MONTHLY LEGAL UPDATE – 09/2018: LEGAL UPDATE RELATING TO FINANCE AND CREDIT
1. LEGAL DOCUMENTS ARE EFFECTIVE FROM 01/09/2018
1.1. Circular No. 37/2016/TT-NHNN management, operation and use of the national interbank electronic payment system
v Name of legal document: Circular No. 37/2016/TT-NHNN issued on 30/12/2016 by the State Bank of Vietnam management, operation and use of the national interbank electronic payment system (hereinafter referred to as the “Circular No. 37/2016/TT-NHNN”).
v Effective date: 01/09/2018.
Some contents should be noted:
·
Firstly, stipulating general
provisions on the National interbank electronic payment system (hereinafter
referred to as “NIEPS”), include the following contents: Primary modules and
functions of the NIEPS; Interbank electronic payment records; Debt payment in
the NIEPS;…
Specifically,
-
Article 3 of Circular No. 37/2016/TT-NHNN stipulates:
“Primary modules and functions of the
NIEPS
1. NIEPS is an integrated system that consists of: NPSC, BNPSC,
software installed in participants and affiliated participants.
2. Processing modules include: high-value payment module, foreign
currency payment module, low-value payment module, checking account processing
module.
3. The high-value payment module is meant to process real-time gross
settlement for payment orders in VND using high-value payment services.
4. The foreign currency payment module is meant to process real-time
gross settlement for payment orders in foreign currencies using foreign
currency payment services.
5. The low-value payment module is meant to process low-value payment
orders using low-value payment services.
6. The checking account processing module is meant to inspect and
process high-value payment orders, foreign currency payment orders, processing
results of clearing and net settlement from other systems.”
-
Article 4 of Circular No. 37/2016/TT-NHNN stipulates:
“Interbank electronic payment records
1. Interbank electronic payment records may be physical or electronic
documents prescribed by applicable regulations of law on accounting records.
2. The basis for creation of payment orders is the interbank electronic
payment records.
3. Payment orders shall be created electronically according to the
template and data standards decided by the Governor of the State bank.”
-
Article 5 of Circular No. 37/2016/TT-NHNN stipulates:
“Debt payment in the NIEPS
1. A prior
authorization contract is required for debt payment among participants other
than units of the State bank.
2. A prior
authorization contract is required for debt payment among participants other
than units of the State bank.
3. Prior
authorization contract or a payment agreement
A debt between
participants must have the following elements:
- Intraday limit
on debt payment between the participants;
- Intraday limit
on an unverified debt payment order;
- Effective period
of the contract or agreement.”
-
Other contents related to general regulations on
NIEPS stipulated in Article 1, Article 2, Article 6, Article 7 of Circular No.
37/2016/TT-NHNN.
·
Secondly, stipulating management and
operation of NIEPS, includes the
following contents: Inspection of the NIEPS; Logging and storage of transaction
data; Issuance, management and use of electronic signatures on the NIEPS;…
Specifically,
-
Article 8 of Circular No. 37/2016/TT-NHNN
stipulates: “Inspection of the NIEPS
1. The NIEPS
operator shall inspect the NIEPS everyday in terms of balance, threshold and
payment data.
2. Information
Technology Administration shall inspect the software, equipment and
communications network of the NIEPS at the NPSC and BNPSC.
3. The NIEPS
operator, participants and affiliated participants shall regularly carry out
inspection and supervision to receive and process payment orders during the
working time of the NIEPS; ensure continuous and safe operation of the NIEPS.”
-
Article 11 of Circular No. 37/2016/TT-NHNN
stipulates: “Logging and storage of
transaction data
1. The processing
of transactions shall be automatically recorded by the NIEPS in the form of
electronic data.
2. Electronic data
shall be copied to storage devices (magnetic tapes, hard drives) on a daily
basis for archiving. Electronic data to be archived include:
a) Electronic data
about transaction requests and electronic messages containing results of each
participant and affiliated participant;
b) Electronic data
about electronic messages, settlement transactions, data comparison and
processing results of the NPSC.
3. Electronic data
and documents shall be managed in accordance with regulations of law on
archiving. The log shall be produced at the request of competent authorities to
serve inspection, control or dispute settlement in a manner that is conformable
with regulations of law on confidentiality of clients’ information.”
