VN raises credit organizations’ minimum reserve

SBV Governor Nguyễn Văn Giàu

SBV Governor Nguyễn Văn Giàu, in his recent press interview, said that the document was issued in the context that Việt Nam is stepping up comprehensive integration into the international community and commercial banks need to strengthen capacity and safety.

Reporter: Many commercial banks said that the technical barriers erected in the Circular are hard for them to jump over. What are your comments?

Governor: The purpose of the monetary policy is to stabilize the value of the currency, ensure the safety of the banking and payment systems. Việt Nam’s integration process has been advancing step by step, thus the regulations, defined in the Circular, aim at promoting banking operations to new standards.

Once the system is safe, the first beneficiaries are credit organizations, and the whole society as next, which lead to easier State management over the organizations.

Moreover, the Circular just stipulates low requirements. Even, some banking experts criticized the SBV for handling with care.

The question is that commercial banks should take this Circular as a chance to raise their management standards instead of being afraid of the new regulations.

Reporter: Regarding the reserve for payment, the SBV already ordered commercial banks to keep 20% of their mobilizing capital. Under the Circular, why the SBV will not allow the banks to use non-term deposits to do business.

Governor: The volume of non-term deposits from economic organizations is not small.

If an organization deposits their money in the morning and withdraws it in the afternoon, a commercial bank would loose its liquidity, especially when its minimal reserve is not high enough.

Reporter: If credit organizations are suddenly banned to do business with non-term deposits they will be shocked and cannot balance their input resources?

Governor: We will settle this issue in two ways: the central bank will assist them or give them a roadmap to remove the non-term deposits away from their business capital.

I confirmed that in next some years, the non-term deposits will be further strictly controlled.

Reporter: Can you compare the regulations defined in the Circular and those of the Basel Rules?

The regulations of the Circular are far to meet with those of the Basel Rules I or II. The world has already advanced to the Basel III. Now, Việt Nam has up to 100 credit organizations, both domestically and externally funded ones, thus the internationalization of domestic rules becomes natural.

By Hải Minh