Continuing to amend Circular 36: Is it reasonable?

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The banking system is meeting the demand for a large capital.

With this second amendment, the State Bank of Vietnam has received a lot of support from commercial banks and experts, but there are concerns about the lack of consistency in issuing legal documents of the State Bank of Vietnam.

Suitable situation

According to the draft amendment and supplement of Circular 36/2014 / TT-NHNN, the roadmap for banks to use short-term funds for medium and long-term loans will be at maximum 45% by 2018 and 40% in 2019 for banks and branches of foreign banks. Accordingly, the reduction of the maximum use rate of short-term medium and long-term loans from 60% (2016) to 40% will be delayed by two years compared to the initial comments on implementation of revision of Circular 36. According to previous regulations in Circular 06/2016 / TT-NHNN amending and supplementing some articles of Circular 36/2014 / TT-NHNN, commercial banks and branches of foreign banks will have to be reduced this ratio to 40% from the beginning of 2018. In addition, non-bank credit institutions will be kept at a maximum rate of 90% instead of 80% from the beginning of 2018.

According to State Bank of Vietnam's explanation, this revision is based on the assessment of impacts of monitoring data of the State Bank of Vietnam and macroeconomic data, the economic situation in the first months of 2017, as well as the main direction of the administration. Macroeconomics of the Government in the last months of the year. Earlier, the Prime Minister requested the State Bank to study solutions and strive for credit growth to 21-22% in 2017. Therefore, the State Bank of Vietnam has adjusted this rate in accordance with the policy of Government and the actual situation of medium and long-term loans to credit institutions.

Earlier, in May 2017, at the Prime Minister's meeting with businesses, the Governor of the State Bank of Vietnam, Mr. Le Minh Hung said that the proportion of medium and long term loans accounted for about 53% of total credit debt while mobilized capital for medium and long term credit system was only about 13-15%. Therefore, the Governor of the State Bank of Vietnam instructed to adjust the roadmap to apply the maximum rate of using short-term funds for medium and long-term loans of credit institutions to meet the demand for capital in investment, meeting the requirements of the economy in the current situation.

According to financial - banking expert, Dr. Can Van Luc, in accordance with current regulations, the banking system simultaneously meets the demand for large capital and the demand for an increase in credit under the direction of the Government about medium and long term loan rates. Therefore, the banking system is forced to increase interest rates to mobilize capital medium and long term faster and stronger. Therefore, if the State Bank of Vietnam adjusts the timeframe to meet the short-term rate for medium and long-term loans, it will reduce the pressure on the banking system, thereby reducing the mobilization of interest rates, reducing costs, contributing to lower interest rates.

In addition, many experts said that this delay would help credit institutions have more conditions to develop credit without having to worry much about the ability to touch the limits according to the draft amendment of Circular 36, stocks of banks such as VCB, BID, CTG, MBB then increased strongly.

Banks can still meet requirements

However, the fact showed that the State Bank of Vietnam made several changes, stretched the roadmap for the regulations. The reason for the State Bank to amend is to support businesses, banks to deal with economic difficulties and many changes. But some experts did not agree because this will affect the prestige of a central bank when issuing legal documents. The Finance and Banking Expert, Dr. Nguyen Tri Hieu said that, according to regulations, the promulgation of legal regulations must be based on impact studies, to have time to prepare to create conditions. As a result, the State Bank of Vietnam has some changes, stretching the roadmap as it will create the premise for many changes, inconsistencies in the future, creating a common situation.

Moreover, according to Dr. Hieu, despite the changes to meet the new requirements of economic development, when they have laid down the provisions of the law, credit institutions will have to find ways to run the operation to meet that requirement. It is impossible for the needs of banks and credit institutions to change the law of the State. The expert said that if the short-term capital of credit institutions was limited, the bank should reduce the amount of medium and long-term loans, turn into short-term loans to meet regulations. In terms of mobilizing capital, to meet the target of 40% as required, banks need to increase medium and long term mobilization, such as raising interest rates on medium and long term deposits, launching promotions and treat depositors.

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It can be seen that, although there are many different views, it is important that the State Bank of Vietnam should take into consideration the safeguarding of the banking system as well as the targets for economic development. In particular, the adjustment of regulations and roadmaps should be done with care, avoiding the formation of precedent, "habits" in economic management.