-
Article 12 of Circular No. 37/2016/TT-NHNN stipulates:
“Issuance, management and use of
electronic signatures on the NIEPS
1. Four types of
digital signatures:
a) The creator’s
digital signature;
b) The
controller’s digital signature;
c) The approver’s
digital signature;
d) The
communicator’s digital signature.
2. Issuance and
use of digital signatures:
a) Instruments for
creation of creators’ and controllers’ digital signatures shall be issued and
managed by participants and affiliated participants following their own
procedures;
b) Private keys
for creation of approvers’ and communicators’ digital signatures shall be
issued by the State bank in accordance with regulations of the State bank on
management and use of digital signatures, digital documents and authentication
of digital signatures. The person given a digital signature or private key is
responsible for its confidentiality and shall bear legal responsibility if its
revelation causes damage.
c) The appointment
of creators, controllers and approvers of participants and affiliated
participants shall be decided by their competent persons as long as creators
are independent from controllers and approvers.”
-
Other contents related to general regulations on
NIEPS stipulated in Article 9, Article 10, Article 13, Article 14, Article 15
of Circular No. 37/2016/TT-NHNN.
·
Thirdly, stipulating payment orders
in the NIEPS, including
the following contents: Creation of a payment order; Inspection of validity of
a payment order; Settlement of payment orders at the participants and
affiliated; Settlement and processing of payment orders at the transaction
center.
Specifically,
-
Article 16 of Circular No. 37/2016/TT-NHNN
stipulates:
Creation of a payment order
1. Regarding a payment order created from physical records:
a) The creator shall follow these steps:
- Inspect the validity and legitimacy of the client’s transaction
documents;
- Determine the type of payment order;
- Compare and check the client’s account balance;
- Enter the following information: the order-creating unit (name, bank
code), amount, name, address, account number (if any), ID/passport number or
enterprise ID number of the order giver), the unit serving the order giver, the
order-receiving unit (name, bank code), name, address, account number (if any),
ID/passport number and issuance date of the order recipient, the unit serving
the order recipient, payment description and other information relevant to the
interbank transaction, payment to state budget, sale of Government bonds and
other types of transactions (if any) using Form TTLNH-04;
- Double check the entered data and add the digital signature to the
payment order;
- Sign the records; transfer the records and entered data to the
controller;
b) The controller shall:
- Verify data about: the order-receiving unit, the unit serving the order
giver, the unit serving the order recipient, the amount and payment
description.
- Return the order to the creator if any error is found;
- Add the digital signature to the payment order; sign the records and
transfer them to the approval if all data are correct;
c) The approver shall:
- Check the consistency between data on original records and electronic
data;
- Return the order to the creator or controller if any error is found;
- Add the digital signature to the payment order; sign the records.
2. Regarding a payment order created from electronic records:
In the cases where a payment order is created from electronic records
in a participant’s or affiliated participant’s system, the structure and format
defined by the State bank must be complied with and the following requirements
must be satisfied:
a) If the electronic record is valid but
information therein is insufficient according to Clause 1a of this Article, the
creator shall provide additional information; the controller and approver shall
carry out verification similarly to physical records to ensure the accuracy,
and add their digital signatures to the payment order;
b) If the electronic record is valid and
information therein is sufficient, the digital signatures may be added manually
or automatically to each payment order;
c) If the input electronic records are valid
and contain sufficient information and satisfy security and accuracy
requirements, the competent person of the unit will decide whether the approver
is the only person that needs to add his/her signature to the payment order and
will take responsibility for such decision, or follow the instructions in
Clause 2a of this Article.
3. After the payment order is sent and the
status is successful, it can be printed out.
4. A payment order will be processed by the
NIEPS using the participant’s checking account with the same currency as that
on the payment order opened at the State bank’s transaction center.”
-
Other contents related to general regulations on
payment orders in the NIEPS stipulated in Article 17, Article 18, Article 19 of
Circular No. 37/2016/TT-NHNN.
