CIRCULAR

PROVIDING FOR MAXIMUM RATIO OF SHORT-TERM CAPITAL SOURCE WHICH IS USED FOR MEDIUM TERM AND LONG TERM LOAN TO CREDIT INSTITUTION

- Pursuant to the Law on the State Bank issued in 1997, the Law on the amendment, supplement of several Articles of the Law on the State Bank in 2003;
- Pursuant to the Law on the Credit Institutions issued in 1997; the Law on the amendment, supplement of several Articles of the Law on the Credit Institutions in 2004;
-.Pursuant to the Decree No. 96/2008/ND-CP dated 26 August 2008 of the Government providing for functions, assignments, authorities and organizational structure of the State Bank of Vietnam;
The State Bank of Vietnam hereby provides for the maximum ratio of short term capital source which is used for medium term and long term loan for credit institutions as follows:

Chapter I.

GENERAL PROVISIONS

Article 1. Governing scope and subjects of application

This Circular provides for the maximum ratio of short term capital source to be used for medium term and long term loan for credit institutions which are operating in Vietnam, except for local people’s credit fund.

Article 2. Interpretation

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1. Short term capital source of credit institution means the capital source with remaining term to be up to 12 months.

2. Medium term, long term capital source means the capital source with remaining term to be over 12 months.

3. Medium term, long term loan means the loan, finance lease amount with the lending term of over 12 months.

Chapter II.

SPECIFIC PROVISIONS

Article 3. Short-term capital source to be used for medium term and long term loan

Short term capital source which is used for medium term and long term loan includes:

1. Demand deposit, time deposit with the remaining term to be up to 12 months of organizations (including other credit institutions), individuals.

2. Demand savings deposit, time-savings deposit by individuals, of which remaining term is up to12 months.

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4. Loans from other credit institutions, of which remaining term is up to 12 months, except for loans in the inter-bank market.

Article 4. Medium, long term capital source to be used for medium and long term loan

1. Medium, long term capital source which is used for medium, long term loan includes:

a. Time deposit with the remaining term to be over 12 months of organizations (including other credit institutions), individuals

b. Time savings deposit by individuals, of which remaining term is over 12 months.

c. Capital source mobilized in the form of issuing valuable paper with remaining payment term to be over 12 months.

d. Loans from other credit institutions, of which remaining payment term is over 12 months;

dd. Charter capital and remaining reserve fund after deducting investments in procurement of fixed assets; capital contributions, shares purchase under provisions in Paragraph 20, Article 20 of the Regulation on prudential ratios in operation of credit institutions, issued in conjunction with the Decision No. 457/2005/QD-NHNN dated 19 April 2005 of the Governor of the State Bank which was amended, supplemented by the Decision No. 34/2008/QD-NHNN dated 5 December 2008 of the Governor of the State Bank.

e. Equity surplus

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a. Investments in held-to-maturity securities and investments in other valuable papers with medium, long term, which are issued by other credit institutions.

b. Investments in purchase of treasury stock

c. Deposits at other credit institutions with the term of 12 months

Article 5. Maximum ratio of the short-term capital source to be used for medium, long term loan

1. Credit institution shall use capital source for medium, long term loan under the following principles of order:

a. Using medium, long term capital source

b. Using short term capital source

2. Maximum ratio of short term capital source to be used for medium, long term loan of credit institutions shall be as follows:

- Commercial bank: 30%

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- Central People’s Credit Fund: 20%

3. Ratio of short-term capital source to be used for medium and long term loan shall be calculated under the following formula

[(A-B)/C] x 100%

Of which

- A is total outstanding medium, long term loans

- B is total of medium, long term capital source to be used for medium, long term loan after deducting amounts required to deduct under provisions in Article 4 of this Circular.

- C is total short term capital source to be used for medium, long term loan as stipulated in Article 3 of this Circular.

Chapter III.

IMPLEMENTATION PROVISIONS

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This Circular shall be effective after 45 days since the date of signing and replace provisions on maximum ratio of short term capital source to be used for medium, long term loan of credit institutions in the Regulation on prudential ratios in operation of credit institutions, issued in conjunction with the Decision No. 457/2005/QD-NHNN dated 19 April 2005 of the Governor of the State Bank.

Article 7. Implementation organization

1. Since the effective date of this Circular, credit institutions which have the ratio of short term capital source to be used for medium, long term loan to be higher than the ratio stipulated in this Circular shall not be permitted to continue using the short term capital source for medium and long term loan, and must take measures and plan of adjustment to ensure that by 1 January 2010, the credit institutions correctly comply with the stipulated ratios.

2. Department of Forecast and Monetary Statistics shall base on provisions in this Circular to build up and submit to the Governor for the issuance of statistic reporting regime for credit institutions,

3. Director of Administrative Department, Chief Inspector of Banking Inspectorate and Supervisory Agency, Head of units of the State Bank, General Manger of State Bank branches in province, city under the central Government’s management, Chairman of Board of Directors and General Director (Director) of credit institutions shall be responsible for the implementation of this Circular.

FOR THE GOVERNOR OF THE STATE BANK OF VIETNAM
DEPUTY GOVERNOR




Tran Minh Tuan