SBV to reduce reserve requirement ratios on bank deposits

Credit institutions that take part in the central bank’s plan on supporting the restructuring of ailing credit institutions would be allowed to halve reserve requirements for all types of deposits.

A transaction office of the Bank for Investment and Development of Vietnam (BIDV)__Photo: Internet

This has been unveiled by the State Bank of Vietnam (SBV) in a draft circular on reserve requirement ratios applicable to credit institutions and foreign bank branches.

The draft would apply to all credit institutions established and operating under the Law on Credit Institutions, except those which are placed under special control, have not yet inaugurated, are going to liquidate assets, dissolve or terminate operation under decisions of competent authorities, or have their operation licenses revoked.

Experts said the reduction of reserve requirement ratios would be helpful for credit institutions, while exerting little impacts on the financial and monetary markets.

According to banking expert Nguyen Tri Hieu, lower reserve requirement ratios would help credit institutions have more money to pour into the market, thus relieving enterprises’ tension about capital sources for investment, production and business.

As per the draft, deposits subject to reserve requirements are all types of Vietnam-dong and foreign-currency deposits at credit institutions, including demand deposit, time deposit, savings deposit, and proceeds from issuing deposit certificates, bills, treasury bills and bonds.

Reserve requirements of credit institutions would be managed by the SBV Operations Center.