· Fourthly, stipulating other contents, such as: clearing settlement among participants and net settlement from other systems (Chapter IV of Circular No. 37/2016/TT-NHNN); settlement of funds insufficiency in interbank electronic payment (Chapter V of Circular No. 37/2016/TT-NHNN); correction of errors (Chapter VI of Circular No. 37/2016/TT-NHNN); reports and processing thereof (Chapter VII of Circular No. 37/2016/TT-NHNN),…
· Fifthly, promulgating forms of official dispatch on registration of participation in NIEPS (Form No. TTLNH-01), official dispatch on withdrawing from NIEPS (Form No. TTLNH-02), official dispatch on registration of member units and indirect members participating in NIEPS (Form No. TTLNH-03) and forms of other documents related to the operation, management and using NIEPS.
v Name of legal document: Decision No. 31/2018/QĐ-TTg issued on 03/8/2018 by the Government Prime Minister annulling some legal documents in the field of national defense; finance; banking (hereinafter referred to as the “Decision No. 31/2018/QĐ-TTg”).
v Effective date: 20/09/2018.
The content should be noted: annulling Decision No. 230/2005/QĐ-TTg issued on 21/9/2005 by the Government Prime Minister on piloting the equitization of the Bank for Foreign Trade of Vietnam.
Specifically, Clause 3, Article 1 of Decision No. 31/2018/QĐ-TTg stipulates: “To annul some legal documents in the field of national defense; finance; banking
3. Decision No. 230/2005/QĐ-TTg issued on 21/9/2005 by the Government Prime Minister on piloting the equitization of the Bank for Foreign Trade of Vietnam.”
2. Legal documents issued in July and August 2018v Name of legal document: Circular No. 16/2018/TT-NHNN issued on 31/7/2018 by the State Bank of Vietnam amending and supplementing certain articles of the Circular No. 36/2014/TT-NHNN dated 20/11/2014 of the Governor of the State Bank of Vietnam providing for prudential ratios and limits for operations of credit institutions and foreign bank branches.(Circular No. 16/2018/TT-NHNN issued on 31/7/2018 by the State Bank of Vietnam amending and supplementing certain articles of the Circular No. 36/2014/TT-NHNN dated 20/11/2014 of the Governor of the State Bank of Vietnam providing for prudential ratios and limits for operations of credit institutions and foreign bank branches hereinafter referred to as the “Circular No. 16/2018/TT-NHNN”Circular No. 36/2014/TT-NHNN dated 20/11/2014 of the Governor of the State Bank of Vietnam providing for prudential ratios and limits for operations of credit institutions and foreign bank branches hereinafter referred to as the “Circular No. 36/2014/TT-NHNN”)v Effective date: 31/7/2018.Some contents should be noted:
·
Firstly, adding words that defined
in Article 3 of Circular No. 36/2014/TT-NHNN.
Specifically, Clause 1, Article 1
of Circular No. 16/2018/TT-NHNN stipulates: “Amending and supplementing certain articles of the Circular
No. 36/2014/TT-NHNN by:
1. Adding the following Clause 25 to Article 3:
“25. Exchange rate used to calculate prudential ratios and limits
prescribed herein are as follows:
a) Exchange rate between a foreign currency and VND:
(i) On working days other than the last working day of a month/
quarter/ year, the exchange rate shall be the one regulated by the State Bank
for use in the chart of accounts of credit institutions;
(ii) On the last working day of a month/ quarter/ year, the exchange
rate shall be the one regulated by the State Bank for converting the monthly/
quarterly/ annual balance sheet prepared in a foreign currency into the one in
VND if a credit institution/ foreign bank branch uses VND as its accounting
currency, or the one for converting financial statements prepared in a foreign
currency into VND if a credit institution/ foreign bank branch uses a foreign
currency as its accounting currency in the chart of accounts of credit
institutions and financial reporting policies applicable to credit
institutions;
b) The exchange rate between a foreign currency and USD shall be
decided by credit institutions/ foreign bank branches.””
·
Secondly, amending and supplementing
the formula for determining the liquidity reserve ratio prescribed at Point b,
Point c, Clause 2, Article 15 of Circular No. 36/2014/TT-NHNN.
Specifically, Clause 2, Article 1
of Circular No. 16/2018/TT-NHNN stipulates: “2.
Amending and supplementing Point b and Point c Clause 2 Article 15 as follows:
“b) The calculation of liquid reserve ratio is based on the following
formula:
|
Liquid reserve ratio
(%) |
= |
Assets of high
liquidity |
x |
100 |
|
Total Liability |
Where:
- Highly liquid assets are determined according to the Appendix 3
hereof;
- Total liability denotes total liability entry on a balance sheet
minus:
+ Refinanced loans made by the State Bank through discount on valuable
papers, loans pledged by valuable papers (minus the refinanced loans made by
the State Bank based on bonds issued by Vietnam Asset Management Company);
overnight loans made through the interbank electronic payment system; forward
sale of valuable papers through open market operations of the State Bank;
forward sale of valuable papers through open market operations of the State
Bank.
