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Legal update relating to Finance and Credit (Monthly Legal Update – 04/2019)

by QNT | Apr 8, 2019 | Banking, EN, Legal Update

1. LEGAL DOCUMENTS ARE EFFECTIVE FROM 01/04/2019

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;

e) Group 6: Cooperative banks.

3. 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.

4. 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.

5. 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.”

Legal update relating to Finance and Credit (Monthly Legal Update – 03/2019)

by QNT | Mar 8, 2019 | Banking, EN, Legal Update

1. LEGAL DOCUMENTS ARE EFFECTIVE FROM 01/03/2019

1.1. Circular No. 30/2018/TT-NHNN guidance for determination of state capital of equitized enterprises being credit organization

Name of legal document: Circular No. 30/2018/TT-NHNN issued on 12/12/2018 by the State Bank of Viet Nam guidance for determination of state capital of equitized enterprises being credit organization (hereinafter referred to as the “Circular No. 30/2018/TT-NHNN”).
Effective date: 01/03/2019.

The contents should be noted: Clause 2 Article 2 of Circular No. 30/2018/TT-NHNN stipulates on regulated entities of the Circular as follows: “2. Regulated entities:

a) Equitized enterprises are credit institutions, including:

(i) State-owned one-member limited liability companies with 100% of the charter capital prescribed in Clause 2, Article 2[1] of Decree No. 126/2017/ND-CP are credit institutions;

(ii) One-member limited liability companies invested by state enterprises with 100% charter capital prescribed in Clause 3[2], Article 2 of Decree No. 126/2017/ND-CP are credit institutions;

b) The agency representing the owner and agencies, organizations and individuals involved in the determination of the state capital of equitized enterprises is the credit institution specified at Point a of this Clause.”

1.2. Circular No. 51/2018/TT-NHNN regulating conditions, records, order and procedures for approving the capital contribution, share purchase of credit institutions

Name of legal document: Circular No. 51/2018/TT-NHNN issued on 31/12/2018 by the State Bank of Viet Nam regulating conditions, records, order and procedures for approving the capital contribution, share purchase of credit institutions (hereinafter referred to as the “Circular No. 51/2018/TT-NHNN”).
Effective date: 01/03/2019.

Some contents should be noted:

Firstly, regulating conditions of capital contribution, purchase of shares of credit institutions.

Specifically, Article 4 of Circular No. 51/2018/TT-NHNN stipulates as follows: “Article 4. Conditions of capital contribution, purchase of shares of credit institutions

1. Conditions for making capital contribution and share purchase to establish and buy subsidiary companies specified at Points a and c, Clause 1, Article 1 of this Circular (except for subsidiary companies operating in the field of management debt and asset exploitation):

a) License for establishment and operation of credit institutions with contents of capital contribution and share purchase;

b) Ensuring the minimum capital adequacy ratio as prescribed in Point b, Clause 1, Article 130 of the Law on Credit Institutions in the 24 months preceding the proposed month and at the time of completing the capital contribution and buying shares according to approval of the State Bank;

c) Ensuring the ratio of capital contribution and share purchase in accordance with Article 129 of the Law on Credit Institutions in the 24 months preceding the proposed month and at the time of completion of capital contribution and share purchase as approved by the State Bank;

d) The real value of charter capital at the time of completion of capital contribution or share purchase is not lower than the legal capital;

dd) The results of profitable business activities according to the financial statements of the year preceding the year of request for audit have been audited by an independent auditing organization;

e) Not be sanctioned for administrative violations in debt classification, appropriation and use of reserves to handle risks, contribute capital, buy shares in 12 consecutive months preceding the proposed month;

g) Having a bad debt ratio compared to the total outstanding debt of less than 3% in the 12 months preceding the proposed month;

h) There is an organizational structure, the Board of Directors, the Members’ Council, the Control Board, the General Director (Director) in accordance with the Law on Credit Institutions and the regulations of the State Bank.

2. Conditions for making capital contribution and share purchase for establishment and acquisition of associated companies specified at Points a and c, Clause 1, Article 1 of this Circular (except for affiliate companies operating in the field of debt management and asset exploitation):

a) Conditions specified at Points a, d, dd, e, g and h, Clause 1 of this Article;

b) Ensuring the minimum capital adequacy ratio as prescribed in Point b, Clause 1, Article 130 of the Law on Credit Institutions in the 12 months preceding the proposed month and at the time of completing the capital contribution and buying shares according to approval of the State Bank;

c) Ensuring the ratio of capital contribution and share purchase in accordance with Article 129 of the Law on Credit Institutions in the 12 months preceding the proposed month and at the time of completion of capital contribution and share purchase as approved by the State Bank.

3. Conditions for capital contribution and share purchase to establish and acquire subsidiaries and associated companies operating in the field of debt management and asset exploitation:

a) Conditions specified at Point a, Clause 1 of this Article;

b) Ensuring the ratio of capital contribution and share purchase in accordance with Article 129 of the Law on Credit Institutions at the time of completion of capital contribution and share purchase as approved by the State Bank;

c) Having a bad debt ratio compared to the total outstanding debt of over 3% in the 12 months preceding the proposed month.

