Circular No. 16/2018/TT-NHNN Amending and supplementing certain Articles of Circular No. 36/2014/TT-NHNN dated November 20, 2014 of the Governor of the State Bank of Vietnam on limits and safety ratios in the operations of credit institutions and foreign bank branches

CIRCULAR

Amending and supplementing certain articles of Circular No. 36/2014/TT-NHNN dated November 20, 2014 of the Governor of the State Bank of Vietnam stipulating limits and ratios for ensuring safety in the operations of credit institutions,branches of foreign commercial banks The Governor of the State Bank of Vietnam issues this Circular to amend and supplement certain articles of Circular No. 36/2014/TT-NHNNdated November 20, 2014 of the Governor of the State Bank of Vietnam stipulating limits and ratios for ensuring safety in the operations of credit institutions,branches of foreign commercial banks

Pursuant to the Law on the State Bank of Vietnam dated June 16, 2010;

Pursuant to the Law on Credit Institutions dated June 16, 2010;

Pursuant to the Law Amending and Supplementing Certain Provisions of the Law on Credit Institutions dated November 20, 2017;

Pursuant to Government Decree No. 16/2017/NĐ-CP dated February 17, 2017 on the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;

At the proposal of the Director of Banking Inspection and Supervision;

(Circular No. 36/2014/TT-NHNN)., amended and supplemented by Decree No. 109/2025/NĐ-CP and Decree No. 193/2025/NĐ-CPPursuant to the Law on Public Investment dated November 29, 2024;Article 1. Amending and supplementing certain articles of Circular No. 36/2014/TT-NHNN1. Supplement Clause 25 to Article 3 as follows:"25. The exchange rate for calculating the limits and ratios for ensuring safety under this Circular (hereinafter referred to as the exchange rate) shall be defined as follows: a) Exchange rate for converting various foreign currencies into Vietnamese dong:l(i) On non-working days that are not the last working day of the month, quarter, or year: apply the regulations of the State Bank of Vietnam on the accounting exchange rate in the Accounting Account System of credit institutions; (ii) On working days which are the last working day of the month, quarter, or year: apply the regulations of the State Bank of Vietnam on the exchange rate for converting the Balance Sheet Statement in foreign currency to Vietnamese dong for credit institutions and branches of foreign commercial banks using Vietnamese dong as the accounting currency or the exchange rate for converting financial statements in foreign currency to Vietnamese dong for credit institutions and branches of foreign commercial banks using foreign currency as the accounting currency in the Accounting Account System of credit institutions and Financial Reporting Regulations for credit institutions;âb) The exchange rate for converting other foreign currencies into US dollars shall be determined by credit institutions and branches of foreign commercial banks." 2. Points b and c of Clause 2 of Article 15 are amended and supplemented as follows:

"b) The liquidity ratio is calculated according to the following formula:

Liquidity Ratio (%)

Total Liabilities

- High liquidity assets as specified in Appendix 3 attached to this Circular;

- Total Liabilities is the Total Liabilities item on the Balance Sheet, minus:

+ Central Bank refinancing in the form of discounting negotiable instruments, collateralized loans (excluding Central Bank refinancing based on bonds issued by the Asset Management Company of Credit Institutions of Vietnam); overnight inter-bank electronic payment transactions; sale of negotiable instruments with maturity through open market operations of the Central Bank.

+ Other credit facilities of credit institutions and branches of foreign commercial banks in the form of sale with maturity, discounting, rediscounting and collateralized loans: (i) negotiable instruments used in transactions with the Central Bank; (ii) bonds and bills issued or guaranteed by governments and central banks of countries rated AA or higher or equivalent rating by independent international credit rating agencies (Standard & Poor's, Fitch Ratings).

c) High liquidity assets and total liabilities are calculated in Vietnamese dong, including Vietnamese dong and other freely convertible foreign currencies converted into Vietnamese dong at the exchange rate specified in point a of Clause 25 of Article 3 of this Circular."

3. Point a of Clause 3 of Article 15 is amended and supplemented as follows:

Where:

"1. Credit institutions and branches of foreign commercial banks determine the maximum proportion of short-term capital used for medium- and long-term lending in Vietnamese dong (including Vietnamese dong and foreign currencies converted into Vietnamese dong at the exchange rate specified in point a of Clause 25 of Article 3 of this Circular) according to the following formula:

A (%)

- A: Proportion of short-term capital used for medium- and long-term lending.

- B: Total medium- and long-term loan balance as specified in Clause 2 of this Article minus total medium- and long-term capital as specified in Clause 3 of this Article.

- C: Short-term capital as specified in Clause 4 of this Article.

2. The total medium- and long-term loan balance includes:

a) Balances of the following items with remaining terms exceeding one year:

(i) Loans and financial leasing (including loans and financial leasing to other credit institutions and branches of foreign commercial banks in Vietnam), except:

- Loans and financial leasing from entrusted funds of the Government, individuals, and organizations (including other credit institutions and branches of foreign commercial banks in Vietnam; parent banks, overseas branches of parent banks) where the risks associated with these loans and financial leasing are borne by the Government, individuals, and organizations;

Where:

(ii) Entrusted loans to other credit institutions and branches of foreign commercial banks for lending and financial leasing where the entrusting credit institution and branch of a foreign commercial bank bears the risk;

(iii) Purchases and investments in securities (including bonds issued by the Asset Management Company of Credit Institutions of Vietnam), excluding securities used in transactions with the Central Bank;