+ Credit extensions of other credit institutions and foreign bank
branches through forward sale, discount, re-discount and pledged loans:
(i) valuable papers used in the State Bank's transactions; (ii) bonds or
treasury bills issued by or issued under the guarantee by the Governments or
Central Banks of countries rated at least “AA” by an international credit
rating agency (Standard & Poor’s, or Fitch Rating) or other corresponding
rank of other independent credit rating organizations.
c) Highly liquid assets and total liability are calculated in VND,
including VND and other freely convertible foreign currencies converted into
VND according to the exchange rate prescribed in Point a Clause 25 Article 3 hereof.””
·
Thirdly, amending and supplementing
the provisions on subjects which are calculated and maintained the solvency
ratio by the credit institution, foreign bank branch.
Specifically, Clause 3, Article 1
of Circular No. 16/2018/TT-NHNN stipulates: “3.
Amending and supplementing Point a Clause 3 Article 15 as follows:
“a) Credit institutions/ foreign bank branches must calculate and
maintain the solvency ratio within 30 days regarding VND[1]
and the solvency ratio within 30 days regarding foreign currencies (including
USD and other foreign currencies converted into USD according to the exchange
rate prescribed in Point b Clause 25 Article 3 hereof);””
·
Fourthly, amending and supplementing
other contents, such as: the maximum ratio of short-term fund used for granting
medium and long-term loans stipulated in Article 17 of Circular
No. 36/2014/TT-NHNN (Clause 4, Article 1 of Circular No. 16/2018/TT-NHNN);
the content relating to the formula for determining the maximum loan-to-deposit
ratios stipulated in Clause 1, Article 21 of Circular No. 36/2014/TT-NHNN
(Clause 5, Article 1 of Circular No. 16/2018/TT-NHNN).
·
Fifthly, abolishing a number of
provisions on amendments and/or supplements to the contents relating to formula
for determining the liquidity reserve ratio; subjects which are calculated and
maintained the solvency ratio by the credit institution, foreign bank branch; the
maximum ratio of short-term fund used for granting medium and long-term loans; the
content relating to the formula for determining the maximum loan-to-deposit
ratios. They are specified respectively in Clause 15, Clause 16, Clause 17 and Clause
22, Article 1 of Circular No. 19/2017/TT-NHNN issued on 28/12/2017 by the State
Bank of Vietnam amending and supplementing a number of articles of Circular No. 36/2014/TT-NHNN.
Specifically, Clause 2, Article 3 of Circular No.
16/2018/TT-NHNN stipulates: “2. Clause
15, Clause 16, Clause 17 and Clause 22 Article 1 of the Circular No. 19/2017/TT-NHNN
dated December 28, 2017 by the State Bank's Governor are abrogated.”
v Name of legal document: Directive No. 04/CT-NHNN issued on 02/8/2018 by the State Bank of Vietnam continuing to effectively implement the key tasks and solutions of the banking sector in the last 6 months of 2018 (hereinafter referred to as the “Directive No. 04/CT-NHNN”).v Effective date: 02/8/2018.Some contents should be noted: Setting out the solutions and tasks that credit institutions should implement in the last 6 months of 2018.Specifically, Point c, Clause 2, Section I of Directive No. 04/CT-NHNN has the following contents: “c) Credit institutions:
- Controlling the credit growth rate according to the credit growth
target of 2018, which has been announced, ensuring the focus on the production
and business domains, priority fields under the Government's undertakings; taking
the initiative in analyzing and evaluating the situation so as to control the
quality, ensure the safety of lending activities, handle old bad debts and
control newly arising bad debts. Strictly controlling the growth rate and
quality of credit for potentially risky areas such as credit for investment,
real estate, securities and credit sectors for clients/large client groups,
credit for BOT, BT transport projects... Strictly controlling of consumer
credit, especially consumer credit related to real estate; strictly abiding by
the provisions of law on loans for life and consumer credit and the provisions
on the use of non-cash payment instruments for disbursement. Strictly controlling
of the purpose of using loans.
- Organizing drastically and efficiently implementing contents and
solutions in the restructuring plan in association with the handling of bad
debts up to 2020, which have been approved and ensured according to the timetable.