4. Conditions for making capital contribution or share purchase for other enterprises operating in the fields specified at Point b, Clause 1, Article 1 of this Circular:

a) The conditions specified in Clause 1 of this Article;

b) Ensuring the maximum ratio of short-term capital sources used for medium- and long-term loans under the provisions of Point c, Clause 1, Article 130 of the Law on Credit Institutions and the regulations of the State Bank in 24 Next month before the proposed month.

5. Conditions for converting debts into contributed capital specified at Point d, Clause 1, Article 1 of this Circular:

a) Conditions specified at Points a, b, c, d, dd, e and h, Clause 1 of this Article;

b) Debts converted into contributed capital must be bad debts and the transfer of debts into contributed capital is to handle bad debts. Bad debts are debts determined by the State Bank’s regulations on classification of assets, deduction levels, methods of setting up risk provisions and the use of risk provisions in the operation of credit institutions, branches of foreign bank.”

Secondly, prescribing the order and procedures for approving capital contribution and purchase of shares of credit institutions.

Specifically, Article 6 Circular No. 51/2018/TT-NHNN stipulates: “Article 6. Order and procedures for approving capital contribution and purchase of shares of credit institutions

1. Credit institutions shall make 02 sets of dossiers as prescribed in Article 5 of this Circular and send them to the State Bank (via the Banking Inspection and Supervision Agency). In case the dossier is incomplete or invalid, within 7 days after receiving the dossier, the Banking Inspection and Supervision Agency shall send a written request to the credit institution to supplement the dossier.

2. Within 07 days from the date of receipt of a complete and valid dossier, the Banking Inspection and Supervision Agency shall send a written document enclosed with the dossier for sending comments:

a) State Bank branches in provinces, cities where the credit institutions are headquartered on meeting the conditions prescribed in this Circular;

b) Units of the State Bank on capital contribution, share purchase, debt transfer into contributed capital of credit institutions (if necessary).

3. Within 10 days from the date of receiving the written opinions of the Banking Inspection and Supervision Agency, the consulted units specified in Clause 2 of this Article shall have their written opinions sent to Banking Inspection and Supervision on the contents to be consulted.

4. Within 14 days from the date of receiving the comments of the relevant units, the Banking Inspection and Supervision Agency shall appraise the dossier and submit it to the State Bank Governor for consideration, approval or disapproval of the capital contribution, share purchase, debt transfer into contributed capital at the request of the credit institution.

5. Within 45 days from the date of receipt of a complete and valid dossier, the State Bank shall issue a written approval or disapproval of the capital contribution, share purchase and debt transformation into contributed capital of a credit institution; In case of disapproval, the State Bank shall issue a document clearly stating the reason.

6. Within 12 months after the State Bank issues a written approval, the credit institution must complete the capital contribution, share purchase, and debt transfer into contributed capital. Beyond this time limit, the State Bank’s written approval shall automatically expire.”

7. 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. 53/2018/TT-NHNN regulations on the network of non-bank credit institutions

Name of legal document: Circular No. 53/2018/TT-NHNN issued on 31/12/2018 by the State Bank of Viet Nam regulations on the network of non-bank credit institutions (hereinafter referred to as the “Circular No. 53/2018/TT-NHNN”).
Effective date: 01/03/2019.

Some contents should be noted:

Firstly, regulations on conditions for establishing branches of non-bank credit institutions

Specifically, Article 7 of Circular No. 53/2018/TT-NHNN stipulates: “Article 7. Conditions for establishing branches

1. A non-bank credit institution with a period of operation of 12 months or more (calculated from the date of opening operation to the time of request) is allowed to establish no more than 3 branches in a fiscal year when meeting the following conditions:

a) The actual value of charter capital as at December 31 of the preceding year is not lower than the legal capital level;

b) Interest-bearing business activities according to the consolidated financial statements and audited separate financial statements of the preceding year preceding the year of proposal. This condition does not apply to non-bank credit institutions submitting their application for the second year from the date of opening;

c) At the time of the proposal, the competent agency does not apply measures not to expand the area of operation;

d) At the time of the proposal, it does not violate the regulations on safety ratio in the operation of non-bank credit institutions;

dd) The ratio of bad debt to total outstanding debt as of December 31 of the preceding year preceding the year of proposal and at the time of the proposal does not exceed 4% or another rate decided by the Governor fin each period;

e) At the time of proposal the Board of Directors, the Members’ Council, and the Control Board to have the quantity and structure strictly according to the provisions of law, no vacancies to the General Director (Director) title;

g) At the time of the proposal does not violate the regulations on internal control system and internal audit; asset classification and risk provisioning;

h) There is a Regulation on network management in accordance with Article 6 of this Circular;

i) Has a scheme to establish a network unit.

