Central Bank Keeps Closer Tabs on Joint Stock Capital Increases

Joint stock commercial banks and joint venture banks must increase their registered capital to at least VND1 trillion by the end of 2007 and VND3 trillion by 2010. (Photo:TK)

The State Bank of Viet Nam recently decided to strengthen its management of capital increases by joint stock commercial banks in a bid to reduce risk in the banking sector.

Deputy Governor of the State Bank of Viet Nam (SBV) Dang Thanh Binh announced yesterday that directors of SBV branches in cities and provinces must get the central bank's permission before they approve plans by any rural or urban joint stock bank to raise its capital beyond VND500 billion.

Besides, the directors of the SBV's city and provincial branches must get permission to give any commercial joint stock bank the green light to raise its capital above VND1 trillion.

The SBV's decision aims to prevent joint stock commercial banks engaging in massive capital raising without first considering the demand for and efficient use of the extra funds, as well as their management capacity, and thereby stay out of trouble.

As reported by Sai Gon Giai Phong newspaper, the Government previously issued a policy on scaling up banks’ capital to end their disadvantage in terms of financial capacity.

Under the new decision, joint stock commercial banks and joint venture banks must increase their registered capital to at least VND1 trillion by the end of 2007 and VND3 trillion by 2010.

By H.Y – Translated by Trong Khuong

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