Organizing the comprehensive application of measures prescribed in Resolution
No. 42/2017/QH14 to speed up the handling of bad debts and security assets of
bad debts, ensuring the fulfillment of the objectives of handling bad debts
according to the approved plans; reviewing the classification of debts,
ensuring that loan quality is accurately reflected and mandatory loan loss
provision is implemented according to law.
- Seriously and drastically implementing Directive No. 07/CT-NHNN dated
11/10/2017 on enhancing the prevention, control and prevention of law
violations in the monetary and banking sector, contributing to stabilizing the
currency, banking, focuses on ensuring safety in deposit transactions, payment
activities, consumer credit activities, and serving the living needs of credit
institutions. Tightening discipline and sense of law observance in the system
so as to ensure that officials and employees comply with regulations and
internal procedures, provisions of law, minimize moral hazard and strictly
dealing with violations in banking activities.
- Closely coordinating with the SBV's units to timely handle and well
implement the communication on monetary and banking activities, ensuring the
stability of the system and raising the public's confidence in the banking
system. Promoting propaganda, warnings and instructions to clients know the
procedures and procedures of transactions, types of risks, tricks fraud in
electronic payment, card payment.”
v Name of legal document: Decision No. 986/2018/QĐ-TTg issued on 08/8/2018 by the Government Prime Minister approving the development strategy of Vietnam's banking sector up to 2025 with orientation to 2030 (hereinafter referred to as the “Decision No. 986/2018/QĐ-TTg”).v Effective date: 08/8/2018.Some contents should be noted:
·
Firstly, setting specific targets
for the development of Vietnam's banking sector by 2025, with orientation to
2030.
Specifically, Point b, Clause 2, Section I, Article 1 of
Decision No. 986/2018/QĐ-TTg stipulates: “Specific
targets
- Increasing the
independence, taking initiative and accountability of the State Bank for the
purpose of administering monetary policy and controlling inflation at a
compatible level with the socio-economic development orientations in each
period, supporting macroeconomic stability, promoting the goal of sustainable
economic growth.
Decreasing the
ratio of credit in foreign currency/total credit, making efforts to the ratio
of foreign currency deposits/total of payment method achieved below 7,5% in
2020 and 5% in 2030; progressing to interrupt for foreign currency loans to by
the end of 2030, overcoming basically the dollarization situation in the
economy.
- Strengthening the institutional capacity, effectiveness and
efficiency of banking inspection and supervision by the State Bank; expanding
the scope of inspection and supervision to financial corporations in the form
of parent-child companies, of which the parent company is a credit institution;
by the end of 2025, banking inspection and supervision will abide by most of
the principles of effective banking supervision in Basel.
- Promoting the development of non-cash payment, ATM and POS network
optimization. by the end of 2020, the ratio of cash on total of payment method
will be under 10%; by the end of 2025, the ratio will be under 8%.
- Increasing the number of enterprises and people accessing to
financial and banking services provided by credit institutions. Focusing on
developing appropriate types of services for population groups which access
little or none to traditional banking services in rural, remote or
socio-economic difficulty-hit areas.
- Developing the system of credit institutions suitable to
socio-economic conditions and the actual state of the system in each period:
2018 – 2020:
+ Continue to restructuring the system of credit institutions with the
focus on basically dealing with bad debts and weak credit institutions in
appropriate forms according to the market mechanism on the principle of prudence,
ensuring the interests of depositors and maintaining the stability and safety
of the system; reducing the number of weak credit institutions so that there is
a number of appropriate and credit institutions and they operate in a healthy
manner;
+ Continue to improve the financial situation, raising the managerial
capacity of credit institutions in accordance with law and in accordance with
international practice; step by step handling and eliminating the situation of
cross-investment, cross-ownership and ownership of manipulation and dominance
in related credit institutions; Promote divestment outside the sector of
commercial banks.
+ Striving by the end of 2020:
Commercial banks have their equity capital accordance with Basel II, of
which there are at least from 12 to 15 commercial banks successfully applying
standard method of Basel II; There are at least from 1 to 2 commercial banks in
the top 100 largest banks (basing on total assets) in Asia;
Raising income of non-credit services in total commercial banks' income
about 12-13%; completing the listing of shares of joint stock commercial banks
on Vietnam's stock market; raising the legal capital for people's credit funds;
Decreasing bad debt ratio in the credit institutions, bad debt sold by
VAMC and debts that have implemented debt classification measures under 3% (not
including weak commercial banks which have handling plan approved by the
Government).