2. Non-bank credit institutions with operating duration of less than 12 months (from the date of opening operation to the time of proposal) are allowed to establish no more than 2 branches when meeting the following conditions:

a) The real value of charter capital at the time of proposal is not lower than the legal capital;

b) The ratio of bad debt to the total outstanding debt at the latest time of the proposal does not exceed 4% or another rate as decided by the Governor in each period;

c) The provisions at Points c, d, e, g, h and i, Clause 1 of this Article.”

Secondly, annulling Decision No. 01/2008/QD-NHNN dated January 9, 2008 of the Governor of the State Bank of Vietnam promulgating regulations on opening and terminating operations of branches and representative offices of groups non-bank credit institutions.

Specifically, Clause 2 Article 25 of Circular No. 53/2018/TT-NHNN stipulates: “Article 25. Implementation effect

…

2. To annul Decision No. 01/2008 / QD-NHNN dated January 9, 2008 of the Governor of the State Bank of Vietnam promulgating regulations on opening and terminating operations of branches and representative offices of groups non-bank credit institutions.”

1.4. Circular No. 01/2019/TT-NHNN on amendments to the Circular No. 30/2015/TT-NHNN dated December 25, 2015 by the Governor of the State Bank of Viet Nam on licensing, organization and operation of non-bank credit institutions

Name of legal document: Circular No. 01/2019/TT-NHNN issued on 01/02/2019 by the State Bank of Viet Nam on amendments to the Circular No. 30/2015/TT-NHNN dated December 25, 2015 by the Governor of the State bank of Vietnam on licensing, organization and operation of non-bank credit institutions (hereinafter referred to as the “Circular No. 01/2019/TT-NHNN”).
Effective date: 20/03/2019.

Some contents should be noted:

Firstly, modify, supplement the explanation of the phrase “Lessee”.

Specifically, Clause 1 Article 1 of Circular No. 01/2019/TT-NHNN stipulates: Article 1. Amendments to the Circular No. 30/2015/TT-NHNN dated December 25, 2015 by the Governor of the State Bank of Vietnam (“SBV”)

1. Clause 14 Article 3[3] is amended as follows:

“14. Lessee (including the seller of an asset that then leases that asset under a finance lease contract) refers to a legal entity or individual that operates in Vietnam and directly uses the leased asset to serve their operations.

When a household, artel or organization without a legal status wishes to enter into a finance lease contract, such finance lease contract must be concluded by its member or authorized representative.”.”

Secondly, the phrase “Cục Thanh tra, giám sát ngân hàng” (“Bank Supervision and Inspection Office”) is changed into “Cơ quan Thanh tra, giám sát ngân hàng (đối với địa bàn có Cục Thanh tra, giám sát ngân hàng)” (“Bank Supervision and Inspection Authority (for province where the Bank Supervision and Inspection Office is established)”)

Specifically, Clause 3 Article 2 of Circular No. 01/2019/TT-NHNN stipulates: “Artilce 2.

…

3. The phrase “Cục Thanh tra, giám sát ngân hàng” (“Bank Supervision and Inspection Office”) is changed into “Cơ quan Thanh tra, giám sát ngân hàng (đối với địa bàn có Cục Thanh tra, giám sát ngân hàng)” (“Bank Supervision and Inspection Authority (for province where the Bank Supervision and Inspection Office is established)”) at Point a Clause 3 Article 10, Point d Clause 1 Article 41, Article 7 Appendix No. 09A, Article 7 Appendix No. 09B, Article 7 Appendix No. 09C, Article 7 Appendix No. 09D of the Circular No. 30/2015/TT-NHNN.”

1.5. Decree No. 16/2019/ND-CP amending and supplementing decrees on business conditions under the state management of the State Bank of Viet Nam

Name of legal document: Decree No. 16/2019/ND-CP issued on 01/02/2019 by the Government of Viet Nam amending and supplementing decrees on business conditions under the state management of the State Bank of Viet Nam (hereinafter referred to as the “Decree No. 16/2019/TT-NHNN”).
Effective date: 20/03/2019.

The content should be noted: amending and supplementing conditions for a credit information company to obtain a certificate of eligibility for credit information-related activities.

Specifically, Article 4 of Decree No. 16/2019/ND-CP stipulates: “Article 4. Amending and supplementing certain articles of the Government’s Decree No. 10/2010/ND-CP dated February 12, 2010 on credit information-related activities

Clause 5 Article 7[4] (as amended and supplemented in Article 1 of the Government’s Decree No. 57/2016/ND-CP dated July 01, 2016 providing amendments to Article 7 of the Government’s Decree No. 10/2010/ND-CP dated February 12, 2010) is amended and supplemented as follows:

“5. There are at least 15 credit institutions, branches of foreign banks (except banks for social policies, cooperative banks, people’s credit funds and microfinance institutions) that commit to provide credit information; these credit institutions and branches of foreign banks do not give similar commitments to any other credit information provider.””

