Tiếng Việt

Legal update relating to Finance and Credit (Monthly Legal Update – 02/2019)

by | Feb 19, 2019 | Banking, EN, Legal Update | 0 comments

1. LEGAL DOCUMENTS ARE EFFECTIVE FROM 01/02/2019

1.1. Circular No. 31/2018/TT-NHNN guiding foreign exchange management for outward investment in petroleum industry

  • Name of legal document: Circular No. 31/2018/TT-NHNN issued on 18/12/2018 by the State Bank of Viet Nam guiding foreign exchange management for outward investment in petroleum industry (hereinafter referred to as the “Circular No. 31/2018/TT-NHNN”)

  • Effective date: 01/02/2019.

Some contents should be noted:

  • Firstly, regulating responsibility of a licensed credit institution[1].

Specifically, Article 18 of Circular No. 31/2018/TT-NHNN stipulates as follows: “Article 18. Responsibility of a licensed credit institution

  1. Instruct investors in carrying out procedures for opening, closure and use of investment capital accounts and pre-investment foreign currency accounts in accordance with regulations herein and relevant laws.

  2. Open and close investment capital accounts and pre-investment foreign currency accounts, and carry out collection and payment transactions via these accounts at the request of investors in accordance with regulations herein.

  3. Transfer foreign currency abroad before investment for investors in accordance with regulations laid down in Clause 1, Clause 2 and Clause 4 Article 5 of the Decree No. 124/2017/ND-CP and regulations herein. In case the investor is required to carry out procedures for applying for an approval for pre-investment transfer of foreign currency abroad with the SBV, the licensed credit institution shall make transfer of foreign currency abroad for the investor when he/she presents the SBV’s approval.

  4. Make transfer of investment capital abroad for investing in petroleum after the issuance of the outward investment registration certificate at the request of the investor only when the investor presents the written certification of registration or registration of changes in the outward investment-related forex transactions in petroleum issued by the SBV in accordance with regulations laid down in Chapter IV hereof.

  5. Request the investor to provide necessary documents/ vouchers for examining, inspecting and facilitating the pre-investment transfer of foreign currency abroad to serve the purposes defined in Clause 1 and Clause 4 Article 5 of the Decree No. 124/2017/ND-CP.

  6. Examine, inspect and keep all documents and vouchers of actual transactions so as to ensure the provision of forex service to investors for correct purposes and in compliance with applicable laws.

  7. Give confirmation of account details and amounts of money transferred abroad before the issuance of outward investment registration certificate, the balance on the pre-investment foreign currency account which is then used as the investment capital account, the opening of investment capital account, the balance on the investment capital account, amounts of money transferred abroad and transferred to Vietnam up to the occurrence of changes in order that the SBV can use such confirmation as the basis for considering granting the certification of registration or registration of changes in the outward investment-related forex transactions in petroleum.

  8. Comply with regulations on reporting laid down in Chapter VII hereof and relevant laws.”

  • Secondly, stipulating on reports by licensed credit institutions.

Specifically, Article 20 Circular No. 13/2018/TT-NHNN stipulates: “Article 20. Reports by licensed credit institutions

  1. By the 10th day of the month following the month in which the pre-investment transfer of foreign currency abroad is made or the transfer of foreign currency abroad to Vietnam is made via the investor’s pre-investment foreign currency account, the licensed credit institution where the investor’s pre-investment foreign currency account is opened must submit a report to the SBV (via the Foreign Exchange Management Department) on transactions made via the pre-investment foreign currency account (using the form provided in the Appendix No. 07 enclosed herewith).

  2. The licensed credit institution where the investor’s investment capital account is opened must submit reports on collections and payments made via the investor’s investment capital account in accordance with the SBV’s regulations on reporting and statistics by credit institutions and branches of foreign banks.”

  • Thirdly, Circular No. 31/2018/TT-NHNN supersedes the Circular No. 36/2013/TT-NHNN dated December 31, 2013.

Specifically, Clause 1 Article 24 stipulates: “Article 24. Effect

  1. This Circular comes into force from February 01, 2019 and supersedes the Circular No. 36/2013/TT-NHNN dated December 31, 2013.”

1.2. Circular No. 32/2018/TT-NHNN guiding the State bank of Vietnam’s foreign currency conversion procedures for projects given the government undertakings to provide guarantee and assistance in foreign currency conversion

  • Name of legal document: Circular No. 32/2018/TT-NHNN issued on 18/12/2018 by the State Bank of Viet Nam guiding the State bank of Vietnam’s foreign currency conversion procedures for projects given the government undertakings to provide guarantee and assistance in foreign currency conversion (hereinafter referred to as the “Circular No. 32/2018/TT-NHNN”)

  • Effective date: 01/02/2019.

Some contents should be noted:

  • Firstly, regulating responsibility of converting banks[2].

Specifically, Article 7 of Circular No. 32/2018/TT-NHNN stipulates as follows: “Article 7. Responsibility of converting banks

  1. Carry out the foreign currency conversion procedures for projects given the Government to provide guarantee and assistance in foreign currency conversion according to GGU and regulations herein.

  2. Assume responsibility for the faithfulness and accuracy of documents/ vouchers submitted by project enterprises and investors so as to ensure the compliance of the foreign currency conversion for projects with GGU and regulations herein.”

  • Secondly, stipulating on reports submitted by converting banks

Specifically, Article 9 Circular 32/2018/TT-NHNN stipulates: “Article 9. Reports submitted by converting banks

1. By the 20th of each month, the converting bank must report the SBV (the Foreign Exchange Management Department, the Financial Policy Department and the Operations Center) on:

a) The sale of foreign currencies to project enterprise/ investors during the converting month;

b) The estimated amount of foreign currency to be converted for project enterprises/ investors in the next month.

