Central bank considers changing roadmap for ratio of short-term funds for long-term loans
The State Bank of Việt Nam was considering changing the roadmap for adjusting the ratio of short-term funds used for medium and long-term loans, with the aim that banks could lower lending costs and provide preferential rates to aid post-pandemic recovery.
This point was a highlight of the draft circular which would amend the Circular No 22/2019/TT-NHNN on limits and prudential ratios of banks and foreign bank branches.
The central bank said that the development of the COVID-19 pandemic remained complicated worldwide and Việt Nam still faced a high risk of infection from external sources.
The virus outbreak severely affected every socio-economic aspect in the first half of this year, the central bank said, citing statistics that the country’s gross domestic product expanded at just 1.81 per cent in the six-month period, the lowest growth rate in the past decade.
A number of enterprises were facing the risk of shortages of raw material, narrowing down production scale or temporarily halting operations. In addition, the increasing pressure from controlling inflation and unemployment was also weighing on social security.
Adjusting the roadmap for the ratio of short-term funds used for medium and long-term loans would be critical in that context to create conditions for credit institutions to better support their customers to recover their production and business after the pandemic, the central bank said.
Under Circular No 22/2019/TT-NHNN, the maximum ratio of short-term funds used for medium- and long-term loans would be reduced from 40 per cent to 37 per cent from October 1, which might cause difficulties for banks in restructuring their capital sources, the central bank said.
The central bank also predicted further drops in deposits at banks due to the impacts of the COVID-19 pandemic.
Thus, to implement the policies about preferential lending rates, the central bank proposed two options for extending the deadline of the maximum ratio of short-term funds used for medium- and long-term loans.
In the first option, the central bank would give a six-month extension.
Specifically, the maximum ratio of short-term funds used for medium- and long-term loans would be 40 per cent to March 31, 2021, then reduced o 37 per cent from April 1, 2021 to March 31, 2022. From April 1, 2022 to March 31, 2023, the maximum ratio would be 34 per cent and 30 per cent from April 1, 2023 onwards.
In the second option, a one-year extension was proposed.
Accordingly, the maximum ratio of 40 per cent would be applicable until September 30, 2021, then cut to 37 per cent from October 1, 2021 to September 30, 2022, 34 per cent from October 1, 2022 to September 30, 2023, 34 per cent from October 1, 2022 to September 30, 2023 and 30 per cent from October 1, 2023. — VNS