Central bank may review call deposits for lending in Circular 13, Vietnam Financial News
The government Office has lately sent Official Letter No 5801/VPCP - TH stating the instructions from Vietnams prime minister asking the central bank reviewing Circular 13/2010/TT-NHNN issued recently by this agency.
Experts believe that the State Bank of Vietnam (SBV), the countrys central bank may include call deposits of economic organisations into all the funds mobilised by banks.
Accordingly, the prime minister required the SBV to check and review the contents of this new Circular as mentioned by some newspapers to make reports and propose remedies to the government before October 1, 2010.
Under the official letter, some newspapers have published a number of articles reflecting the opinions of the Vietnam Bankers Association (VNBA) of a specified number of "inadequate "provisions prescribed in the new Circular, including of the Article 5, 16, 18 and others, which are believed to have effects on the operations of banks and credit institutions.
Earlier, in their petition, 14 banks and finance companies via VNBA cited inadequacies in Circular 13 and requested the SBV to reconsider them, because once the regulations take effect, the credits will be difficult.
First of all, the new circular rules that the percentage of total loans to mobilised capital is only a maximum of 80 percent, but the cash deposits of economic organisations, the State Treasury, Social Insurance and other organisations are not included in the total mobilised capital.
This is considered a big problem for banks as competition in the mobilisation of capital from residential areas is getting increasingly intense, while call deposits of economic organisations, Social Insurance, the State Treasury and other organisations have high stability.
Le Van Phu, deputy director of Indovina Bank said that if the amount of call deposits from the above organisations is not included in the mobilised capital for lending, it will be very difficult for banks.
General director of a joint stock bank assessed that the old mobilised capital rate does not grow much, while outstanding loans of banks actually do not increase, leading to the excess of capital. Due to seasonal factors, in the first 6 months, the demand was not strong on the capital market. The market demand for capital from now to the end of this year may be improved compared to the first months of the year. But in the current context, banks are very cautious in lending.
On the other hand, according to many banks, the time from now until October 01, 2010, when Circular 13 takes effect, is too urgent and short to adhere to all the provisions of the Circular.
However, Dr Tran Du Lich member of the National Currency - Financial Policy Advisory Council, said that it is hard to delay implementation of the provisions in Circular 13 because this Circular was issued from May 2010.
According to Dr Lich, if any adjustment in Circular 13 is made, he believes that the central bank may only reconsider the percentage of call deposits of economic organisations to be counted into the mobilised funds of banks. "In some cases, banks can use the idle money (payment deposits and current deposit accounts of enterprises) to make mortgages to borrow loans through the interbank market. If banks take advantage of this then they will be able to reduce interest rates," Lich said.
Vietnam Business And Financial News Network. Source [intellasia.net]
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