1.6. Circular No. 02/2019/TT-NHNN amending and supplementing a number of articles of the circular no. 23/2014/TT-NHNN dated august 19, 2014 of the State Bank of Vietnam guiding the opening and use of payment accounts at payment service suppliers

Name of legal document: Circular No. 02/2019/TT-NHNN issued on 28/02/2019 by the State Bank of Viet Nam amending and supplementing a number of articles of the circular no. 23/2014/TT-NHNN dated august 19, 2014 of the State Bank of Vietnam guiding the opening and use of payment accounts at payment service suppliers (hereinafter referred to as the “Circular No. 02/2019/TT-NHNN”).
Effective date: 01/03/2019.

Some contents should be noted:

Firstly, amending and supplementing regulations on authorization in using payment accounts.

Specifically, Clause 2, Article 1 of Circular No. 02/2019/TT-NHNN stipulates: “Article 1. Amending and supplementing a number of articles of Circular No. 23/2014/TT-NHNN of August 19, 2014 of The State Bank of Vietnam guides the opening and use of payment accounts at payment service suppliers

…

2. Clause 1 and Clause 2 of Article 4[5] are amended and supplemented as follows:

“1. The account holder has the right to authorize another person to use his or her payment account.

The authorization in the use of payment accounts must be in writing and comply with the law on authorization.””

Secondly, supplementing regulations on handling checks and complaints in using payment accounts.

Specifically, Clause 11 Article 1 of Circular No. 02/2018/TT-NHNN stipulates: “Article 1. Amending and supplementing a number of articles of Circular No. 23/2014/TT-NHNN of August 19, 2014 of The State Bank of Vietnam guides the opening and use of payment accounts at payment service suppliers

…

11. “Article 15a. Handling checks and complaints in using payment accounts

1. Banks and branches of foreign banks are responsible for receiving customers’ inquiries and complaints during the process of using payment accounts to ensure compliance with the following principles:

a) Applying at least two forms of receiving information of inspection and complaint including via telephone switchboards (with sound recording) and through transaction points of banks and branches of foreign banks; ensure the verification of basic information that customers have provided to banks and foreign bank branches;

b) Developing a form of request for investigation and complaint for customers to use when requesting investigation and complaint. In case of receiving information via telephone switchboards, banks and branches of foreign banks require customers to supplement inspection requests and complaints according to forms within the prescribed time of banks and branches of foreign banks to act as the official basis for handling investigation and complaints. In case of authorizing other people to request examination, complaint, customers shall comply with the provisions of law on authorization;

c) Banks and branches of foreign banks are allowed to agree on and specify the time limit for customers to be entitled to request for investigation and complaint but not less than 60 days from the date of the transaction for requesting investigation, complaint.

2. Time limit for handling investigation and complaints:

a) Within 30 working days after receiving customers’ requests for first-time inspection and complaint according to one of the receiving forms prescribed at Point a, Clause 1 of this Article, the banks or branches of foreign banks shall be responsible for handling customers’ requests for investigation and complaints;

b) Within 5 working days from the date of notification of inspection results, complaints to customers, banks and branches of foreign banks shall be refunded to customers according to the agreement and current law for losses arising out of the customer’s fault and/or not subject to force majeure circumstances as agreed upon terms and conditions for opening and using payment accounts;

c) In case of expiry of the time limit for handling the control and complaint specified at Point a of this Clause, but the cause or error of any party has not been determined yet, within the next 15 working days, the bank or branches of foreign banks shall agree with customers on the plan of handling investigation and complaints.

3. If the case shows signs of a crime, the bank or branches of foreign banks shall notify the competent state agency in accordance with the law on criminal procedures and report to the State Bank (Payment Department, Banking Inspection and Supervision Agency, State Bank of provinces and cities in the area); at the same time, notify customers in writing about the status of handling requests for investigation and complaints. The handling of results of inspection and complaints falls under the handling responsibility of competent state agencies. In cases where competent state agencies announce the settlement results without criminal elements, within 15 working days from the date of conclusion of competent state agencies, banks or branches of foreign banks agreed with customers on the plan of handling results of investigation and complaint.

4. In case the banks, branches of foreign banks, customers and related parties cannot reach an agreement and/or disagree with the process of requesting a investigation or complaint, the dispute resolution shall be made according to regulations of laws.””

[1] “Article 2. Regulated entities

…

2. State-owned enterprises including:

a) Wholly state-owned single-member limited liability companies (LLCs) that are parent companies of state-owned economic groups, parent companies of state corporations (including state-owned commercial banks) or parent companies in groups of parent companies and subsidiaries (hereinafter referred to as “parent companies”).

b) Wholly state-owned single-member LLCs.

c) Wholly state-owned enterprises that have not been converted into single-member LLCs.”

[2] “Article 2. Regulated entities

…

3. Single-member LLCs with 100% of charter capital invested by state-owned enterprises (hereinafter referred to as “level II enterprises”).”

[3] “Article 3. Interpretation of terms

In this Circular, some terms are construed as follows:

…

14. The lessee (including sub-lessee) includes organizations and individuals operating in Vietnam including legal and natural persons and other civil subjects according to civil laws who have the use of the leased assets for their own purposes.”

