The State Bank of Vietnam granted permission on Feb. 2 to five credit institutions to maintain compulsory reserves for Vietnamese dong deposits at below regulated levels for a five-month period beginning February 1.

The Mekong Development Commercial Bank, Mekong Delta Housing Bank, Agribank, LienViet Post Bank and the Central People's Credit Fund will be allowed to maintain compulsory reserves 20 percent below the levels required pursuant to Circular No 20/2010 TT-NHNN issued by the State Bank in September 2010.

The central bank said that it had eased the requirements for these institutions because they fulfilled a significant public policy role, lending heavily to agricultural producers and for rural development projects.

Under Circular No 20, each credit institution is required to ensure that at least 40 percent of its loans be made for agriculture and rural development in order to enjoy the lower compulsory reserves requirement.

The designated credit institutions are now be required to submit monthly reports on lending made for agriculture and rural development purposes, the State Bank said. It also ordered its provincial branches to set compulsory reserve levels for these credit institutions.

Currently, commercial banks and other credit institutions are required to maintain compulsory reserves of 3 percent against deposits with a maturity of under 12 months, and 1 percent against term deposits of 12 months or more./.