MONTHLY LEGAL UPDATE – 09/2019: LEGAL UPDATE RELATING TO FINANCE AND CREDIT
1. LEGAL DOCUMENTS ISSUED IN 08/2019
1.1. Circular No. 11/2019/TT-NHNN regulations on special control for credit institutions
v Name of legal document: Circular No. 11/2019/TT-NHNN issued on 02/08/2019 by the Governor of the State Bank of Viet Nam NHNN regulations on special control for credit institutions (referred to as the “Circular No. 11/2019/TT-NHNN”).v Effective date: 01/10/2019.The content should be noted: providing the form of special control.
Specifically, Article 7 of
Circular No. 11/2019/TT-NHNN stipulates: “Article
7. Special forms of control
1. Based on the actual situation and level of risks in operations of
the credit institution, the Governor of the State Bank or the Director of the
branch of State Bank shall consider and decide:
a) Put credit institutions under special control in the form of special
supervision or comprehensive control;
b) The content, scope, measures and tasks of control of activities are
specified in the Decision of special control, in accordance with the form of
special control and content specified in Clause 1, Article 15[1]
of this Circular.
2. Special supervision means the placement of a credit institution
under the direct control of the State Bank through direct, remote direct
control and on-spot inspection by the special control committee for the
operation of the credit institution is under special control.
3. Comprehensive control means the placing of a credit institution
under the direct control of the State Bank through the direct control and
on-spot control of the Special Control Board for daily activities of Credit
institutions are under special control.
4. The form of special control is changed as follows:
a) Based on the actual situation and level of risks in operations of the credit institution under special control, the Special Control Board shall propose the Governor of the State Bank (via The Central Banking Inspection and Supervision Authority) change the form of special control to the credit institution under special control specified in Clause 1, Article 6[2] of this Circular or propose the Director of the branch of State Bank to change the form of special control for with credit institutions under special control specified in Clause 2, Article 6 of this Circular;
b) Within 20 days after receiving the recommendations of the Special Control Board specified at Point a of this Clause, the Governor of the State Bank or the Directors of the branches of State Bank shall consider and decide to change the forms of special control for credit institutions are under special control according to their competence prescribed in Article 6 of this Circular.”
1.2. Circular No. 13/2019/TT-NHNN amending and supplementing a number of articles of Circular related to licensing, organization and operation of credit institutions and branches of foreign banksv Name of legal document: Circular No. 13/2019/TT-NHNN issued on 21/08/2019 by the Governor of the State Bank of Viet Nam NHNN amending and supplementing a number of articles of Circular related to licensing, organization and operation of credit institutions and branches of foreign banks (referred to as the “Circular No. 13/2019/TT-NHNN”).v Effective date: 05/10/2019.Some content should be noted:
·
Firstly, amending
and supplementing regulations on procedures for approval for
provisional lists of personnel of credit institutions and branches of foreign
banks.
Specifically, Clause 8 Article 2
Circular No. 13/2019/TT-NHNN stipulates: “Article
2. Amending and supplementing a number of articles of Circular No.
22/2018/TT-NHNN dated September 5, 2018 of the Governor of the State Bank of
Vietnam guidelines for procedures and application for approval for provisional
lists of personnel of commercial banks, non-bank credit institutions and
foreign banks’ branches (hereinafter referred to as Circular No. 22/2018/TT-NHNN)
…
8. Article 8 is amended and supplemented as follows:
“Article 8. Procedures for approval for provisional lists of personnel
of credit institutions and foreign banks’ branches
1. The credit institution or foreign bank’s branch shall prepare an
application as prescribed in Articles 6 and 7 of this Circular and submit it to
the State Bank for the subjects specified in Clause 1, Article 4 of this
Circular or the branches of State Bank for the subjects defined in Clause 2,
Article 4 of this Circular. If the application is unsatisfactory, within 07
working days from the receipt of the application, the State Bank (Central
Banking Inspection and Supervision Authority) shall request the credit
institution or foreign bank’s branch in writing to complete it.
2. The credit institution or foreign bank’s branch shall complete the
application at the request of the State Bank (Central Banking Inspection and
Supervision Authority) or the branches of State Bank within up to 45 working
days from the date on which additional documents are requested in writing by
the State Bank (Central Banking Inspection and Supervision Authority). After
the aforementioned time limit, the credit institution or foreign bank’s branch
shall re-submit an application as prescribed in this Circular to the State Bank
or the branches of State Bank for consideration and approval.
3. Within 30 working days from the receipt of satisfactory application
prescribed in Articles 6 and 7 of this Circular, the State Bank shall send a
written approval or written rejection of the provisional list of the credit
institutions or foreign bank’s branch. In case of rejection, a written
explanation of the State Bank or the branches of State Bank shall be provided.””
· Secondly, amending and supplementing regulations on complying with
reporting regulations
Specifically, Clause 9 Article 2 of Circular No.
