Vietnam to Remove Cap on State Treasury Deposits at Banks from 2027

Overview

The Ministry of Finance (MoF) has proposed amending regulations to remove the cap on State Treasury deposits at commercial banks, a move aimed at bolstering banking system liquidity. The change, expected to take effect from January 1, 2027, could affect major banks including BIDV (BID), HDBank (HDB), and LPBank (LPB).

Key Facts

• State Treasury deposits at commercial banks currently stand at approximately VND 740,000 billion, up over VND 250,000 billion from the start of 2026.
• The current cap, set by Decree 24/2016/NĐ-CP (amended by Decree 14/2025/NĐ-CP), limits deposits to 50% of temporarily idle state budget funds.
• The MoF has directed the State Treasury to maintain deposits near the maximum allowed limit.
• Total state budget funds injected into the market, including deposits and bond repurchases, amount to about VND 780,000 billion.
• The central budget has borrowed approximately VND 262,000 billion from idle state funds in 2026, with plans to borrow an additional VND 220,000-280,000 billion by year-end.
• The MoF is reviewing Decree 24/2016/NĐ-CP to remove the specific cap, giving itself discretion in managing deposits.
• The new decree is expected to take effect from January 1, 2027.

What Happened

The Ministry of Finance has sent a document to the State Bank of Vietnam regarding the coordination of State Treasury deposits at commercial banks. This follows Government Resolution 168/NQ-CP dated June 27, 2026, which outlines growth scenarios and solutions for achieving 2026 growth targets of 10% or more while maintaining macroeconomic stability.

The MoF has prioritized using temporarily idle state budget funds for central budget borrowing, reducing reliance on government bond issuance. From the start of 2026, the central budget has borrowed about VND 262,000 billion from these funds, with additional borrowing planned. The remaining idle funds are used for bond buybacks and term deposits at commercial banks to improve fund management efficiency and support short-term capital for the economy.

Currently, the cap on such deposits is 50% of temporarily idle state funds, as per Decree 24/2016/NĐ-CP. The MoF has instructed the State Treasury to maintain deposits near this limit. As of now, deposits stand at about VND 740,000 billion, with bond repurchases at VND 40,000 billion, totaling VND 780,000 billion supplied to the market.

The MoF is now reviewing the decree to remove the specific cap, instead allowing the MoF to manage deposits flexibly. The new decree is expected to take effect from January 1, 2027.

Market Context

This policy change comes amid a period of strong credit growth and liquidity management challenges for Vietnamese banks. BIDV (BID) closed at VND 38,000 on August 4, 2026, on the HOSE. HDBank (HDB) traded at VND 26,700, and LPBank (LPB) at VND 53,800, both on HOSE. The banking sector has been under pressure to maintain liquidity while supporting economic growth targets. The removal of the cap could provide a significant source of stable, low-cost deposits for banks, potentially easing funding pressures and supporting lending growth.

Strategic Significance

For long-term investors, this regulatory change signals a more flexible approach to state fund management, which could enhance the liquidity profile of commercial banks. Banks with strong relationships with the State Treasury, such as BIDV, may benefit from increased deposit inflows, improving their funding stability and reducing reliance on more expensive market funding. This aligns with the government’s broader goal of supporting economic growth while maintaining financial stability. The move also reflects a trend toward more active management of state budget funds, which could have implications for interbank rates and bond markets.

What to Watch

• Final text of the amended decree, expected to be issued before January 1, 2027.
• Quarterly updates on State Treasury deposit balances at commercial banks.
• Changes in interbank interest rates and liquidity conditions in the banking system.
• Any adjustments to the State Treasury’s deposit allocation strategy among banks.
• Impact on bank net interest margins and funding costs in upcoming earnings reports.