2. Quarterly (by the 03rd of the first month of the reporting quarter), the converting bank must submit reports to the SBV (the Foreign Exchange Management Department, the Financial Policy Department and the Operations Center) on the estimated amounts of foreign currency to be converted by project enterprises/ investors in the next quarter and the foreign currency balancing plan to meet such amounts.”

1.3. Circular No. 36/2018/TT-NHNN regulations on lending activities for offshore investment of credit institutions and foreign bank branches to customers

  • Name of legal document: Circular No. 36/2018/TT-NHNN issued on 25/12/2018 by the State Bank of Viet Nam regulations on lending activities for offshore investment of credit institutions and foreign bank branches to customers (hereinafter referred to as the “Circular No. 36/2018/TT-NHNN”)

  • Effective date: 15/02/2019.

Some contents should be noted:

  • Firstly, regulating on loan demand.

Specifically, Article 4 of Circular No. 36/2018/TT-NHNN stipulates as follows: “Article 4. Demand for offshore investment loans

Credit institutions consider lending to customers with the following needs:

  1. Contributing charter capital to establish an economic organization in accordance with the law of the investment recipient country.

  2. Contributing capital to implement business cooperation contracts (BCC contracts) in foreign countries.

  3. Acquisition of part or all of the charter capital of an overseas economic organization to participate in managing and implementing business investment activities in foreign countries.

  4. The demand for capital for making offshore investment in the form prescribed at Point đ, Clause 1, Article 52[3] of the Law on Investment and its guiding documents.”

  • Secondly, regulating loan conditions.

Specifically, Article 5 of Circular No. 36/2018/TT-NHNN stipulates: “Article 5. Conditions for borrowing capital

Credit institutions shall consider and decide to provide loans for offshore investment when customers meet the following conditions:

  1. Customers are legal entities with civil legal capacity as prescribed by law. Individual customers (including individuals who are members or authorized representatives of households, cooperative groups and other organizations without legal status) from full 18 years or older with administrative capacity full civilian according to the law.

  2. Having been granted an offshore investment registration certificate and investment activities approved or licensed by the competent authority of the investment recipient country. In case, the law of the investment-receiving country does not provide for investment licensing or investment approval, investors must have documents evidencing their right to invest in the investment-receiving country.

  3. Having offshore investment projects and plans evaluated as feasible by credit institutions and customers capable of repaying credit institutions.

  4. There are 2 consecutive years without bad debt incurred until the time of loan request.”

1.4. Circular No. 40/2018/TT-NHNN amending and supplementing a number of articles of the Circular No. 13/2018/TT-NHNN dated May 18th, 2018 of the Governor of the State Bank of Viet Nam on internal control systems of commercial banks and foreign banks’ branches

  • Name of legal document: Circular No. 40/2018/TT-NHNN issued on 28/12/2018 by the State Bank of Viet Nam amending and supplementing a number of articles of Circular No. 13/2018/TT-NHNN dated May 18th, 2018 of the Governor of the State Bank of Viet Nam on internal control systems of commercial banks and foreign banks’ branches.

(Circular No. 13/2018/TT-NHNN dated May 18th, 2018 of the Governor of the State Bank of Viet Nam on internal control systems of commercial banks and foreign banks’ branches hereinafter referred to as the “Circular No. 13/2018/TT-NHNN”

Circular No. 40/2018/TT-NHNN issued on 28/12/2018 by the State Bank of Viet Nam amending and supplementing a number of articles of Circular No. 13/2018/TT-NHNN dated May 18th, 2018 of the Governor of the State Bank of Viet Nam on internal control systems of commercial banks and foreign banks’ branches hereinafter referred to as the “Circular No. 40/2018/TT-NHNN”).

  • Effective date: 12/02/2019.

Some contents should be noted:

  • Firstly, adding provisions on credit risk.

Specifically, Clause 1 Article 1 of Circular No. 40/2018/TT-NHNN stipulates: “1. Adding Clauses 23, 24, 25, 26, 27, 28, 29, 30, 31 and 32 to Article 3 (Circular No. 13/2018 / TT-NHNN) as follows:

“23. Credit risks include:

  1. a) Credit risk is a risk that customers do not perform or are unable to perform part or all of their debt repayment obligations under contracts or agreements with commercial banks, foreign bank’s branches, except for the cases specified at Point b of this Clause. In particular, customers (including credit institutions, foreign bank’s branches) have relations with commercial banks, foreign bank’s branches in receiving credit (including receiving credit through trust), receiving deposits, issuing corporate bonds.

  2. b) Partner credit risk is the risk that the counterparty does not perform or is unable to perform part or all of its payment obligations before or when it is due to self-trading transactions; repo transaction and reverse repo transaction; trading derivative products to prevent risks; transactions of buying and selling foreign currencies, financial assets to serve the needs of customers and partners. In which, partners (including credit institutions, foreign bank branches) have transactions with commercial banks, foreign bank branches in self-trading transactions; repo transaction and reverse repo transaction; trading derivative products to prevent risks; transactions of buying and selling foreign currencies, financial assets to serve the needs of customers and partners.””

  • Secondly, amending and supplementing regulations on principles of independence in internal audit principles.

Specifically, Clause 6, Article 1 of Circular No. 40/2018/TT-NHNN stipulates: “6. Point a (iv) clause 1 Article 64[4] (Circular No. 13/2018/TT-NHNN) is amended and supplemented as follows:

“(iv) Criteria for building salaries and other benefits for the positions of the internal audit department must be separate from the business results and operation results of units and sections of the first and second protection line;””

1.5.           Circular No. 41/2018/TT-NHNN amending and supplementing a number of articles of the Circular No. 19/2016/TT-NHNN dated June 30th, 2016 of the Governor of the State Bank of Viet Nam on bank card operations

  • Name of legal document: Circular No. 41/2018/TT-NHNN issued on 28/12/2018 by the State Bank of Viet Nam amending and supplementing a number of articles of Circular No. 19/2016/TT-NHNN dated June 30th, 2016 of the Governor of the State Bank of Viet Nam on bank card

(Circular No. 19/2016/TT-NHNN dated June 30th, 2016 of the Governor of the State Bank of Viet Nam on bank card operations hereinafter referred to as the “Circular No. 19/2016/TT-NHNN”

Circular No. 41/2018/TT-NHNN issued on 28/12/2018 by the State Bank of Viet Nam amending and supplementing a number of articles of Circular No. 19/2016/TT-NHNN dated June 30th, 2016 of the Governor of the State Bank of Viet Nam on bank card operations hereinafter referred to as the “Circular No. 41/2018/TT-NHNN”).

