VBSP Implements the Plan for Handling Liquidity Reserve Ratio in 2020

This is a notable provision in Circular 07/2019/TT-NHNN regarding the limits and safety assurance ratios in the operations of the Vietnam Development Bank.

According to the transitional provisions in Article 13 of Circular 07/2019/TT-NHNN, at the time this Circular takes effect (i.e., January 1, 2020), if Vietnam Development Bank fails to meet the liquidity reserve ratio and the loan-to-deposit ratio requirements as stipulated in Articles 7 and 8 of this Circular, it must develop and implement a remedial plan and submit it to the State Bank of Vietnam (Banking Supervision and Inspection Agency) and the Ministry of Finance for reporting.

Development Bank, remedial plan for liquidity reserve ratio, Circular 07/2019/TT-NHNN

Illustration (source: Internet)

The remedial plan must at least include the following contents:

- Specific limits and ratios that do not comply with the regulation;- Measures and implementation plans to ensure compliance within a maximum period of 06 months from the effective date of this Circular.

In case the State Bank of Vietnam or the Ministry of Finance requests amendments, supplements, or adjustments to the remedial plan, Vietnam Development Bank is responsible for making the adjustments and implementing them as required by the State Bank of Vietnam and the Ministry of Finance.

Furthermore, Circular 07/2019/TT-NHNN also stipulates that for credit agreements signed before the effective date of this Circular, Vietnam Development Bank, customers, and related parties shall continue to execute commitments, rights, and responsibilities as stated in the signed agreements. Amendments and supplements to these agreements shall only be made if the contents of the amendments and supplements conform to the provisions of this Circular.

See the full text of the regulations at Circular 07/2019/TT-NHNN effective from January 1, 2020.

Thu Ba

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