The State Bank of Vietnam is planning to change its policy on reserve requirement ratios for credit institutions and foreign banks’ branches for the first time since 2011.

The State Bank of Vietnam will reduce the reserve requirement ratio by half for credit institutions that take part in the central bank’s plans to support the restructuring of ailing credit institutions. Currently, the central bank’s reserve requirement ratio applicable to demand and below 12-month term deposits is 3 percent of the total deposits, while the rate for 12-month-plus term deposits is 1 percent. The ratios for foreign currency deposits are 8 percent and 6 percent, respectively. According to the central bank, the draft policy was aimed to implement the revised Law on Credit Institutions.  In the past year, with improvement in legal frameworks for restructuring credit institutions and dealing with bad debts, the banking industry has ramped up the restructuring of ailing credit institutions and dealt with non-performing loans.-VNA