  • Effective date: 18/02/2019.

The content should be noted: adding provisions on card conversion process.

Specifically, Clause 5, Article 2 of Circular No. 41/2018/TT-NHNN stipulates: “5. Supplement Chapter IVa after Chapter IV (Circular No. 19/2016/TT-NHNN) as follows:

“Chapter IVa

CONVERSION PROCESS

Article 27a. For card payment organizations

  1. To date December 31st, 2019, at least 35% of ATMs, 50% of cards acceptance devices at the point of sale operating in Viet Nam of acquirer comply with the Basic Standard for domestic chip cards.

  2. To date December 31st, 2020, 100%of ATMs and cards acceptance equipment operating in Viet Nam of acquirer comply with the Standard on domestic chip cards.

Article 27b. For card issuers

  1. To date December 31st, 2019, at least 30% of the cards with BIN issued by card issuer of the State Bank comply with the Basic Standard on domestic chip cards.

  2. To date December 31st, 2020, at least 60% of the cards with BIN issued by card issuer the State Bank comply with the Basic Standard on domestic chip cards.

  3. To date December 31st, 2021, 100% of the cards with BIN issued by card issuer the State Bank comply with the basic standards for domestic chip cards.

Article 27c. Responsibilities of card issuers and card payment organizations

During the transition period, card issuer and acquirer must ensure card activities take place continuously, stably, safely and ensure the legitimate interests of cardholders. “”

1.6.           Circular No. 43/2018/TT-NHNN amending and supplementing a number of articles of Circular No. 16/2010/TT-NHNN dated June 25th, 2010 of the Governor of the State Bank of Viet Nam guiding the implementation of the Decree No. 10/2010/NĐ-CP dated February 12th, 2010 of the Government on credit information-related activities

  • Name of legal document: Circular No. 43/2018/TT-NHNN issued on 28/12/2018 by the State Bank of Viet Nam amending and supplementing a number of articles of Circular No. 16/2010/TT-NHNN dated June 25th, 2010 of the Governor of the State Bank of Viet Nam guiding the implementation of the Decree No. 10/2010/NĐ-CP dated February 12th, 2010 of the Government on credit information-related activities (hereinafter referred to as the “Circular No. 43/2018/TT-NHNN”).

  • Effective date: 18/02/2019.

The content should be noted: amending and supplementing documents used to prove conditions in the application for Certificate of eligibility for credit information-related activities.

Specifically, Clause 1 Article 1 of Circular No. 43/2018/TT-NHNN stipulates:

“1. Point c(viii) clause 1 Article 5[5] Circular No. 16/2010/TT-NHNN (amended and supplemented in Clause 4 Article 1 of Circular No. 23/2016/TT-NHNN dated June 30th, 2016 of the Governor The State Bank of Viet Nam on amending and supplementing a number of articles of Circular No. 16/2010/ TT-NHNN is amended and supplemented as follows:

“Viii) Documents of credit institutions and foreign bank branches committed to providing credit information to enterprises according to form No. 04/TTTD enclosed with this Circular;””

1.7. Circular No. 44/2018/TT-NHNN amending and supplementing a number of articles of the Circular No. 36/2012/TT-NHNN dated December 28th, 2012 of the Governor of the State Bank of Viet Nam on the installation, management, operation, and security of automated teller machines

  • Name of legal document: Circular No. 44/2018/TT-NHNN issued on 28/12/2018 by the State Bank of Viet Nam amending and supplementing a number of articles of Circular No. 36/2012/TT-NHNN dated December 28th, 2012 of the Governor of the State Bank of Viet Nam on the installation, management, operation, and security of automated teller machines.

(Circular No. 36/2012/TT-NHNN dated December 28th, 2012 of the Governor of the State Bank of Viet Nam on the installation, management, operation, and security of automated teller machines hereinafter referred to as the “Circular No. 36/2012/TT-NHNN”

Circular No. 44/2018/TT-NHNN issued on 28/12/2018 by the State Bank of Viet Nam amending and supplementing a number of articles of Circular No. 36/2012/TT-NHNN dated December 28th, 2012 of the Governor of the State Bank of Viet Nam on the installation, management, operation, and security of automated teller machines hereinafter referred to as the “Circular No. 44/2018/TT-NHNN”).

  • Effective date: 18/02/2019.

Some contents should be noted:

  • Firstly, amending and supplementing regulations on installation, change of location and termination of ATM operations.

Specifically, Clause 1, Article 1 of Circular No. 44/2018/TT-NHNN stipulates as follows: “1. Clause 2 Article 4 (Circular No. 36/2012/TT-NHNN) is amended and supplemented as follows:

“2. Within 10 working days before the date of deployment, installation, change of location, change of time, termination of ATM operation, payment service suppliers must notify the State Bank’s branch in the province centrally-run cities (hereinafter referred to as the State Bank’s branch) in the locality where ATMs are deployed or installed under Form No. 1 (for ATM) or Form No. 2 (for mobile ATM) issued together with this Circular.

Within 10 working days before the date of deployment, installation, change of location, change of time or termination of ATM operation in different provinces or cities where the head office or branch of the service provider is located. Payment service directly managing ATMs, payment service providers must notify the State Bank’s branch in the area where ATM is deployed, installed and the State Bank branch in the locality where the head office is located or branch that directly manages ATM according to Form 1 (for ATM) or Form 2 (for mobile ATMs) issued together with this Circular. ””

  • Secondly, amending and supplementing regulations on information and reports.

