APFL & Partners > News > THE WEEK IN BRIEF: 9 OCT 2020

The Week in Brief: 9 October 2020

Welcome to The Week in Brief: A regular legal digest from Audier & Partners.

In this newsletter, our team will highlight major regulatory developments taking place in Vietnam and provide a bite-sized overview of their impact on our clients doing business and investing here.

Our third edition features three changes to Vietnam’s financial regulations including updated financial safety ratios for banks and foreign bank branches, a reduction of management interest rates, and new rules on stock market transactions.

To learn more about one of these changes – and what it means for companies in Vietnam – contact our office for more information.

New Limits and Safety Ratios for Bank Lending

New limitations and safety ratios for banks and foreign bank branches came into force this month. Circular No. 08/2020/TT-NHNN, dated 14 August, set prudent limits and ratios for short-term capital resources used to provide medium- and long-term loans. From 1 October, banks and foreign bank branches will now have to meet the following new terms:

  • From 1 January 2020 to 30 September 2021 the ratio will be 40%;
  • From 1 October 2021 to 30 September 2022 the ratio will be 37%;
  • From 1 October 2022 to 30 September 2023 the ratio will be 34%, and;
  • From 1 October 2023 onwards the ratio will be 30%.

Circular 08 amends and supplements a number of articles of Circular No. 22/2019/TT-NHNN dated 15 November 2019 of the State Bank of Vietnam regulating the limitations and safety ratios in the operation of banks and foreign bank branches.

Management Interest Rates Reduced

On 30 September, the State Bank of Vietnam issued three decisions to reduce management interest rates. Effective from 1 October, each decision mandates new, lower interest rates and outlines the circumstances in which these can be charged.

The first, Decision No. 1728/QD-NHNN, introduces the following three reductions:

  • The interest rate of refinancing has fallen from 4.5% to 4.0% per annum
  • The interest rate of rediscount has been cut from 3.0% to 2.5% per annum
  • The reverse purchase or “repo” interest rate has been reduced from 5.5% to 5.0% per annum

The second, Decision 1729/QD-NHNN, reduces the cap on interest rates for term deposits of one to six months from 4.25% to 4.0% per annum. Furthermore, the top interest rate which People’s Credit Funds and micro-finance institutions can charge on term-deposits of one to six months has also fallen from 4.75% to 4.5% per annum.

The third, Decision No. 1730/QD-NHNN, covers maximum VND short-term lending interest rates. For credit institutions and foreign bank branches, this has been reduced from 5% to 4.5% per annum. While the maximum VND short-term lending interest rate People’s Credit Funds and micro-finance institutions can charge has been cut from 6% to 5.5% per annum.

Decisions 1728, 1729 and 1730 continue a trend of falling interest rates throughout 2020, as Vietnam seeks to stimulate demand and support business during the difficult financial climate of COVID-19.

New Rules on Stock Market Transactions

This month also sees the implementation of new regulations on electronic stock market transactions, after the Ministry of Finance’s Circular No. 73/2020/TT-BTC came into effect.

From 1 October, investors who place an order over the phone must do so from the same number and must now provide additional verification over and above the transaction account number as before. Telephone transactions will not be successful unless the information provided matches that registered in the electronic stock trading platform.

Circular 73 also stipulates that an investor’s information must be verified each time a trade is made, and adds a new definition of “trading time”. This is now defined as the time when investors log into the online securities trading platform to complete online securities trading orders.

Circular 73 amends and supplements a number of articles of Circular No. 134/2020/TT-BTC dated December 2017.

For further details on these changes, or to learn more about doing business in Vietnam, contact our office on

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