(iv) For loans, financial leasing, and entrusted loans specified in sub-clause (i) and (ii) of this point with different repayment periods, the remaining term for calculating medium- and long-term loans is determined for each loan corresponding to its repayment period.

b) Principal overdue balances of loans, entrusted loans, financial leasing, and balances of purchases and investments in securities.

a) The outstanding debt of the following items with remaining terms exceeding 01 (one) year:

(i) Loans and financial leases (including loans and financial leases to other credit institutions and foreign bank branches in Vietnam), except:

- Loans and financial leases funded from entrusted funds of the Government, individuals, and other organizations (including other credit institutions and foreign bank branches in Vietnam; parent banks and foreign branches of parent banks) where the risks related to these loans and financial leases are borne by the Government, individuals, and such organizations;

- Loans for programs and projects funded from refinancing capital of the State Bank according to the Government's decision,

(ii) Entrusted loans to other credit institutions and foreign bank branches for lending and financial leasing where the risk is borne by the entrusting credit institution or foreign bank branch;

(iii) Purchases and investments in securities (including bonds issued by the Asset Management Corporation of Credit Institutions in Vietnam), except securities used in transactions of the State Bank;

(iv) For loans and financial leases, and entrusted loans specified in sub-clause (i) and sub-clause (ii) of this point, if there are multiple debts corresponding to different repayment periods, the remaining term for calculating medium and long-term loan balances shall be determined separately for each debt corresponding to the repayment period of that debt.

b) Overdue principal balance of loans, entrusted loans, financial leases, and balances of purchases and investments in securities.

3. Medium-term and long-term capital sources include the remaining balance with a term exceeding one year of the following items:

a) Individual deposits;

b) Domestic and foreign organization deposits, except for various types of State Treasury deposits;

c) Domestic and foreign financial institution loans (excluding loans from other foreign bank branches in Vietnam);

d) Government loans in the form of entrusted investment funds where the financial institution or foreign bank branch bears the risk;

đ) Loans from lead financial institutions or foreign bank branches when such financial institutions or foreign bank branches participate in lending to projects involving entrusted investments and related risks they bear;

e) Funds raised from issuing promissory notes, bills of exchange, deposit certificates, and bonds;

g) Charter capital, authorized capital, supplementary charter capital reserve fund, development investment fund, and remaining financial reserve fund after deducting the original value of fixed asset purchases, investments, contributions, and share purchases as prescribed by law;

h) Share premium surplus and undistributed profits after purchasing treasury shares;

i) Loans from other financial institutions or foreign bank branches in Vietnam for non-bank financial institutions;

k) Deposits from people's credit cooperatives for cooperative banks;

4. Short-term capital sources include the remaining balance with a term up to one year (including demand deposits) of the following items:

a) Individual deposits, excluding margin deposits and dedicated capital deposits;

b) Domestic and foreign organization deposits, excluding the following items:

(i) Various types of State Treasury deposits;

(ii) Customer margin deposits and dedicated capital deposits;

(iii) Deposits from other financial institutions or foreign bank branches in Vietnam;

c) Domestic and foreign financial institution loans (excluding loans from other foreign bank branches in Vietnam);

d) Government loans in the form of entrusted investment funds where the financial institution or foreign bank branch bears the risk;

đ) Loans from lead financial institutions or foreign bank branches when such financial institutions or foreign bank branches participate in lending to projects involving entrusted investments and related risks they bear;

e) Funds raised from issuing promissory notes, bills of exchange, deposit certificates, and bonds;

g) Deposits and loans from other financial institutions or foreign bank branches in Vietnam for non-bank financial institutions;

h) Deposits from people's credit cooperatives for cooperative banks;

5. Financial institutions and foreign bank branches must comply with the maximum ratio of short-term capital used for medium-term and long-term lending according to the following schedule:

a) From January 1, 2018 to December 31, 2018:

(i) Commercial banks and foreign bank branches: 45%;

(ii) Non-bank financial institutions: 90%.

b) From January 1, 2019:

(i) Commercial banks and foreign bank branches: 40%;

(ii) Non-bank financial institutions: 90%.”

5. Clause 1 of Article 21 shall be amended and supplemented as follows:

"1. Commercial banks, cooperative banks, and foreign bank branches shall implement the maximum loan-to-deposit ratio in Vietnamese dong (including Vietnamese dong and foreign currencies converted into Vietnamese dong at the exchange rate specified in Point a, Clause 25, Article 3 of this Circular) determined by the following formula:

Where:

- LDR: Loan-to-deposit ratio.

- L: Total loans as stipulated in Clauses 2 and 3 of this Article.

- D: Total deposits as stipulated in Clause 4 of this Article."

Article 2. Implementation

The Director of the Office, the Director of Banking Inspection and Supervision, Heads of units under the State Bank of Vietnam, Governors of the State Bank of Vietnam Branches in provinces and centrally-administered cities, Chairmen of the Board of Directors, Chairmen of the Board of Members, and General Managers (Directors) of financial institutions and foreign bank branches are responsible for organizing the implementation of this Circular.

Article 3. Effectiveness

1. This Circular takes effect from July 31, 2018.

2. Abolish Clause 15, Clause 16, Clause 17, and Clause 22 of Article 1 of Circular No. 19/2017/TT-NHNN dated December 28, 2017, issued by the Governor of the State Bank of Vietnam amending and supplementing certain provisions of Circular No. 36/2014/TT-NHNN./.