What are regulations on liquidity management of banks in Vietnam?
Hello Lawnet. I have a question related to internal control systems of commercial banks and foreign banks’ branches. There will be new regulations next year. What are regulations on liquidity management of banks in Vietnam? Thank you!
Lam Anh - Tien Giang
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What are regulations on liquidity management of banks in Vietnam? - image from internet
Pursuant to Article 49 of the Circular 13/2018/TT-NHNN on internal control systems of commercial banks and foreign banks’ branches issued by the Governor of the State Bank of Vietnam (effective from 01/01/2019), the regulations on liquidity management of banks in Vietnam are as follows:
1. The commercial bank/foreign bank's branch manages liquidity for:
a) The commercial bank alongside its branches and other affiliates, the foreign bank's branch;
b) Vietnamese Dong and foreign currencies (at least US Dollar, also including other currencies converted to USD).
2. Liquidity risk management must include at least the following contents:
a) Manage liquidity within the day by monitoring that day’s liquidity, identifying sources of capital as well as the ability to mobilize those sources to maintain the day’s liquidity, forecasting events that can drastically change such liquidity and propose handling measures;
b) Manage high-liquidity assets, based on market values, and their convertibility to cash for meeting liquidity requirements in both normal conditions and a low-liquidity market;
c) Manage sources of mobilized capital by keeping statistics on the average demand deposit balance in a timespan of at least 30 days, core deposit balance and other indices for mobilized sources of capital as specified in the commercial bank’s/foreign bank's branch’s internal regulations;
d) Manage the cash flow by creating a term chart for the following day and specific timeframes (1 week, 1 month, 3 months, 6 months and 1 year) to determine the cash flow gap by comparing the inflows and outflows, in compliance with the State Bank's regulations on prudential limits and ratios for commercial bank’s/foreign bank's branch’s operations and other liquidity rations specified in the bank’s internal regulations;
dd) Manage liquidity sources by assessing those sources' accessibility in order to meet future liquidity needs in both normal conditions and a low-liquidity market.
Above are regulations on liquidity management of banks in Vietnam. Please refer to the Circular 13/2018/TT-NHNN for further information.
Best regards!
