New regulations from the State Bank of Vietnam that limit the short-term capital (i.e. the money in everyday accounts) to 30 percent of the cash used for medium and long-term loans down from 34 percent, has come into effect, Vietnam News is reporting.
Note: Vietnam’s banking sector is still developing and very much relies on the traditional system of using savings deposits to lend to borrowers. Reducing this limit will therefore remove a sizable amount of cash from the lending pool for medium and long-term loans. The HCM City Real Estate Association (HOREA), per the above article, has requested a delay in the policy’s implementation arguing this will have a negative impact on a real estate sector already struggling to access capital, however, this seems unlikely–there is plenty of money at banks, so much, in fact, that the SBV has been buying it back through t-bills.