2021 – 2025:
+ Further enhancing competitiveness, increasing transparency and adhere
to good international standards and practicing in the management and operation
of credit institutions;
+ Striving by the end of 2020:
There are at least from 2 to 3 commercial banks in the top 100 largest
banks (basing on total assets) in Asia and from 3 to 5 listed banks in foreign stock
markets;
All commercial banks apply Basel II in accordance with the standard
method, implementing pilot application of Basel II under the advanced method at
State-owned commercial banks holding dominant shares and good quality joint
stock commercial banks which have successfully implemented Basel II under the
standard method;
Increasing the proportion of income from non-credit services in total
income of commercial banks about 16-17%;
Bad debt of the entire system of credit institutions is less than 3%.
- Increasing the efficiency of allocating credit capital for
socio-economic development; accelerating the development of "green
credit", "green bank" to contribute to the transformation of the
economy into green growth, low carbon emissions, adaptation to climate change;
increasing the proportion of bank credit capital invested in renewable energy,
clean energy, low carbon production and consumption. Integrating sustainable
development, climate change and green growth in credit programs and projects.
- Step by step raising the position of Vietnam in international banking
forums and organizations, serving for the development of the banking sector, in
line with the requirements of international integration.”
·
Secondly, setting out the tasks and
solutions to develop the Vietnamese banking sector by 2025, with orientation to
2030, including legal solutions.
Specifically, Clause 1, Section II, Article 1 of
Decision No. 986/2018/QĐ-TTg stipulates: “1.
Completing the legal framework on monetary and banking policies on the basis of
fully observing the laws of the market economy in line with international
practices and meeting the requirements of integration.
- Reviewing and
finalizing the Law on the State Bank of Vietnam and related regulations on the
tasks and powers of the State Bank, ensuring that the State Bank has
strengthened its independence and initiative in administration currency policy,
while ensuring its role as a government agency; consolidating and enhancing the
banking sector's capability, ensuring that after 2020, the banking market shall
operate on the market principle basically;
- Reviewing and
evaluating the impact and effectiveness, then amending, supplementing and
promulgating regulations related to monetary stability in the direction:
ensuring the implementation of monetary policy in accordance with the
objectives of controlling inflation, effectively coordinating between monetary
policy and fiscal policy and other policies. Operating interest rates in line
with macroeconomic developments, inflation and monetary market. Operating the
exchange rate in a flexible manner, in line with market developments, monetary
balances of macroeconomic, monetary and monetary policy objectives;
- Setting up the
system of standard index to assess the stability and safety of the monetary
market;
- Summarizing and
evaluating the implementation of the Ordinance on Foreign Exchange 2005 and the
Ordinance on Amendment of the Ordinance on Foreign Exchange in 2013; basing on
this, continue to complete the legal framework on foreign exchange management
for capital transactions, current transactions and other economic relations
related to foreign exchange.
- Completing the
legal framework defining the responsibilities of the State Bank in inspecting
and supervising financial corporations in the form of a parent – child company
in which the parent company is a credit institution; coordinating with relevant
agencies in advising the Government on the establishment of a legal framework
for financial corporations;
- Identifying the focal
role of the State Bank in promoting financial stability; Legalize the function
of financial stability of the State Bank and step by step completing the legal
framework for macro-security supervision of the financial system;
- Studying the
model for supervising the integration of the financial system in conformity
with international practices and Viet Nam's realities and then report it to the
Prime Minister;
- Reviewing,
supplementing and finalizing regulations on assurance of banking operations
safety, licensing, inspecting, supervising and post-inspecting supervising in
line with international practices and Viet Nam's realities; increasing
accountability and transparency in the governance and operation of credit
institutions, in line with the requirements of the restructuring of credit
institutions in each period;
- Issuing a
roadmap for guiding and implementing Basel II; formulating criterions,
classifying and ranking credit institutions, clearly identifying healthy credit
institutions, weak credit institutions and credit institutions being important
in the system; and reviewing and improving the appropriate management and
monitoring mechanisms for each type;
- Formulating a
mechanism for assisting credit institutions designated to receive and manage weak
credit institutions and credit institutions in restructuring; setting up a
system of early warning of risks, mechanisms for handling system crises and
dealing with credit institutions with high risks, ensuring the State Bank's
right to intervene in order to protect the system's safety and deposit of
people's safety; amending and supplementing the provisions on intensifying the
handling of cross-ownership, preventing the abuse of management and operation
rights and the right to major shareholders to manipulate activities of credit
institutions; completing the legal framework on merger, consolidation and
bankruptcy of credit institutions;
- Studying,
amending and finalizing regulations on foreign investor purchasing shares of
Vietnamese credit institutions in the direction of increasing the foreign
investors' ownership ratio for each type of credit institution. They are in
line with the signed international commitments in order to increase the
mobilization of resources in terms of capital, technology and administration of
foreign investors; and encouraging the participation of foreign investors in
the handling of weak credit institutions;
- Amending and
supplementing a number of articles of the Law on prevention of money
laundering;
- Studying to
formulate and promulgate the Law on Payment Systems in order to enhance the
management and supervision for the payment system in the ensuring safety
economy, compatibility with Vietnam's reality based on national standards and
international practices and improve the state management role in the payment
sector of the State Bank;
- Completing
institutions and policies, creating favorable conditions for credit
institutions to fully supplying and diversifying financial products and
services, especially non-credit banking products and the products of modern
services based on the application of digital technology, meeting the growing
demand of the economy;
- Reviewing,
amending, supplementing and promulgating legal documents on electronic money.”