13/2019/TT-NHNN stipulates: “Article
2. Amending and supplementing a number of articles of Circular No.
22/2018/TT-NHNN dated September 5, 2018 of the Governor of the State Bank of
Vietnam guidelines for procedures and application for approval for provisional
lists of personnel of commercial banks, non-bank credit institutions and
foreign banks’ branches (hereinafter referred to as Circular No. 22/2018/TT-NHNN)
…
9. Article 11 is amended and
supplemented as follows:
“Article 11. Complying with
reporting regulations
1. Credit institutions and branches
of foreign banks shall promptly notify in writing to the State Bank of changes
related to the satisfaction of criteria and conditions of the personnel to be
elected or appointed arising in the course of the State Bank's consideration of
dossiers of application for approval of the list of personnel plans or from the
date the State Bank issues written approval of the lists of expected personnel
until the personnel are elected, appointed in accordance with the following
provisions:
a) For credit institutions and
branches of foreign banks defined in Clause 1, Article 4 of this Circular: send
to the Central Banking Inspection and Supervision Authority;
b) For branches of foreign banks
prescribed in Clause 2, Article 4 of this Circular: send to the branch of State
Bank where the branch of foreign bank is located.
2. Within 10 working days after the
election, appointment of titles of Chairman and members of the Board of
Directors, Chairman and members of the Board of members, Head and members of
the Control Board, General Director Directors (directors), credit institutions
and branches of foreign banks must send written notices to the State Bank as
prescribed at Points a and b, Clause 1 of this Article on the list of elected
and appointed persons according to the form in Appendix 03 attached to this
Circular. ”.”
· Thirdly, amending
and supplementing regulations on responsibilities of the
Central Banking Inspection and Supervision Authority
Specifically, Clause 10 Article 2 of Circular
No. 13/2019/TT-NHNN stipulates: “Article
2. Amending and supplementing a number of articles of Circular No.
22/2018/TT-NHNN dated September 5, 2018 of the Governor of the State Bank of
Vietnam guidelines for procedures and application for approval for provisional
lists of personnel of commercial banks, non-bank credit institutions and
foreign banks’ branches (hereinafter referred to as Circular No. 22/2018/TT-NHNN)
…
9. Clause 1 Article 121 is amended and supplemented as follows:
“1. The Central Banking Inspection and Supervision Authority shall be the focal point to assess the fulfillment of dossiers, standards and conditions of expected personnel of credit institutions and foreign bank branches subject to regulation stipulated in Clause 1, Article 4 of this Circular according to the provisions of the Law on Credit Institutions and this Circular; get opinions from related units ; sum up and submit to the Governor of the State Bank for consideration, written approval or disapproval of expected personnel of the credit institution, branches of foreign banks. “.”
[1]
“Article 15.
Tasks and powers of the Special Control Board
1. The Special Control Board performs the
tasks and powers prescribed in Article 146b of the Law on Credit Institutions
(amended and supplemented in 2017). The special control board shall perform its
tasks and powers through one or several of the following activities:
a) Request the specially controlled
credit institution to provide complete, accurate and timely information,
documents and records related to the operations of the specially controlled
credit institution, including the following information, documents, records:
(i) Financial situation, actual value of
charter capital and reserve funds;(ii) Actual situation on organization,
personnel, management, administration, information technology system and
internal control system;
(iii) Actual situation of operation,
business, investment; solvency when due;
(iv) Situation of assets and collaterals,
in which specific reports on bad debt situations, bad receivable debts,
potential structural debts become bad debts, bad debts sold to the Management
Company unresolved assets, accrued interests must be withdrawn as prescribed by
law but not yet withdrawn;
(v) List of customers (excluding credit
institutions, branches of foreign banks) receiving credit; list of organizations
and individuals sending money; other creditors;
(vi) Other information serving the
performance of tasks of the Special Control Board.
