Required reserve ratio reduced by half for credit institutions

From October 1, credit institutions as mandatory transferees of commercial banks placed under special control as prescribed in the Law on Credit Institutions will be entitled to 50-percent reduction of the required reserve ratio.

Such is stated in the State Bank Governor’s Circular 23/2025/TT-NHNN (Circular 23) of August 12, 2025, amending and supplementing a number of articles of the State Bank Governor’s Circular 30/2019/TT-NHNN of December 27, 2019, on required reserves of credit institutions and foreign bank branches (Circular 30).

The reduction applies to four commercial banks, including Vietcombank, MB, VPBank and HDBank, as mandatory transferees of commercial banks placed under special control.

Specifically, support-providing credit institutions defined in Article 4.39 of the Law on Credit Institutions will be entitled to 50-percent reduction of the required reserve ratio based on the approved recovery plans for credit institutions placed under special control. At the same time, credit institutions as mandatory transferees of commercial banks placed under special control specified in the Law on Credit Institutions will have their required reserve ratio reduced by half based on the approved mandatory transfer plans for commercial banks placed under special control.

The reduction rate of the required reserve ratio for each credit institution mentioned above will be calculated based on the required reserve ratio for that credit institution as stipulated in Article 6.1 of the Circular and applies to all types of deposits subject to required reserves.

Worthy of note, the central bank has added “policy banks” as the fourth category of credit institutions not compelled to set aside required reserves as specified in Article 3 of Circular 30. The three existing categories include: (i) credit institutions placed under special control, (ii) credit institutions not yet having commenced operation, and (iii) credit institutions approved for dissolution or included in a competent agency’s decision on opening of bankruptcy procedures or decision on license revocation.

Regarding the responsibilities of the Credit Institutions Supervision Department, Article 7 of Circular 23 says that based on the required reserve ratio reduction for support-providing credit institutions and credit institutions as transferees in the approved recovery plan and the approved mandatory transfer plan, the Department will send to the State Bank of Vietnam (SBV)’s Operations Center and Monetary Policy Department a notice of the reduction of the required reserve ratio for support-providing credit institutions and credit institutions as transferees.

This notice must state the names of support-providing credit institutions and credit institutions as transferees, the month of commencement of the application and the duration of the application of the required reserve ratio reduction.

The Credit Institutions Supervision Department must also send to the SBV’s Operations Center the central bank’s documents and decisions on special control, termination of special control, dissolution, and revocation of licenses, of credit institutions within three working days from the date of issuance of these documents and decisions. This excludes documents and decisions issued by the SBV's regional branches.

Concurrently, the Department will have to supervise and handle according to its competence, or propose competent agencies, organizations and individuals to handle, violating credit institutions.

By VLLF