·
Thirdly, promulgated together with
Decision No. 986/2018/QĐ-TTg is the list of programs, projects and strategies
of sections not falling under the approving competence of the Governor of the
State Bank of Vietnam (Appendix of programs, projects and strategies of
sections not falling under the Governor's approving competence (Attached to
Decision No. 986/QĐ-TTg issued on 08/8/2018 by Prime Minister)).
v Name of legal document: Circular No. 17/2018/TT-NHNN issued on 14/8/2018 by the State Bank of Vietnam amending and supplementing a number of articles of circulars prescribing licensing, business network and foreign exchange operations of credit institutions and foreign bank branches (hereinafter referred to as the “Circular No. 17/2018/TT-NHNN”).v Effective date: 01/10/2018.Some contents should be noted:
·
Firstly, amending, supplementing and
abolishing a number of provisions relating to the conditions for founding
shareholders in the grant of establishment and operation licenses of
joint-stock commercial banks specified at Points a, b, d, e , e, g (ii) Clause
2, Article 9 and Clause 3, Article 10 of Decision No. 40/2011/TT-NHNN issued on 15/12/2011
by the Governor of the State Bank of Vietnam providing for the issuance of
license and the organization, operation of commercial banks, foreign bank's
branches, representative offices of foreign credit institutions, other foreign
organizations having banking activities in Vietnam.
Specifically, Article 1 of
Circular No. 17/2018/TT-NHNN stipulates: “Amending,
supplementing and repealing certain Articles of the Circular No. 40/2011/TT-NHNN dated
December 15, 2011 of the State Bank’s Governor prescribing licensing,
organization and operation of commercial banks, foreign bank branches and
representative offices of foreign credit institutions and other foreign
organizations involved in banking operations in Vietnam.
1. Point dd clause 2 Article 9 shall be amended and supplemented as
follows:
“dd) All founding shareholders shall be required to own at least 50% of
the charter capital when establishing a joint-stock commercial bank, and all of
those who are legal persons shall own at least 50% of total shares of founding
shareholders;".
2. Point e clause 2 Article 9 shall be amended and supplemented as
follows:
“e) Notwithstanding the conditions prescribed in point c and dd of this
clause, a founding shareholder who is an individual person must satisfy the
following conditions:
(i) Hold the Vietnamese citizenship;
(ii) Not a prohibited person as provided in the Enterprise Law;
(iii) Not eligible to use mobilized funding sources and funds borrowed
from any organization or individual as the contributed capital;
(iv) Be a manager of the enterprise earning profits within a minimum
period of 03 consecutive years preceding the year of submission of the
application for a business license, or holding a undergraduate or postgraduate
degree in economics or law;".
3. Point g (ii) clause 2 Article 9 shall be amended and supplemented as
follows:
“(ii) Not allowed to use mobilized funding sources and funds borrowed
from any other organization or individual as the contributed capital;”.
4. Point a, b and d clause 2 Article 9 shall be repealed; the words
"a, b" specified in point g clause 2 Article 9, clause 3 Article 10
shall be eliminated.”
