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Vietnam Business » Vietnam Banking News » Vietnam State Bank says will probe inter-bank borrowing

Vietnam State Bank says will probe inter-bank borrowing

The central State Bank of Vietnam has just announced it will launch inspections into those commercial banks that borrow heavily on the inter-bank market to check their liquidity.

Those credit institutions who pool inter-bank loans more than one-fifth of their mobilized funds will be subject to inspections, said the central bank. The central bank has asked its inspectors to make up inspection plans to this effect.

Commercial banks often borrow from one another on the inter-bank market to guarantee their safe liquidity levels.

Governor Nguyen Van Giau told the Daily that such inspections were merely a regular activity of the central bank to ensure capital safety for each bank and all the banking industry. "This is just normal inspection by the State Bank to have an insight, not because of any irregularities on the part of commercial banks," he said.

Commenting on the announcement, a banker in HCMC said the inter-bank market is also a business sphere for banks, where they lend and borrow from each other to ensure liquidity as well as to gain a profit.

"In nature, there is no problem with the inter-bank activity, but some banks have recently have pooled capital from this market for re-lending, so the central bank comes in to check," the source said.

He noted that if the central bank tightens its control on the inter-bank market, those institutions that gain much profits from the market will be affected.

Vietnam Business And Financial News Network. Source [english.thesaigontimes.vn]

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