Vietnam Development Bank.
4. Equity used for lending is the equity capital of the Vietnam Development Bank in accordance with the Government's regulations on financial management regime and performance evaluation for the Development Bank. Vietnam, except for the following:
a) Residual value of fixed assets (determined by historical cost of fixed assets less accumulated depreciation) and construction-in-progress costs at actual rates but not exceeding 25% of charter capital; charter capital and reserve fund of Vietnam Development Bank;
b) Actual amount of charter capital used to contribute charter capital of Vietnam Infrastructure Development and Financial Investment Corporation;
c) Financial reserve fund.
5. The Vietnam Development Bank must maintain the ratio of outstanding loans to total capital used for lending at a maximum of 95%.”
Accordingly, the loan-to-deposit ratio to total mobilized capital will be changed to the loan-to-deposit ratio to total capital used for lending.
The total capital used for lending will have to maintain the loan-to-deposit ratio of 95% in the near future.
What are the responsibilities of the Vietnam Development Bank to ensure the safety of banking operations?
Pursuant to Article 9 of Circular 07/2019/TT-NHNN stipulating as follows:
“Article 9. Vietnam Development Bank
1. Regularly and continuously comply with prudential limits and ratios in banking activities as prescribed in this Circular.
2. In case the Vietnam Development Bank fails to guarantee or is in danger of not meeting the limit, the prudential ratio in banking operations as prescribed in this Circular, within a maximum period of 30 days from If the date is not guaranteed or there is a risk of not reaching the limit, the safety ratio in operation, the Vietnam Development Bank must send a remedial plan to ensure the correct compliance with the limits, the safety ratio. banking activities specified in this Circular directly or by post to the State Bank (Banking Inspection and Supervision Agency), the Ministry of Finance.
3. Report fully, promptly and accurately on safety limits and ratios in banking activities in accordance with regulations of the State Bank of Vietnam.”
Accordingly, the Vietnam Development Bank will have the responsibilities specified above in ensuring the safety in banking operations.
Circular 07/2022/TT-NHNN will take effect from August 15, 2022.
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