Calculation Method for Liquidity Reserve Ratio of the Vietnam Development Bank

At the end of the last working day of each month, the Vietnam Development Bank, based on the regulations in Appendix Circular 07/2019/TT-NHNN, shall calculate and manage the liquidity reserve ratio as stipulated below:

Illustrative image (source: internet)

- The Vietnam Development Bank must hold high-liquidity assets to reserve for meeting due payment needs and unforeseen emerging demands;

- The liquidity reserve ratio is determined by the following formula:

In which:

- High-liquidity assets are stipulated in the Appendix of this Circular;

- Total Capital is the total of the items in the Capital section on the Balance Sheet, including: deposits by the State Treasury, financial organizations, credit institutions, economic organizations, and customers; loans from the State budget, financial organizations, and credit institutions; issuance of valuable papers; other debts excluding Risk Provision Fund;

Notably, high-liquidity assets and total capital are calculated in Vietnam Dong, including Vietnam Dong and other freely convertible foreign currencies converted to Vietnam Dong at the central exchange rate announced by the State Bank of Vietnam for the US Dollar (USD) and the cross exchange rate of Vietnam Dong for some other foreign currencies according to the regulations of the State Bank of Vietnam on the announcement of the central exchange rate of Vietnam Dong for the US Dollar and the cross exchange rate of Vietnam Dong for some other foreign currencies.

Additionally, this Circular stipulates that the Vietnam Development Bank must maintain the minimum liquidity reserve ratio according to the following schedule:

- From the effective date of Circular 07/2019/TT-NHNN (January 1, 2020) to December 31, 2020: 0.6%;

- From January 1, 2021, to December 31, 2022: 1%;

- From January 1, 2023, to December 31, 2024: 1.5%;

- From January 1, 2025: 2%.

See additional regulations in Circular 07/2019/TT-NHNN which take effect from January 1, 2020.

Thu Ba

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