Prudential Ratios and Limits
The State Bank of Vietnam issued Circular 06/2016/TT-NHNN dated 27 May 2016 to amend Circular 36/2014/TT-NHNN on the prudential ratios and limits on the activities of credit institution. Notable changes are below.
- From 1 January 2017, the risk coefficient applicable for credit facilities granted to real estate business is 200%.
- The maximum ratios applicable for a commercial bank’s short- term capital sources that may be used for medium to long term lending is adjusted as follows: (i) 60% from 1 Jul 2016 to 31 Dec 2016; (ii) 50% from 1 Jan 2017 to 31 Dec 2017; and (iii) 40% from 1 Jan 2018. This applies to foreign bank branches.
Circular 06 takes effect from 1 July 2016.
The Government issued Resolution 35/NQ-CP dated 16 May 2016 on supporting and developing enterprises up to 2020. The key points are as follows:
- In 2017, the derivative securities market shall be established and the two stock exchanges of Vietnam: Ho Chi Minh City and Hanoi stock exchanges, shall be merged.
- 50% reduction in personal income tax for workers in high technology IT sector and agricultural sector using high technology.
- The MPI will work with other ministries to establish an enterprise incubation model to support start-ups.
- The government should not criminalise economic or civil relationships but penalize serious offenders pursuant to law.
For more information, click Asia Counsel Insights 3 June 2016.
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