b) Requesting the specially controlled
credit institution to inventory existing cash and cash equivalents in the whole
system on the principle of performing cross-checking, cross - supervising and
reporting on performance results within 05 days after completing the inventory;
c) Organizing the supervision of the
inventory process specified at Point b of this Clause in accordance with the
reality and operation scope of the credit institution under special control;
d) In the period where there is no plan
for restructuring or restructuring the credit institution under special control
that has not been approved by the competent authority, based on the
information, documents and records approved by the group. Specially controlled
credit institutions provided for in points a and b of this clause or
information from independent audit reports, inspection conclusions and other
sources of information, Special Control Board assesses the operational status
of the credit institution under special control to actively implement or report
to the Governor of the State Bank (via the Central Banking Inspection and
Supervision Authority) or the Director of the State Bank branch handling
measures in accordance with the reality of specially controlled credit
institutions;
dd) Approving before the credit
institution under special control performs a number of transactions and
operations;
f) Requesting the specially controlled
credit institution to report its operation results according to the contents
and frequency suitable to the reality of the specially controlled credit
institution;
g) Deciding to attend the meetings of the
Board of Directors, Board of Members, Board of Controllers of the credit
institution that are under special control and give opinions on the contents of
the meeting related to powers, duties of the special control committee;
h) Directing, inspecting, supervising and
controlling the operations of the credit institution under special control to
prevent the hiding, dispersing, pledging, mortgaging, and transferring of
assets and other acts that may cause damage to specially controlled credit
institutions;
i) Periodically as prescribed in the
Decision of special control or when necessary or at the request of the Governor
of the State Bank, Director of the State Bank branch, report to the Governor of
the State Bank (via the Central Banking Inspection and Supervision Authority, for
Special Control Boards of credit institutions under special control specified
in Clause 1, Article 6 of this Circular) or Directors of the branches of State
Bank (for the Special Control Board of a credit institution under special
control specified in Clause 2, Article 6 of this Circular) the situation of
management, administration, operation, business, investment, finance, liquidity
and other issues (if any) of the credit institution under special control and
recommendations and handling measures (if any); results, difficulties and
obstacles in the course of implementing the restructuring plan, already
approved by the competent authorities, and proposing and proposing handling
measures (if any);
k) Promptly reporting to the Governor of
the State Bank (via the Central Banking Inspection and Supervision Authority,
for the Special Control Board of the specially controlled credit institution
specified in Clause 1, Article 6 of the Circular) this Circular) or the
Directors of the branches of the State Bank (for the Special Control Board of
the credit institution under special control specified in Clause 2, Article 6
of this Circular) unusual developments in activities, potential risks, risks of
unsafety and law violations of credit institutions under special control;
difficulties and obstacles arising in the process of special control of the
credit institution and recommendations, recommendations for handling measures;
l) Promptly notifying the credit
institution under special control to information and direction of competent
authorities relating to operations and restructuring plans.
m) Other duties assigned by the Governor
of the State Bank or the Directors of the branches of the State Bank.”
[2]
“Article 6.
Competence to make decisions in the special control of the credit institution
1. The Governor of the State Bank shall
consider and decide the following contents regarding credit institutions which
are not People's Credit Funds:
a) Putting credit institutions in the
cases specified in Clause 1, Article 145 of the Law on Credit Institutions
(amended and supplemented in 2017), Article 4 and Article 5 of this Circular
into special control;
b) Forms of special control prescribed in
Article 7 of this Circular;
c) Establishing of a special control
board under the provisions of Articles 14 and 15 of this Circular;
d) Duration of special control;
dd) Noticing of special control as
prescribed in Article 9 of this Circular;
e) Disclosing special control information
in accordance with Article 10 of this Circular;
g) Actual value of charter capital and
reserve funds, record reduction of charter capital of commercial banks subject
to special control approved by the Government for compulsory transfer as
prescribed in Article 11 of this Circular;
h) Extending of the term of special
control as prescribed in Article 12 of this Circular;
i) Terminating special control as
prescribed in Article 13 of this Circular;
k) Other contents specified in the Law on
Credit Institutions (amended and supplemented in 2017) and this Circular.
2. Directors of branches of State Bank in
provinces, cities under the central Government's management (hereinafter
referred to as branches of the State Bank) shall consider and decide on the
following issues for credit institutions being People's Credit Funds are
headquartered in the area:
a) The contents specified at Points a, b,
c, d, dd, e, h and i, Clause 1 of this Article;
b) The contents specified at Points a and
b, Clause 3, Article 146; Clauses 1, 2, 3, 4, 5 and 7 of Article 146a (except
for the contents of special loans, extension of special loan terms of the State
Bank); Clauses 2 and 6, Article 146dd; Points a, b and d, Clause 2, Article
148b; Clauses 2, 3 and 4 (except for the case specified in Clause 3 of this
Article) Article 148c; Clauses 2, 3, 4, 5, 6 and 11 of Article 148d; Clauses 1
and 2, Article 149c and Clauses 1 and 2, Article 149d of the Law on Credit
Institutions (amended and supplemented in 2017).
For the contents specified at Point dd,
Clause 2, Article 148b; Clauses 7 and 12, Article 148, and Clause 3, Article
149c of the Law on Credit Institutions (amended and supplemented in 2017), the
Directors of the branches of the State Bank reports to the Governor of the
State Bank (via the Central Banking Inspection and Supervision Authority) to
approved before implementation.
3. The Directors of the branches of the
State Bank report and propose the Governor of the State Bank (via the Central
Banking Inspection and Supervision Authority) to propose the Government to
implement the contents specified in Clause 1, Article 146 of the Law on Credit
Institutions (amended and supplemented in 2017) for credit institutions being
People's Credit Funds are headquartered in the area.”