Specifically, Clause 4 Article 1 of Circular No. 44/2018/TT-NHNN stipulates: “4. Clause 1 of Article 10 is amended and supplemented as follows:

“1. The payment service supplier, the State Bank’s branch in the area where ATM is deployed and installed shall be responsible for reporting to the State Bank of Viet Nam (via the Department  of Payment ) as follows:

a) Report according to the regulations of the State Bank of Viet Nam on the statistical reporting mode applicable to credit institutions and foreign bank branches and when required by competent agencies as prescribed under the law;

b) Periodic report on ATM operations for the first 6 months (reporting period is from January 1st to June 30th) and annually (reporting period is from January 1st to December 31st) before the 15th of the consecutive month following the reporting period according to the contents guided in Form 4 (for payment service suppliers) and Form 5 (for the State Bank branch) issued together with the Information this Circular””

1.8. Circular No. 45/2018/TT-NHNN providing credit institutions with instructions for grant of loans guaranteed by credit guarantee funds under regulations of government’s Decree No.34/2018/ND-CP dated march 8, 2018 on establishment, organization and operation of credit guarantee funds for small and medium-sized enterprises

  • Name of legal document: Circular No. 45/2018/TT-NHNN issued on 28/12/2018 by the State Bank of Viet Nam providing credit institutions with instructions for grant of loans guaranteed by credit guarantee funds under regulations of government’s Decree No.34/2018/ND-CP dated march 8, 2018 on establishment, organization and operation of credit guarantee funds for small and medium-sized enterprises (hereinafter referred to as the “Circular No. 46/2018/TT-NHNN”)

  • Effective date: 12/02/2019.

Some contents should be noted:

  • Firstly, regulating on interest rates on loans guaranteed by credit guarantee funds.

Specifically, Article 6 of Circular No. 45/2018/TT-NHNN stipulates as follows: “Article 6. Interest rates on loans guaranteed by credit guarantee funds

The lender[6] and borrower shall agree on the interest rates on short-term, medium-term and long-term loans guaranteed by credit guarantee funds, shall ensure that the interest rate is not greater than the one on loans with the same maturity period, in the same sector or industry determined by the lender, and conforms to regulations of the State Bank as well as other relevant law provisions.”

  • Secondly, Circular No. 45/2018/TT-NHNN replaces the Circular No. 05/2015/TT-NHNN dated May 4, 2015 of the State Bank providing instructions for credit institutions’ collaboration with credit guarantee funds in granting loans guaranteed by credit guarantee funds as per the Prime Minister’s Decision No. 58/2013/QD-TTg dated October 15, 2013.

Specifically, Clause 1 Article 9 of Circular No. 45/2018/TT-NHNN stipulates: “Article 9. Entry into force

  1. This Circular shall enter into force from February 12, 2019 and replace the Circular No. 05/2015/TT-NHNN dated May 4, 2015 of the State Bank providing instructions for credit institutions’ collaboration with credit guarantee funds in granting loans guaranteed by credit guarantee funds as per the Prime Minister’s Decision No. 58/2013/QD-TTg dated October 15, 2013.”

1.9. Circular No. 50/2018/TT-NHNN regulations on documents, order and procedures for approving some contents of changes of commercial banks, branches of foreign banks

  • Name of legal document: Circular No. 50/2018/TT-NHNN issued on 31/12/2018 by the State Bank of Viet Nam regulations on documents, order and procedures for approving some contents of changes of commercial banks, branches of foreign banks (hereinafter referred to as the “Circular No. 46/2018/TT-NHNN”)

  • Effective date: 15/02/2019.

Some contents should be noted:

  • Firstly, stipulating principles of making and sending dossiers of request for approval of changes of commercial banks, branches of foreign banks.

Specifically, Article 3 of Circular No. 50/2018/TT-NHNN stipulates: “Article 3. principles of making and sending dossiers of request for approval of changes

  1. The dossier must be made in 01 set in Vietnamese. The composition of documents in foreign languages must be consular legalized in accordance with the provisions of Vietnamese law (except for cases of exemption from consular legalization in accordance with the law on consular legalization) and translation Vietnamese. Translations from foreign languages into Vietnamese must be notarized or certified by the translator according to the provisions of law.

  2. For dossier components being copies, commercial banks or branches of foreign banks shall submit copies granted from the original books or certified copies or copies enclosed with the originals for comparison. In case the applicant submits a copy with the original copy for comparison, the applicant must sign for certification on the copy and be responsible for the accuracy of the copy compared to the original.

  3. A written request signed by a legal representative of a commercial bank or branches of foreign banks. In case of signing under authorization, the dossier must have an authorization document made in accordance with the provisions of law.

  4. The dossier shall be submitted directly or sent by post to the State Bank of Vietnam (via the Banking Inspection and Supervision Agency) or the State Bank branch in the province or city decentralized (hereafter) collectively referred to as the State Bank).”

  • Secondly, prescribing on dossiers, order and procedures for approval in case foreign banks or branches of foreign banks temporarily suspend business activities from 05 working days or more, except for cases of temporary suspension of operation due to events majeure.

Specifically, Article 10 of Circular No. 50/2018/TT-NHNN stipulates: “Article 10. Temporary suspension of business activities from 05 working days or more, except for temporary suspension of operation due to force majeure events

1. Application dossier includes:

a) Written proposal, including at least the following:

(i) The number of days and times expected to suspend business operations;

(ii) Reason and necessity of suspending business operations;

(iii) Solutions to be implemented to minimize the impact of business suspension on customers’ rights and interests;

b) Resolutions or decisions of the Board of Directors with respect to joint-stock commercial banks, resolutions or decisions of the Members’ Council for limited liability commercial banks on suspension of business operations; Decision of the General Director of a foreign bank branch on suspension of business operations;

c) Documents proving the necessity of suspending business operations.

