Banking institutions get liquidity lifeline

A new circular has effectively opened another capital valve into the economy by sustaining credit growth while still complying with prudential limits, but also underscored how heavily the financial system is leaning on the banking sector.

- By Ha Truc

On May 15, the State Bank of Vietnam (SBV) enacted Circular No.08/2026/TT-NHNN, amending regulations on prudential ratios and safety limits applicable to banks and foreign bank branches.

Under the new rules, commercial banks are now allowed to include an additional 20 per cent of term deposits from the Vietnam State Treasury (VST) in their total funding base for the calculation of the loan-to-deposit ratio (LDR).

Data from the SBV showed that, as of the end of March, VST deposits placed within the banking system stood at approximately $25.07 billion. State-owned commercial banks alone accounted for 99.6 per cent of total treasury deposits across credit institutions.

First-quarter financial statements from Vietcombank, BIDV, and VietinBank showed that the three state-owned lenders collectively held more than $22.52 billion in VST deposits, up nearly 39 per cent from the end of last year.

Extending the application of the 20 per cent Treasury deposit inclusion in LDR calculations could provide each of these banks with an additional funding buffer of around $1.48 billion, to support lending expansion.

However, this is not considered a fully stable source of funding. Following its review, the SBV noted that VST deposits are short-term funds with maturities of no more than three months and are inherently unstable, as they may be withdrawn before maturity to meet state budget disbursement needs or reallocated if banks fail to win subsequent treasury deposit tenders.