·
Secondly, abolishing the “to have
full and valid dossier” conditions for the establishment of a domestic branch
of a commercial bank specified at Point i, Clause 1, Article 6 of Circular No.
21/2013/TT-NHNN issued on 09/9/2013 by the State Bank of Vietnam providing for
the operational network of commercial banks.
Specifically, Article 2 of Circular
No. 17/2018/TT-NHNN stipulates: “Repealing
certain articles of the Circular No. 21/2013/TT-NHNN dated September 9,
2013 of the State Bank’s Governor prescribing business networks of commercial
banks
Repealing point I clause 1 Article 6[2].”
·
Thirdly, abolishing the condition: “the
permit with limited duration is issued by the State bank” under the conditions
for commercial banks to be considered and allowed to extend other foreign
exchange transactions on domestic or foreign markets, Which stipulated in Point
a, Clause 2, Article 10 of Circular No. 21/2014/TT-NHNN issued on 14/8/2014 by
the State Bank of Vietnam providing guidance on scope of foreign exchange
transactions, requirements and procedures for permitting foreign exchange
transactions of credit institutions, branches of foreign banks.
Specifically, Article 3 of
Circular No. 17/2018/TT-NHNN stipulates: “Repealing
certain articles of the Circular No.21/2014/TT-NHNN dated August 14, 2014
of the State Bank’s Governor providing guidance on the scope of foreign
exchange operations, conditions, procedures and processes for approval of foreign
exchange operations of credit institutions and foreign bank branches
Repealing point a clause 2 Article 10 (which has been amended and
supplemented by clause 10 Article 1 of the Circular No. 28/2016/TT-NHNN dated
October 5, 2016 amending and supplementing certain articles of the Circular No.
21/2014/TT-NHNN dated August 14, 2014 of the State Bank’s Governor providing
guidance on the scope of foreign exchange operations, conditions, procedures
and processes for approval of foreign exchange operations of credit
institutions and foreign bank branches).”
·
Fourthly, amending, supplementing and
abolishing other contents:
Specifically,
-
Requirements for licensing joint stock non-bank
credit institutions prescribed in Clause 5, Point a Clause 6, Clauses 1, Clause
2 and Clause 3 of Article 11 of Circular No. 30/2015/TT-NHNN dated 25/12/2015 by
the Governor of the State Bank of Vietnam regulations on issuance of licences,
organization and operation of non-bank credit institutions (Article 4 of
Circular No. 17/2018/TT-NHNN);
- Requirements for head offices, material foundations in the conditions for granting cooperative bank licenses; criteria on working time in the banking domain, for the standards of the general director of cooperative banks prescribed in Clause 6 Article 8, Clause 1 Article 25 of Circular No. 31/2012/TT-NHNN issued on 26/11/2012 by the Governor of the State Bank of Vietnam providing for cooperative banks (Article 5 of Circular No. 17/2018/TT-NHNN);
- Conditions for individual to become a member of people's credit fund stipulated at Point d, Clause 1, Article 31 of Circular No. 04/2015/TT-NHNN issued on 31/3/2015 by the Governor of the State Bank of Vietnam on people's credit funds (Article 6 of Circular No. 17/2018/TT-NHNN).
[1]
The term “maintain the solvency ratio
within 30 days regarding VND“ is stipulated in Clause 3, Article 1 of
Circular No. 16/2018/TT-NHNN as “maintain
the solvency ratio within 30 days regarding VND (including VND and other freely
convertible foreign currencies converted into VND according to the exchange
rate prescribed in Point a Clause 25 Article 3 hereof)” and then be
rectified as “maintain the solvency ratio
within 30 days regarding VND “ by Article 1 of Decision No. 1564/QĐ-NHNN
which issued and be effected on 03/8/2018 by the Governor of the State Bank of
Vietnam rectifying the Circular No. 16/2018/TT-NHNN issued on 31/7/2018 by the
State Bank of Vietnam amending and
supplementing certain articles of the Circular
No. 36/2014/TT-NHNN dated 20/11/2014 of the Governor of the State
Bank of Vietnam providing for prudential ratios and limits for operations of
credit institutions and foreign bank branches.
[2] Article 6.
Conditions for establishment of branches in country of commercial bank
To be
permitted to establish branches in country, the commercial bank must meet fully
the following conditions:
1. For
commercial banks with operational duration of 12 months or more (counted from
the date of starting activities till the time of request):
i) To have
full and valid dossier as prescribed in this Circular.