[4] “Article 7. Conditions for a credit information company to obtain a certificate of eligibility for credit information-related activities

…

5. Having at least 20 commercial banks that commit to provide credit information exclusively to the company”

[5] “Article 4. Authorization in using payment account1. In the process of using the payment account, the account holder, the chief accountant or the person in charge of accounting (if any) may authorize another person.”

This amount is amended by Clause 2 Article 1 of Circular 32/2016/TT-NHNN

“Article 1. Amending and supplementing a number of articles and appendices of Circular No. 23/2014/TT-NHNN dated August 19, 2014 of the State Bank of Vietnam guiding the opening and use of payment accounts at payment service suppliers”

…

2. Clause 1… Article 4 is amended and supplemented as follows:

“1. The account holder has the right to authorize another person to use his or her payment account.”

“2. Authorization in the use of payment accounts must be in writing and comply with the law on authorization. Authorization in using the organization’s payment account must be approved in writing by the account opening organization.”

This clause is amended by Clause 2 Article 1 of Circular 32/2016/ TT-NHNNĐ

“Article 1. Amending and supplementing a number of articles and appendices of Circular No. 23/2014/TT-NHNN of August 19, 2014 of The State Bank of Vietnam guides the opening and use of payment accounts at payment service suppliers

…

2. … Clause 2 of Article 4 is amended and supplemented as follows:

… 2. Authorization in the use of payment accounts must be in writing and comply with the law on authorization. “”

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

by QNT | Feb 19, 2019 | Banking, EN, Legal Update

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

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.
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.
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.
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.
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.
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.
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.
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

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).
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

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

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.
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:

Contributing charter capital to establish an economic organization in accordance with the law of the investment recipient country.
Contributing capital to implement business cooperation contracts (BCC contracts) in foreign countries.
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.
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:

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

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.
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

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.
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

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.
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.
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

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

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.
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.
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.
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

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

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.
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.
The credit institution shall compare and update information of depositors as per the law on anti-money laundering.
The depositor will follow other procedures as guided by the credit institution.
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.
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

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

A credit institution shall take term deposits in accordance with its scope of operation permitted by law and its establishment and operation licenses.
A customer may only make a term deposit and receive payment thereof via his/her checking account.
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).
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.
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.
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.

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

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.

[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:

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
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.”

Legal update relating to Finance and Credit (Monthly Legal Update – 01/2019)

by QNT | Jan 7, 2019 | Banking, EN, Legal Update

1. LEGAL DOCUMENTS ARE EFFECTIVE FROM 01/12/2018

1.1. Circular No. 13/2018/TT-NHNN on internal control systems of commercial banks and foreign banks’ branches

Name of legal document: Circular No. 13/2018/TT-NHNN issued on 18/05/2018 by the State Bank of Viet Namon internal control systems of commercial banks and foreign banks’ branches (hereinafter referred to as the “Circular No. 13/2018/TT-NHNN”).
Effective date: 01/01/2019.

Some contents should be noted:

Firstly, regulating on submission of internal control reports to the State Bank.

Specifically, Article 7 of Circular No. 13/2018/TT-NHNN stipulates: “Submission of internal control reports to the State Bank

1. The commercial bank/foreign bank branches must produce internal control reports and submit them to the State Bank (the Bank Inspection and Oversight Authority) as specified in Clauses 2, 3 and 4 of this Article.

2. The internal control report includes:

a) Annual self-inspection and self-assessment results, as specified in Appendix 1 issued together with this Circular;

b) Annual risk management report, as specified in Appendix 2 issued together with this Circular;

c) Annual internal capital adequacy assessment report, as specified in Appendix 4 issued together with this Circular;

d) Annual internal audit report, as specified in Appendix 5 issued together with this Circular, alongside unscheduled internal audit report.

3. Report submission period:

a) In the case of reports mentioned in Points a, b and c, Clause 2 of this Article: The commercial bank/foreign bank’s branch shall submit the fiscal year’s report within 45 days after the end of that fiscal year.

b) In the case of reports mentioned in Points d, Clause 2 of this Article:

(i) The commercial bank shall submit the fiscal year’s internal audit report within 60 days after the end of that fiscal year.

(ii) The foreign bank branches shall submit the fiscal year’s internal audit report within 60 days after the internal audit’s date of completion. No submission is required if there is no internal audit in that fiscal year;

(ii) The commercial bank/foreign bank branches shall submit the unscheduled internal audit report within 07 working days after the unscheduled internal audit’s date of completion.

4. The internal control report mentioned in Clause 2 of this Article must update the problems, limitations and risks that recently arose in the internal control system of the whole commercial bank, including the departments of the headquarters, branches and other affiliates specified in the State Bank’s regulations on commercial banks’ operational networks (hereinafter referred to as other affiliates) and foreign bank’s branch.”

Secondly, regulating on Requirements for internal control.

