A clerk counts dong-denominated banknotes at a bank branch in Hanoi. Photo by The Investor/Trong Hieu.

Under Circular No. 25/2026/TT-NHNN issued on Monday, the central bank amended regulations governing prudential ratios for credit institutions, requiring banks and foreign bank branches to maintain a maximum short-term funding ratio for medium- and long-term loans of 40%.

The move marks a shift in the SBV's policy after years of gradually lowering the ratio to reduce maturity mismatch risks in the banking system. By increasing the cap, the regulator is expected to provide lenders with greater flexibility to extend longer-term credit.

The ratio is a key banking safety indicator measuring the extent to which short-term deposits are used to finance longer-term loans. A higher ratio can increase liquidity risks if funding matures well before the underlying loans are repaid.

However, with Vietnam's economy continuing to rely heavily on bank credit and demand for medium- and long-term financing remaining strong, particularly for manufacturing, infrastructure, industrial real estate and large-scale investment projects, the revised ceiling is expected to expand banks' lending capacity.

The circular also amends rules governing banks' liquidity ratios by revising the categories of deposits included in the calculation of payment capacity requirements.

Under the new rules, deposits from domestic and foreign organizations, including those placed by other credit institutions and foreign bank branches, will generally be included in the calculation, with exceptions for certain specialized deposits.

These include escrow accounts, dedicated capital deposits, demand deposits from the State Treasury and 80% of the State Treasury's term deposits, or another proportion determined by the SBV governor.

The central bank said the amendments are intended to update the prudential regulatory framework in line with market conditions and supervisory requirements.

The new circular also abolishes Circular 08/2020/TT-NHNN and Circular 08/2026/TT-NHNN from July 1, consolidating regulations governing prudential limits and safety ratios for credit institutions.

Analysts expect the relaxation of the funding ratio to support credit growth in the second half of 2026, as commercial banks remain the primary source of financing for Vietnam's economy while the domestic capital market, particularly the corporate bond segment, has yet to fully recover.

At the same time, the higher ceiling will require banks to strengthen liquidity risk management and closely monitor the maturity structure of their assets and liabilities to avoid funding mismatches during periods of market stress.

Economist Nguyen Tri Hieu said relaxing technical limits may support credit growth in the near term but would require banks to maintain robust asset-liability management and liquidity risk controls.

"If medium- and long-term financing continues to rely too heavily on the banking system, maturity mismatch risks will remain," he said.