On May 29, 2018, the State Bank of Vietnam issued Decision No.1158/QD-NHNN on mandatory reserve ratio applicable to credit institutions and branches of foreign banks. This Decision took effect since the maintenance period for the mandatory reserves in June 2018.

Accordingly, Decision No.1158/QD-NHNN regulates on mandatory reserve ratio applicable to credit institutions and branches of foreign banks as follows:

1. People’s credit funds and microfinance institutions: The mandatory reserve ratio for Vietnam dong deposits and deposits in foreign currency is 0%;
2. Policy Bank: Mandatory Reservation Level According to Government Provisions.
3. Vietnam Agricultural and Rural Development Bank and Co-operative Bank apply mandatory reservation quotas corresponding to each type and deposits are as follows:

–           Demand payment in Vietnam dong and maturity of 12 months is 3% of total deposit balances subject to mandatory reserve;

–           VND deposits with a maturity of 12 months and over are 1% of the total deposit balances covered by mandatory reserve;

–           Deposits in foreign currencies of credit institutions abroad are 1% of the total deposit balances covered by mandatory reserve;

–           Deposits in foreign currency subject to other mandatory reserves than demand deposits and less than twelve months shall represent 7% of the total deposit balances covered by mandatory reserve;

–           Deposits in foreign currency subject to mandatory reserves for other terms of 12 months or more shall be equal to 5% of the total deposit balances covered by mandatory reserve calculation.

4. Other Credit institutions shall apply the mandatory reserve ratio corresponding to each type of deposit as follows:

–           To submit Vietnam dong for demand deposits and on terms less than 12 months shall be 3% of the total deposit balances covered by mandatory reserve calculation;

–           VND deposits with a maturity of 12 months and over are 1% of the total deposit balances covered by mandatory reserve;

–           Deposits in foreign currencies of credit institutions abroad are 1% of the total deposit balances covered by mandatory reserve;

–           For deposits in foreign currency, the mandatory reserve for demand payments and maturities of less than 12 months shall be 8% of the total deposit balances covered by mandatory reserve;

–           Deposits in foreign currency subject to mandatory reserves with another maturity of 12 months or more shall correspond to 6% of the total deposit balances covered by mandatory reserves.

Therefore, as compared with the previous documents, Decision No.1158/QD-NHNN has adjusted to increase the mandatory reserves for credit institutions to ensure credit security, risk management better in the financial market.