Draft policy on rating microfinance institutions makes public for comments

Draft policy on rating microfinance institutions makes public for comments

The rating will include five criteria that is built based on the CAMEL model, including capital adequacy, asset quality, management, earnings and liquidity.

The rating aims to ensure the safe and healthy operation of each microfinance institution. Photo baochinhphu.vn

The State Bank of Vietnam (SBV) has put forward a draft circular for public comment on regulating the rating of microfinance institutions, a move aimed at strengthening oversight and ensuring the safe and healthy operation of each lender.

According to the SBV, the rating is intended to support the management, inspection and supervision of microfinance institutions’ operations.

Under the draft circular, the rating will cover five criteria based on the capital adequacy, asset quality, management, earnings and liquidity (CAMEL) model.

The system does not include the criterion of sensitivity to market risk because, under the provisions of the Law on Credit Institutions, microfinance operations rarely generate such risks. Specifically, microfinance institutions mainly receive deposits and lend in Vietnamese đồng, and are not permitted to engage in high-risk activities such as foreign exchange or securities trading.

Applying the shortened CAMEL model, excluding the sensitivity-to-market criterion, allows regulators to focus on the most significant risks for microfinance institutions, namely credit risk and operational risk.

The SBV said the five-criteria rating system aligns with international regulatory practices. In Việt Nam, the approach is consistent with the method used to rate credit institutions and foreign bank branches under Circular 21/2025/TT-NHNN, and the rating of People’s credit funds under Circular 42/2016/TT-NHNN. 

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