The maximum ratio of short-term funds used for medium- and long-term loans will be reduced from the current 45 per cent to 40 per cent from January 1 next year, according to a new State Bank of Vietnam (SBV) circular released on Wednesday.

Under Circular No 16/2018/TT-NHNN, which revised Circular No 36/2014/TT-NHNN on regulating prudential ratios for credit institutions and foreign bank branches, the SBV also stipulates that the ratio applied to non-banking credit institutions from the beginning of next year will remain unchanged at 90 per cent.
According to the SBV, the medium and long-term capital source should be supplied via the securities channel, but in Vietnam, this source of capital is still mainly mobilised via the banking channel.
SBV’s statistics last year revealed that medium and long-term loans still accounted for 53-55 per cent of the total loans, while medium- and long-term mobilised capital was only 13-15 per cent of total mobilised capital.
SBV was concerned it was a risk for the banking industry if there were an imbalance in the ratio of short-term capital for medium- and long-term loans.
It was estimated that credit growth of all credit institutions by the end of July was around 8 per cent, so that it won’t be hard to meet the 17 per cent credit growth target set for this year as lending often surges sharply in the third and fourth quarters.
Currently, interest rates are commonly 6-9 per cent per year for short-term ordinary loans, and 9-11 per year for medium- and long-term ordinary loans.
For loans in priority sectors, including agriculture businesses, firms producing goods for export, small- and medium-sized enterprises, enterprises operating in auxiliary industries and hi-tech enterprises including startups, the lending interest rate is 6.5 per cent per year.
Source: VNS