2. Order and procedures for approval:

a) At least 45 working days before the expected date of suspension of business operations, commercial banks and branches of foreign banks shall compile dossiers and send them to the State Bank. In case the dossier is incomplete or invalid, within 7 working days after receiving the dossier, the State Bank shall send a written request to the commercial bank or branches of foreign banks to supplement and complete dossiers.

b) Within 30 working days after receiving a complete and valid dossier, the State Bank shall issue a written approval of the proposal of a commercial bank or branches of foreign banks; In case of disapproval, the State Bank shall reply in writing and clearly state the reason.

3. Within a minimum of 7 working days before the date of suspension of business activities approved by the State Bank, commercial banks and foreign bank branches shall be responsible for posting on the media of State Bank, commercial banks, branches of foreign banks and at a daily newspaper written in three consecutive issues or electronic newspapers of Vietnam, which must contain information about the time and temporary reasons stop working.”

  • Thirdly, from February 15, 2019, Circular No. 06/2010/TT-NHNN dated February 26, 2010 of the Governor of the State Bank guiding the organi­zation, governance, administration, charter capital, transfer of shares and supplementation and modification of licenses or charters of commercial banks; and Circular No. 03/2007/TT-NHNN dated June 5, 2007 of the Governor of the State Bank guiding the implementation of several articles of the Decree No. 22/2006/ND-CP dated February 28, 2006 of the government on the organization and operation of foreign bank branches, joint venture banks, 100% foreign owned banks, representative office of foreign credit institutions in Vietnam are no longer effective.

Specifically, Clause 2 Article 21 of Circular No. 50/2018/TT-NHNN stipulates: “Article 21. Effectiveness

…

2. The following documents cease to be effective:

a) Circular No. 06/2010/TT-NHNN dated February 26, 2010 of the Governor of the State Bank guiding the organi­zation, governance, administration, charter capital, transfer of shares and supplementation and modification of licenses or charters of commercial banks;

b) Circular No. 03/2007/TT-NHNN dated June 5, 2007 of the Governor of the State Bank guiding the implementation of several articles of the Decree No. 22/2006/ND-CP dated February 28, 2006 of the government on the organization and operation of foreign bank branches, joint venture banks, 100% foreign owned banks, representative office of foreign credit institutions in Vietnam.”

2. LEGAL DOCUMENTS ISSUED IN 12/2018 AND 01/2019

2.1. Circular No. 46/2018/TT-NHNN providing regulations on time limits, processes and procedures for transition applied to cases in which major shareholders of a credit institution and related persons thereof own shares equalling at least 5% of charter capital of another credit institution

  • Name of legal document: Circular No. 46/2018/TT-NHNN issued on 28/12/2018 by the State Bank of Viet Nam providing regulations on time limits, processes and procedures for transition applied to cases in which major shareholders of a credit institution and related persons thereof own shares equalling at least 5% of charter capital of another credit institution (hereinafter referred to as the “Circular No. 46/2018/TT-NHNN”)

  • Effective date: 01/03/2019.

The content should be noted: stipulating time limits, processes and procedures for transition for transition applied to cases in which major shareholders[7] of a credit institution and related persons thereof own shares equalling at least 5% of charter capital of another credit institution

Specifically, Article 3 of Circular No. 46/2018/TT-NHNN stipulates: “Article 3. Time limits, processes and procedures for transition

1. The credit institution shall cooperate with its major shareholders in reviewing and determining the list of major shareholders and related persons thereof that own shares making up at least 5% of charter capital of another credit institution (hereinafter referred to as group of related major shareholders).

2. The presiding credit institution[8] in collaboration with another credit institution[9] and the group of related major shareholders shall work out the plan for remedy for the ownership of shares beyond allowed limits (hereinafter referred to as remedial plan) and implement the remedial plan in order to ensure, by December 31, 2020 at the latest, the percentage of ownership of shares by the group of related major shareholders conforms to provisions of the Law on Credit Institution (revised and supplemented version). The remedial plan must include, but not limited to, the followings:

a) List of related major shareholders, including the following information:

(i) Major shareholder that is an individual: Full name; ID or citizen ID card or passport number or number of other personal identification paper, issue date and place; permanent address; details about the number of shares and percentage of shares making up charter capital which this major shareholders is holding in a presiding and other credit institution (including quantity, percentage of shares constituting charter capital which are entrusted to other organization and individual; particulars of the entrusted organization or individual, and relationship between the entrusted organization or individual and that major shareholder (if any));

(ii) Major shareholder that is an organization: Full name; number of the certificate of enterprise registration or the like, issue date, place and tax identification number; main office address; details about the number of shares and percentage of shares making up charter capital that this major shareholders is holding in a presiding and other credit institutions (including quantity, percentage of shares constituting charter capital which are entrusted to other organization and individual; particulars of the entrusted organization or individual, and relationship between the entrusted organization or individual and that major shareholder (if any));

(iii) Related persons of a major shareholder: Relationship with the major shareholder and other information to be provided by individuals as prescribed in point a(i) of this clause or by organizations as prescribed in point a(ii) of this clause;

b) Remedial method and roadmap.

3. Presiding credit institutions shall send the State Bank (care of the Bank Supervision and Inspection Agency), other credit institution, and group of related major shareholders, remedial plans within a period of 90 days after this Circular enters into force.

4. Bank Supervision and Inspection Agency shall direct presiding credit institutions to complete the remedial plans (where necessary); shall monitor and oversee implementation of remedial plans.

Presiding credit institutions shall cooperate with other credit institutions and groups of related major shareholders in completing remedial plans and send complete remedial plans to the State Bank (care of Bank Supervision and Inspection Agency), other credit institutions and groups of related major shareholders within a period of 05 working days from the date of formulation of complete remedial plans.