Specifically, Article 14 of Circular No. 13/2018/TT-NHNN stipulates: “Requirements for internal control

1. Internal control applies to all activities, business processes and departments of the commercial bank (including the headquarters, branches and other affiliates) or foreign bank’s branch and must fulfill the following requirements:

a) The commercial bank’s/foreign bank’s branch’s activities must comply with regulations of law;

b) Control conflict of interest; detect and take action against violations in a timely manner;

c) Increase awareness of the roles and responsibilities of individuals and departments in internal control in order to build and maintain the commercial bank’s/foreign bank’s branch’s control culture.

2. Internal control is conducted through control activities, the information exchange mechanism and the management information system.”

Thirdly, regulating on risk limits in risk management.

Specifically, Article 25 of Circular No. 13/2018/TT-NHNN stipulates: “Risk limits

1. The commercial bank’s risk limit is issued and amended (including risk limit adjustment) by the Director General (Director). The competence to promulgate and amend the foreign bank’s branch’s risk limit shall comply with the parent bank’s regulations.

2. The risk limit must:

a) Comply with regulations on restrictions specified in the Law on Credit Institutions and the State Bank’s regulations in to ensure safety of the credit institution’s/foreign bank’s branch’s operations;

b) Have limits on material risks;

c) Comply with the risk appetite, risk management strategies and the total risk assets allocated to that risk;

d) Be sufficient and specific in order to control risks coming from business activities and departments participating in risk-bearing transactions;

dd) Be reviewed and reassessed (adjusted if necessary) at least once per year or when a major change affects the risk position, as specified in the commercial bank/foreign bank’s branch’s internal regulations. In case of raising the commercial bank’s risk limit, the Director General (Director) must notify the Board of Directors/Members’ Council of that adjustment;

e) Be disseminated to the related individuals and departments.

If an activity, transaction or product has different limits for different risks, the commercial bank/foreign bank’s branch must apply the more conservative risk limit.”

1.2. Circular No. 18/2018/TT-NHNN on information system security in banking operations

Name of legal document: Circular No. 18/2018/TT-NHNN issued on 21/8/2018 by the State Bank of Viet Namon information system security in banking operations (hereinafter referred to as the “Circular No. 18/2018/TT-NHNN”).
Effective date: 01/01/2019.

Some contents should be noted:

Firstly, stipulating on management of information technology assets.

Specifically, Article 6 of Circular No. 18/2018/TT-NHNN stipulates: “Management of information technology assets

1. Information technology assets include:

a) Information assets such as digital data and information which are processed and stored through the information system;

b) Physical assets such as information technology equipment, means of media, information-bearing objects and equipment that support operation of the information system;

c) Software assets such as software systems, utility software, middleware, database, application programs, source codes and development tools.

2. The institution shall make a list of all information technology assets attached to each information system as prescribed in Clause 3 Article 4[1] herein. Annual review and update of such list is required.

3. According to the importance of information systems, the institution shall adopt management and protection methods suitable for each type of information technology asset.

4. According to classification of information technology assets prescribed in Clause 1 this Article, the institution shall set up and adopt regulations on asset management and use as prescribed in Article 7, 8, 9, 10 and 11 herein.”

Secondly, stipulating work which institution[2] shall do When an employee in an institution terminates or change employment.

Specifically, Article 15 of Circular No. 18/2018/TT-NHNN stipulates: “Employment termination or change

When an employee in an institution terminates or change employment, such institution shall:

determine responsibilities of such employee at the date of employment termination or change
request such employee to hand over the information technology assets
revoke the right to access to the information system of the employee resigning from his/her job
timely change the access right to information system of the employee who changes his/her employment in order to conform to the principle that such right is given adequately for him/her to perform the assigned duty.
at least every six months, carry out review, inspection and comparison between personnel management department and department in charge of management of granting and revocation of rights to access to information systems for the purpose of complying with regulations specified in Clause 3 and 4 this Article
inform the State Bank of Viet Nam (Information Technology Authority) of cases in which individuals working in information technology sector of the institution have been disciplined in forms of dismissal, discharge or legal proceedings on account of violations against information security regulations.”

Thirdly, stipulating on criteria for selecting a third party providing the cloud computing service.

Specifically, Article 33 of Circular No. 18/2018/TT-NHNN stipulates: “Criteria for selecting a third party providing the cloud computing service

Any third party shall be selected if it:

1. is an enterprise;

2. owns information technology infrastructure corresponding to the service requested by the institution which:

a) complies with provisions of Viet Namese laws;

b) is granted an unexpired international certificate of information security.”

1.3. Circular No. 20/2018/TT-NHNN regulating on monitoring of payment systems

Name of legal document: Circular No. 20/2018/TT-NHNN issued on 30/8/2018 by the State Bank of Viet Nam regulating on monitoring of payment systems (hereinafter referred to as the “Circular No. 20/2018/TT-NHNN”).
Effective date: 01/01/2019.

Some contents should be noted:

Firstly, explaining the terms “Payment system”, “Important payment system”.

