Circular No. 22/2019/TT-NHNN dated November 15, 2019 of the State Bank of Vietnam on prescribing limits and prudential ratios in operations of banks and foreign bank branches

CIRCULAR

Prescribing limits and prudential ratios in operations
of banks and foreign bank branches^[1]

Pursuant to June 16, 2010 Law No. 46/2010/QH12 on the State Bank of Vietnam;

Pursuant to June 16, 2010 Law No. 47/2010/QH12 on Credit Institutions;

Pursuant to the November 20, 2017 Law Amending and Supplementing a Number of Articles of the Law on Credit Institutions;

Pursuant to the Government’s Decree No. 16/2017/ND-CP of February 17, 2017, defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;

At the proposal of the Chief of the Banking Supervisory Agency;

The Governor of the State Bank of Vietnam promulgates the Circular prescribing limits and prudential ratios in operations of banks and foreign bank branches.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

1. This Circular prescribes limits and prudential ratios which banks and foreign bank branches must constantly maintain in their operations, including:

a/ Capital adequacy ratio. This ratio is not applicable to banks and foreign bank branches maintaining the capital adequacy ratio prescribed in Circular No. 41/2016/TT-NHNN of December 30, 2016, of the Governor of State Bank of Vietnam, prescribing capital adequacy ratio of banks and foreign bank branches, and amending, supplementing and replacing documents (if any) (below referred to as Circular No. 41/2016/TT-NHNN);

b/ Credit extension limits;

c/ Solvency ratio;

d/ Maximum ratio of short-term capital sources used to provide medium- and long-term loans;

dd/ Government bond or government-guaranteed bond purchase or investment ratio;

e/ Limits on capital contribution and share purchase;

g/ Loan-to-deposit ratio.

2. Based on results of supervision, inspection and examination by the State Bank of Vietnam (below referred to as the State Bank) of banks and foreign bank branches, in case of necessity to secure prudence in operations of these banks and foreign bank branches and depending on the nature and extent of risks, the State Bank may request banks and foreign bank branches to maintain one or several limit(s) or prudential ratio(s) higher than those prescribed in this Circular.

3. Banks subject to special control shall maintain limits and prudential ratios under Article 146dd of the Law on Credit Institutions, which was amended and supplemented.

4. Banks providing support under approved rehabilitation plans shall maintain government bond and government-guaranteed bond purchase or investment ratio under Clause 8, Article 148dd of the Law on Credit Institutions, which was amended and supplemented.

5. For banks and foreign bank branches financing programs or projects under decisions of the Government or Prime Minister, the consideration of capital sources and debit balance of each program or project upon determining limits and prudential ratios must comply with decisions of the Government or Prime Minister.

Article 2. Subjects of application

1. Banks, including state-run commercial banks, cooperative banks, joint-stock commercial banks, joint-venture banks and wholly foreign-owned banks.

2. Foreign bank branches.