What are regulations on liquidity ratio in Vietnam? How to calculate liquidity ratio in Vietnam?

What are regulations on liquidity ratio in Vietnam?

Pursuant to Clause 2, Article 14 of the Circular 22/2019/TT-NHNN stipulating limits and prudential ratios of banks in Vietnam as follows:

a) Every bank and FBB shall hold liquid assets in order to be prepared for payment of debts when they are due and unexpected expenses.

b) Every bank and FBB shall maintain a minimum liquidity ratio of 10%.

How to calculate liquidity ratio in Vietnam? 

Pursuant to Clause 2.c, Article 14 of the Circular 22/2019/TT-NHNN stipulating limits and prudential ratios of banks in Vietnam as follows:

c) The liquidity ratio shall be calculated as follows:

Liquidity ratio (%)	=	Liquid assets	x 100%
		Total liability

 Where:

- Liquid assets are specified in Appendix 3 hereof;

- Total liability is the total liability on the balance sheet minus (-):

+ Refinancing by SBV in the form of discounting, loans backed by financial instruments (minus the refinancing by SBV on the basis of special bonds and bonds directly issued to the debt seller at market prices of VAMC); overnight loan in electronic interbank payment; forward of financial instruments (minus the revenue from sale of bonds directly issued to the debt seller at market prices of VAMC) through open market operation of SBV.

+ Credit extension by other credit institutions and FBBS in the form of forwards, discounting and secured loans: (i) financial instruments used in transactions of SBV; (ii) bonds, treasury bills issued or guaranteed by governments and SBV of other countries and rated by international credit rating agencies (Standard & Poor’s, Fitch Rating) as AA or above, or equivalently rated by another independent credit rating agency.

d) Liquid assets and total liability shall be expressed as VND and other convertible foreign currencies at the rates specified in Point a Clause 26 Article 3 of this Circular).

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