Specifically, Clause 1, Clause 2 Article 3 of Circular No. 20/2018/TT-NHNN stipulates:

“1. Payment system means a system consisting of payment facilities, regulations, procedures, technical infrastructure, operation organizations and participating members for handling, clearing, settling payment transactions arising between participating members.

2. Important payment system is the payment system that plays a key role in servicing the demand of payment in the economy, potentially results in systemic risk, meets at least one in the following criteria:

a) It is the only payment system or accounts for a large proportion of the total payment value compared to the same type payment systems; or

b) It is a system processing high-value payment transactions; or

c) The system is used to settle accounts for other payment systems or for financial market transactions.

Important payment systems defined in this Circular include: the National Interbank Electronic Payment System; Foreign currency payment system (operated by the Joint Stock Commercial Bank for Foreign Trade of Viet Nam); payment system for securities trading; system for compensation, financial transaction switching.”

Secondly, stipulating on supervision contents of the National Interbank Electronic Payment System.

Specifically, Article 8 of Circular No. 20/2018/TT-NHNN stipulates: “The National Interbank Electronic Payment System

The general operation of the National Interbank Electronic Payment System, including information on the duration of operation, status of participants, payment status of each service provided (high-value payment services, low-value payment services, foreign currency payment services, net settlement services for other payment systems).
Risk situation arising and risk management for operational risk, credit risk, liquidity risk and settlement risk of the National Interbank Electronic Payment System.
The observance of legal provisions relating to the management and operation of the National Interbank Electronic Payment System.
Changes in the operation of the National Interbank Electronic Payment System, including changes in system features, procedures and internal procedures.”

Thirdly, issuing annexes for implementing Circular No. 20/2018/TT-NHNN.

Specifically,

Appendix I issued together with Circular No. 20/2018/TT-NHNN on the operation data of the National Interbank Electronic Payment System.
Appendix II issued together with Circular No. 20/2018/TT-NHNN on the operation data of Foreign currency payment system; payment system for securities trading; system for compensation, financial transaction switching.
Appendix III issued together with Circular No. 20/2018/TT-NHNN on the report on operation of the important payment system.
Appendix IV issued together with Circular No. 20/2018/TT-NHNN on incident notification.
Appendix V issued together with Circular No. 20/2018/TT-NHNN on the report on evaluation of the payment system.

1.4. Circular No. 42/2018/TT-NHNN amending and supplementing a number of articles of the Circular No. 24/2015/TT-NHNN dated December 08th, 2015 of the Governor of the State bank of Viet Nam on foreign currency loans granted to residents by credit institutions and branches of foreign banks

Name of legal document: Circular No. 42/2018/TT-NHNN issued on 28/12/2018 by the State Bank of Viet Nam amending and supplementing a number of articles of the Circular No. 24/2015/TT-NHNN dated December 08th,2015 of the Governor of the State bank of Viet Nam on foreign currency loans granted to residents by credit institutions and branches of foreign banks.

(Circular No. 24/2015/TT-NHNN dated December 08th,2015 of the Governor of the State bank of Viet Nam on foreign currency loans granted to residents by credit institutions and branches of foreign banks hereinafter referred to as the “Circular No. 24/2015/TT-NHNN”

Circular No. 42/2018/TT-NHNN issued on 28/12/2018 by the State Bank of Viet Nam amending and supplementing a number of articles of the Circular No. 24/2015/TT-NHNN dated December 08th,2015 of the Governor of the State bank of Viet Nam on foreign currency loans granted to residents by credit institutions and branches of foreign banks hereinafter referred to as the “Circular No. 42/2018/TT-NHNN”).

Effective date: 01/01/2019.

Some contents should be noted:

Firstly, amending and supplementing regulations on currency used for loan repayment.

Specifically, Clause 2 Article 1 of Circular No. 42/2018/TT-NHNN stipulates: ”2. Article 5[3] is amended and supplemented as follows:

“Article 5. Currency used for loan repayment

1. With regard to foreign currency loans, at the time before the signing of credit contracts or loan agreements, the credit institutions and foreign bank branches shall appraise borrowers with sufficient revenues in foreign currencies to repay the loan:

a) Borrowers are in foreign currency which must pay principal and interest on borrowed capital in such foreign currency; cases of debt repayment in other foreign currencies shall be made according to agreements between credit institutions, foreign bank branches and customers in accordance with relevant provisions of law;

b) In case, when the loan is due, borrowers can prove that due to objective causes leading to the source of foreign currency from production and business activities of the borrower being delayed payment, borrowers not having or not having enough foreign currency to repay the loan, borrowers are allowed to buy foreign currency at credit institutions, foreign bank branches or other credit institutions, foreign bank branches to repay the loan.

In cases borrowers have a demand to buy foreign currencies at credit institutions, foreign bank branches, credit institutions, foreign bank branches, they must sell foreign currencies to customers. In case customers borrow money to buy foreign currency at credit institutions, other foreign bank branches, credit institutions, foreign bank branches selling foreign currency must transfer such foreign currency to credit institutions, foreign bank branches lending.