5. From the effective date of this Circular, groups of related major shareholders shall not be allowed to increase the number of shares that they own in presiding and other credit institutions in any form, except in the following situations:

a) They receive bonus shares or share dividends paid in a form of shares;

b) They buy shares which are additionally issued by presiding and other credit institutions to increase their charter capital, but are obliged to ensure that the ownership percentage of these shares is within allowed limits defined in Article 55 of the (amended or supplemented) Law on Credit Institutions.

6. Presiding and other credit institutions shall not be allowed to grant credit or re-issue new credit (in case credit has already been granted) to groups of related major shareholders within the duration of 90 days after the entry into force of this Circular until these groups of related major shareholders comply with the ownership percentages of shares defined in Article 55 of the (amended and supplemented Law on Credit Institutions.

7. In case where both individual and organizational shareholders belonging to groups of related major shareholders have representatives that are members of the Management Boards, members of the Control Boards, Directors General (Directors) of presiding and other credit institutions, and are holding shares beyond allowed limits, they shall be allowed to transfer the ownership of these shares.

8. The transfer of the ownership of shares beyond allowed limits in such cases as purchases of shares by foreign investors; trading and transfer of shares by major shareholders; trading and transfer of shares resulting in changing major shareholders into common shareholders and vice versa, shall be subject to legislation on foreign investors’ purchases of shares of Vietnamese credit institutions, regulations of the State Bank on application requirements, processes and procedures for approval of changes in credit institutions and foreign bank branches.”

2.2. Circular No. 48/2018/TT-NHNN on savings deposits

  • Name of legal document: Circular No. 48/2018/TT-NHNN issued on 31/12/2018 by the State Bank of Viet Nam on savings deposits (hereinafter referred to as the “Circular No. 48/2018/TT-NHNN”)

  • Effective date: 05/07/2019.

Some contents should be noted:

  • Firstly, stipulating on savings deposit interest rate.

Specifically, Article 9 of Circular No. 48/2018/TT-NHNN stipulates: “Article 9. Interest rate

  1. Each credit institution sets forth regulations on savings deposit interest rate in accordance with regulations of the State Bank of Vietnam on interest rates in every period.

  2. Savings deposit interest calculation method shall be accordant with provisions of the State Bank of Vietnam.

  3. Savings deposit interest payment method shall be made as agreed upon between the credit institution and the depositor.”

  • Secondly, stipulating on procedures for making saving deposits at transaction offices of credit institutions.

Specifically, Article 12 of Circular No. 48/2018/TT-NHNN stipulates: “Article 12. Procedures for making saving deposits at transaction offices of credit institutions

  1. A depositor must come to a transaction office of a credit institution in person and present his/her identify proof; in case of a joint savings deposit, all depositors must present their identify proof in person. If the savings deposit is going to made by the legal representative, such legal representative must present his/her representative status proof and identity proof and identity proof of depositor.

  2. The depositor has to register his/her sample signature in a case where he/she wishes to change his/her old sample signature or he/she has not had such a sample signature registered at the credit institution. If the depositor is unable to write, read or see:  he/she will follow the guidelines of the credit institution.

  3. The credit institution shall compare and update information of depositors as per the law on anti-money laundering.

  4. The depositor will follow other procedures as guided by the credit institution.

  5. Upon completion of procedures prescribed in Clauses 1, 2, 3 and 4 of this Article, the credit institution shall take the savings deposit and give the passbook to the depositor.

  6. Adding credit to a savings account of an issued passbook:a) Adding credit in cash: The depositor shall comply with Clauses 1, 2, 3, and 4 of this Article and present the issued passbook.  The credit institution shall take the credit to the savings account, record the credit to the issued passbook and give the passbook to the depositor;b) Adding credit from a checking account of the depositor: the depositor will follow procedures as guided by the credit institution.”

  • Thirdly, Circular No. 48/2018/TT-NHNN supersedes Decision No. 1160/2004/QD-NHNN dated September 13, 2004 of the Governor of the State Bank of Vietnam on promulgation of Regulation on savings deposits, Decision No. 47/2006/QD-NHNN dated September 25, 2006 of the Governor of the State Bank of Vietnam on amendments to Regulation on savings deposits issued together with Decision No. 1160/2004/QD-NHNN dated September 13, 2004 of the Governor of the State Bank of Vietnam.

Specifically, Clause 1 of Article 22 of Circular No. 48/2018/TT-NHNN stipulates: “Article 22. Implementation provision

  1. This Circular comes into force as of July 5, 2019 and supersedes Decision No. 1160/2004/QD-NHNN dated September 13, 2004 of the Governor of the State Bank of Vietnam on promulgation of Regulation on savings deposits, Decision No. 47/2006/QD-NHNN dated September 25, 2006 of the Governor of the State Bank of Vietnam on amendments to Regulation on savings deposits issued together with Decision No. 1160/2004/QD-NHNN dated September 13, 2004 of the Governor of the State Bank of Vietnam.”

2.3. Circular No. 49/2018/TT-NHNN on term deposits

  • Name of legal document: Circular No. 49/2018/TT-NHNN issued on 31/12/2018 by the State Bank of Viet Nam on term deposits (hereinafter referred to as the “Circular No. 49/2018/TT-NHNN”)

  • Effective date: 05/07/2019.

Some contents should be noted:

  • Firstly, stipulating principles of carrying out term deposit transactions.

Specifically, Article 5 of Circular No. 49/2018/TT-NHNN stipulates: “Article 5. Principles of carrying out term deposit transactions

  1. A credit institution shall take term deposits in accordance with its scope of operation permitted by law and its establishment and operation licenses.

  2. A customer may only make a term deposit and receive payment thereof via his/her checking account.

  3. A customer shall, by himself/herself or through his/her legal representative, make a term deposit or receive payment thereof under guidance of the credit institution as per the law. If the customer is a person with limited legal capacity, legally incapacitated person as per the law or a person aged under 15 years, he/she shall make a term deposit or receive payment thereof via his/her legal representative; if the customer is a person with limited recognition and behavior control under law, he/she shall make a make a term deposit or receive payment thereof via his/her guardian (hereinafter referred to as legal representative).

