Circular 08, amending Circular 22 on limits and safety ratios in banking operations, was recently issued by the State Bank, taking effect on 15/5.

Under this regulation, certain items must still be excluded from credit institutions' deposits before being factored into the LDR ratio's denominator. These exclusions include escrow deposits, customer specialized capital deposits, non-term deposits, and 80% of the State Treasury's term deposits.

Banks can now include 20% of the State Treasury's term deposits in their LDR calculation, a change from the previous full exclusion.

This relaxation of LDR calculation helps banks improve their safety ratios and provides more room for credit growth. State-owned banks are expected to benefit most from this adjustment.

As of late march, State Treasury deposits held by state-owned banks (Vietcombank, BIDV, Agribank, VietinBank) constituted over 99% of the system's total treasury deposits, which amounted to 626.700 billion VND.

Transactions at a commercial bank. *Photo: Thanh Tung*

The State Bank reported that the LDR ratios for the four state-owned banks—VietinBank, BIDV, Vietcombank, and Agribank—all rose during the early months of the year. By 31/3, these ratios stood at 83,5%, 82,9%, 84,5%, and 83% respectively, nearing the 85% maximum threshold.

This regulatory amendment comes amidst significant liquidity pressure on the banking system. During its regular meeting in april, the Government directed the State Bank to review and revise regulations, implementing suitable measures to ensure system liquidity.

Quynh Trang