On May 27, 2016, the State Bank of Vietnam issued the Circular No. 06/2016/TT-NHNN on amending and supplementing a number of Articles of the Circular No. 36/2014/TT-NHNN dated November 20, 2014 of the State Bank of Vietnam providing for prudential ratios and limits for operations of credit institution and foreign bank branches.
Within that, the most important content is the schedule to use short-term capital sources as medium and long term loans. In particular, credit institutions, foreign bank branches are entitled to use short-term capital sources as medium and long term loans under the following maximum rate schedule as follow: from July 01, 2016 – December 31, 2016, Commercial banks: 60%; Foreign bank branches: 60%; Non-bank credit institutions: 100%; Cooperative banks: 60%, From January 1, 2017 to December 31, 2017: Commercial banks: 50%; Foreign bank branches: 50%; Non-bank credit institutions: 90%; Cooperative banks: 50%, From January 01, 2018: Commercial banks: 40%; Foreign bank branches: 40%; Non-bank credit institutions: 80%; Cooperative banks: 40%.”.
On credit extension, credit institutions and foreign bank branches shall not be permitted to extend credit to customers for the purpose of their investments and trades in unlisted corporate bonds. Auditing organizations (including auditing enterprises, branches of foreign auditing enterprises in the territory of Vietnam), auditors (including auditors of auditing organizations and public auditors) that currently render auditing services at credit institutions and branches of foreign banks; inspectors that currently provide inspecting services for credit institutions and branches of foreign banks.
This Circular takes effect on July 01, 2016.