  4. Regarding a joint term deposit, the customers shall make deposit or receive payment thereof via their joint checking account. Residents and non-residents may not jointly make a joint term deposit. Organizations and individuals may not jointly make a joint term deposit in foreign currency.

  5. The deposit term shall be determined according to the agreement made between the credit institution and the customer. With regard to a foreign organization or individual who is a non-resident, or a foreign individual who is a resident, the deposit term may not exceed the remaining validity period of their identity proof prescribed in Clause 4 and Clause 5 Article 4 hereof.

  6. The currency used in payment of principal and interest of the term deposit is the currency that the customer previously used to make the deposit.”

  • Secondly, amending certain articles of Circular No. 16/2014/TT-NHNN dated August 1, 2014 of the Governor of the State bank of Vietnam on guidelines for use of foreign currency and Vietnamese dong accounts of residents, non-residents held at authorized banks on (i) Using foreign currency account of residents as organizations; (ii) Using foreign currency account of non-residents as organizations; (iii) Using foreign currency account of residents as individuals; (iv) Using foreign currency account of non-residents as individuals.

Specifically, Clause 4 Article 17 of Circular No. 49/2018/TT-NHNN stipulates: “Article 17. Implementation provisions

…

4. This Circular amends certain articles of Circular No. 16/2014/TT-NHNN dated August 1, 2014 of the Governor of the State bank of Vietnam on guidelines for use of foreign currency and Vietnamese dong accounts of residents, non-residents held at authorized banks:

a) Add the third dash to Point d Clause 1 Article 3[10], the third dash to Point d Clause 1 Article [11]5 as follows:

“Foreign currency receipts from term deposit payout of principal and interest in foreign currency in accordance with regulations and laws on term deposits.”

b) Add Point k to Clause 2 Article 4[12], Point k to Clause 2 Article 5[13], Point I to Clause 2 Article [14]6 as follows:

“Wire transfer of foreign currency cash to term deposit account held at authorized credit institutions in accordance with regulations and law on term deposits.””

2.4. Circular No. 52/2018/TT-NHNN providing on rating credit institutions and branches of foreign banks

  • Name of legal document: Circular No. 52/2018/TT-NHNN issued on 31/12/2018 by the State Bank of Viet Nam providing on rating credit institutions and branches of foreign banks (hereinafter referred to as the “Circular No. 52/2018/TT-NHNN”)

  • Effective date: 01/04/2019.

Some contents should be noted:

  • Firstly, stipulating on principles and methods of ranking foreign credit institutions and branches of foreign banks.

Specifically, Article 4 of Circular No. 50/2018/TT-NHNN stipulates: “Article 4. Principles and methods of ranking foreign credit institutions and branches of foreign banks

1. The rating should ensure full reflection of the operational status and risks of credit institutions and branches of foreign banks and comply with the provisions of law.

2. Credit institutions and foreign bank branches are divided into peer groups, specifically as follows:

a) Group 1: Commercial banks have a large scale (the total average asset value in a quarter is ranked over 100,000 billion dong);

b) Group 2: Commercial banks are small in scale (the total average asset value in a quarter is equal to or lower than VND 100,000 billion);

c) Group 3: Branches of foreign banks;

d) Group 4: Financial companies;

e) Group 5: Financial leasing companies;

f) Group 6: Cooperative banks.

2. Credit institutions and branches of foreign banks are ranked according to the criteria system. Each ranking criterion includes quantitative indicators and qualitative groups. Group of quantitative indicators measures the level of banking operations on the basis of operating data of foreign credit institutions and branches of foreign banks. Qualitative indicators group to measure the compliance with legal regulations of credit institutions and branches of foreign banks.

3. Weight of the target group, the weight of each indicator in each peer group is determined on the basis of the importance of each group of criteria, each indicator for the level of banking activity and love demand of inspection and supervision.

  1. Based on the rating score achieved, credit institutions, foreign bank branches are classified into one of the following categories: Good (A), Fair (B), Medium (C), Weak ( D) or Extremely Weak (E).”

  • Secondly, stipulating on frequency, time for implementation and approval of ratings.

Specifically, Article 21 of Circular No. 52/2018/TT-NHNN stipulates: “Article 21. Frequency, time for implementation and approval of ratings

1. Before June 10 every year, the Banking Inspection and Supervision Agency shall submit to the State Bank Governor for approval the ranking results of the preceding year for credit institutions and branches of foreign banks.

2. Before June 30 every year, the Governor of the State Bank shall approve the ranking results of the preceding year for foreign credit institutions and branches of foreign banks.

3. In case of serving unexpected state management requirements, the State Bank Governor shall decide the time for ranking and approving other ranking results prescribed in Clauses 1 and 2 of this Article.”

[1] ““licensed credit institution” refers to a credit institution or branch of a foreign bank that is licensed to trade or provide forex service in accordance with regulations of the State Bank of Vietnam (hereinafter referred to as “SBV”).” (Clause 1 Article 3 Circular No. 31/2018/TT-NHNN)

[2] ““converting bank” refers to a commercial bank or branch of a foreign bank that is licensed to trade in the foreign exchange market of Vietnam in accordance with applicable laws and designated by the project enterprise or the investor under terms and provisions of the GGU to carry out the conversion of Vietnamese dong (VND) into a foreign currency for the project.” (Clause 5 Article 3 Circular No. 31/2018/TT-NHNN) (GGU is an acronym for Government Guarantee and Undertaking (Clause 5 Article 3 Circular No. 31/2018/TT-NHNN)

[3] “Article 52. Forms of outward investment

…

1. Outward investments in the following forms:

…

đ) Other forms of investments prescribed by law of the host country.”

