Circular 14/2025/TT-NHNN, recently issued by the State Bank of Vietnam (SBV), marks a significant step toward Basel III standards. It offers banks more autonomy but also demands tighter supervision to prevent credit bubbles that triggered financial instability in the past. Credit needs a stronger framework For years, bank credit has been the main source of capital for Vietnam’s economy, with the credit-to-GDP ratio now exceeding 130%—among the highest in the region. This not only highlights the central role of credit but also signals heavy dependence on bank financing. However, the resilience of Vietnam’s banking system still lags behind its regional peers. The average capital adequacy ratio (CAR) of Vietnamese banks stands at around 12.3%, above the minimum 8% threshold but still lower than the ASEAN-5 average and the broader Asia-Pacific benchmark of 13.1%. In line with the Politburo’s Resolution 57/NQ-TW on reforming the law-making process to align with market mechanisms, the Government has tasked the SBV with phasing out administrative credit growth quotas (credit room) and shifting to a regulatory framework based on each bank’s risk management capacity and capital adequacy. To support this transition, the SBV has rolled out a series of capital standard upgrades: – Circular 13/2010/TT-NHNN to […]