[4] “Article 64. Principles of internal audit

1. The principles of internal audit are:

a) Independence:

…

(iv) The criteria for creating pay levels of the Chief Internal Auditor and internal auditors must be separated from the business and operational results of the units and departments belonging to the first and second lines of defense;”

[5] “Article 1. Amending and supplementing a number of Articles of Circular 16/2010/TT-NHNN

…

4. Article 5 is amended and supplemented as follows:

“Article 5. Application for Certificate

1. Dossiers of application for certificates include:

…

c) Documents proving the Conditions stipulated in Article 7 of Decree 10/2010/NĐ-CP and the Government’s regulations amending, supplementing and replacing these Conditions (if any), including:

…

viii) Documents of commercial banks committed to providing credit information to businesses in accordance with Form 04/TTTD issued with this Circular;”

[6] The lender are “credit institutions established and operated as per the Law on Credit Institutions” (clause 2 Article 2 Circular No. 45/2018/TT-NHNN)

[7] “Major shareholder of a joint-stock credit institution means a shareholder directly or indirectly owning 5% or more of the voting share capital of that institution.” (Clause 26 Article 4 Law on Credit 2010)

[8] “Presiding credit institution refers to:

a) Credit institution with major shareholders and related persons thereof that own shares making up at least 5% of charter capital of another credit institution; or

b) Credit institution with major shareholders that is selected under agreements between credit institutions as the one presiding over the formulation of the plan for remedy for the ownership of shares beyond allowed limits in case these credit institutions have the same major credit institutions; or

c) Credit institution with major shareholders which owns the highest percentage of shares in case credit institutions having the same major credit institutions fail to reach an agreement to appoint a credit institution to preside over the formulation of the plan for remedy for the ownership of shares beyond allowed limits as provided in point b of this clause.” (Clause 1 Article 2 Circular 46/2018/TT-NHNN)

[9] “Other credit institution refers to:

  1. a) Credit institution of which at least 5% of charter capital is owned by shareholders, which are major shareholders in that credit institution, and related persons thereof; or

  2. b) Credit institution having a major shareholder that is not the presiding credit institution as provided in point b and c of clause 1 of this Article.” (Clause 2 Article 2 Circular 46/2018/TT-NHNN).

[10] “Article 3. Using foreign currency account of residents as organizations

The residents as organizations are entitled to use foreign currency accounts at the authorized banks for transactions of receipts and expenditures as follows:

Receipts:

…

d) Legal foreign currency revenues earned in the country, including:

– Receipts from the purchase of transferred foreign currency at the authorized credit institutions;

– Receipts of transferred foreign currency or remittance of foreign currency cash deposited into the account for cases entitled to receive foreign currency regulated by the State Bank of Vietnam on the use of foreign exchange in the territory of Vietnam.”

[11] “Article 5. Using foreign currency account of non-residents as organizations

The non-residents as organizations are entitled to use foreign currency accounts at the authorized banks to transact receipts and expenditures as follows:

1. Receipts:

…

d) Receipts of foreign currency from legal sources in the country, including:

– Receipts from the purchase of wired foreign currency at the authorized credit institutions;

– Receipts of wired foreign currency or remittance of foreign currency cash to the account for cases entitled to earn foreign currency regulated by the State Bank of Vietnam on the use of foreign exchange in the territory of Vietnam.”

[12] “Article 4. Using foreign currency account of residents as individuals

The residents as individuals are entitled to use foreign currency account at the authorized banks to transact their receipts and expenditures as follows:

…

2. Expenditures:

a) Sale of foreign currency to authorized credit institutions;

b) Remittance or payment for current account or capital transactions under regulations of law on foreign exchange management;

c) Conversion to other foreign currencies under regulations of State Bank of Vietnam;

d) Conversion to other payment instruments in foreign currency;

dd) Donation or offer as stipulated by laws;

e) Withdrawal of foreign currency cash;

g) Transfer to overseas residents being foreign individuals;

h) Transfer to foreign currency saving accounts opened at the authorized bank for residents as Vietnamese citizens;

i) Payment for the items that may be paid in foreign currencies under regulations of the State Bank of Vietnam on the use of foreign currencies in the territory of Vietnam;”

[13] “Article 5. Using foreign currency account of non-residents as organizations

The non-residents as organizations are entitled to use foreign currency accounts at the authorized banks to transact receipts and expenditures as follows:

 …

2. Expenditures:

a) Sale of foreign currency to authorized credit institutions;

b) Remittance or payment for current transactions or capital transactions under regulations of law on foreign exchange management;

c) Conversion to other foreign currencies under regulations of State Bank of Vietnam;

d) Conversion to other payment instruments in foreign currency;

dd) Withdrawal of foreign currency to individuals working for organizations when being sent abroad for their business trips;

e) Wire transfer or withdrawal of foreign currency cash for payment, bonus or allowance to the residents or non-residents or residents as foreign individuals;

g) Wire transfer overseas or wire transfer to the foreign currency account of other non-residents;

h) Payment for exported goods and services to residents.

i) Payment for items that may be paid in foreign currencies under regulations of the State Bank of Vietnam on the use of foreign exchange in the territory of Vietnam;”

[14] “Article 6. Using foreign currency account of non-residents as individuals

The non-residents as individuals are entitled to use foreign currency accounts at the authorized banks to carry out the transaction of receipts and expenditures as follows:

…

2. Expenditures:

a) Sale of foreign currency to authorized credit institutions;

b) Remittance or payment for current transactions or capital transactions under regulations of law on foreign exchange management;

c) Conversion to other foreign currencies under regulations of State Bank of Vietnam;

d) Conversion to other payment instruments in foreign currency;

dd) Donation or offer as stipulated by law;

e) Withdrawal of foreign currency cash;

g) Wire transfer to abroad or to the foreign currency account of other non-residents;

h) Payment for items that may be paid in foreign currencies under regulations of the State Bank of Vietnam on the use of foreign exchange in the Vietnamese territory.”