Borrowers who have to sell foreign currency to credit institutions, foreign bank branches have sold foreign currency in case of receiving foreign currency from production and business activities.

2. With regard to foreign currencies, at the time before the signing of credit contracts or loan agreements, the credit institutions and foreign bank branches shall appraise borrowers without or insufficient revenue. foreign currency for loan repayment: Borrowers may purchase foreign currencies at credit institutions, foreign bank branches or other credit institutions and foreign bank branches to repay loans.

In cases where borrowers have a demand to buy foreign currencies at credit institutions, foreign bank branches, credit institutions, foreign bank branches, they must sell foreign currencies to customers. In case customers borrow money to buy foreign currency at credit institutions, other foreign bank branches, credit institutions, foreign bank branches selling foreign currency must transfer such foreign currency to credit institutions, branches foreign banks lending. ””.

Secondly, regulating the transitional provisions for credit contracts apply the lending method according to the credit limit or loan agreement to apply the lending method according to the limit signed before Circular No. 42/2018/TT-NHNN takes effect.

Specifically, Article 3 of Circular No. 42/2018/TT-NHNN provides the following: “Article 3. Transitional provisions

For credit contracts apply the lending method according to the credit limit or loan agreement to apply the lending method according to the limit signed before Circular No. 42/2018/TT-NHNN takes effect, which loan agreements are signed each time since the effective date of this Circular, credit institutions, foreign bank branches and borrowers shall comply with the provisions of this Circular.
In addition to the cases stipulated in clause 1 of this Article, credit contracts or loan agreements signed before the effective date of this Circular, credit institutions, foreign bank branches and customers continue to comply with the signed contents in accordance with the provisions of law at the time of signing. In case there is an agreement to amend or supplement the credit contract or loan agreement, the amended and supplemented contents must be consistent with the provisions of this Circular.”

1.5. Circular No. 27/2018/TT-NHNN regulating cases of blockade, termination of blockade of capital and assets of foreign bank branches

Name of legal document: Circular No. 27/2018/TT-NHNN issued on 22/11/2018 by the State Bank of Viet Nam regulating cases of blockade, termination of blockade of capital and assets of foreign bank branches (hereinafter referred to as the “Circular No. 27/2018/TT-NHNN”).
Effective date: 10/01/2019.

Some contents should be noted:

Firstly, providing for the blockade of capital and assets.

Specifically, Article 5 of Circular 27/2018/TT-NHNN provides: “Cases of blockade of capital and property

The State Bank shall consider and decide on the blockade of capital and assets of the foreign bank branch in the following cases:

The net value of the granted capital of the foreign bank branch shall be lower than the legal capital level for a continuous period of 06 months.
Violations of prudential ratios in banking activities stipulated in Article 130 of the Law on Credit Institutions and the State Bank have made a written request for remedy but have not taken remedial measures or failed to remedy them within the time limit as requested by the State Bank.
The accumulated loss amount of a foreign bank branch is more than 50% of the value of the issued capital and reserves stated in the latest audited financial statement.
The State Bank has requested that the parent bank fail to properly perform its obligations to its branch operating in Viet Nam.
When there is information that the parent bank shows signs of insolvency or insolvency or is required by the competent authorities of the country of origin to be in a state of special control liquidation, bankruptcy, or withdrawal of licenses for establishment and operation.”

Secondly, regulating on the cases of termination of blockade of capital and assets.

Specifically, Article 6 of Circular 27/2018 / TT-NHNN states: “Cases of cases of termination of blockade of capital and assets

The State Bank shall consider and decide to terminate the blockade of capital and assets of the foreign bank branch in the following cases:

Foreign banks’ branches have overcome the violations as provided for in Clauses 1, 2 and 3, Article 5 of this Circular.
The parent bank has fulfilled the obligations already committed to the foreign bank branch at the request of the State Bank stipulated in Clause 4, Article 5 of this Circular.
The State Bank shall receive information from competent authorities of the country of origin that the parent bank has overcome the shortcomings specified in Clause 5, Article 5 of this Circular.”

Thirdly, deregulating on blockage of capital and assets stipulated in Circular No. 03/2007/TT-NHNN guiding the implementation of a number of articles of Decree No. 22/2006/NĐ-CP on organization and operation of Branches of foreign banks, joint venture banks, banks with 100% foreign capital, representative offices of foreign credit institutions in Viet Nam.

Specifically, Clause 2, Article 10 of Circular No. 27/2018/TT-NHNN stipulates: “2. Annulling Section VI, Part II of Circular No. 03/2007/TT-NHNN issued on June 5th, 2007 by State bank governor guiding the implementation of a number of articles of Decree No. 22/2006 of the Government on organization and operation of foreign bank branches, joint venture banks, banks with 100% foreign capital and representative offices of foreign credit institutions in Viet Nam.”

1.6. Circular No. 28/2018/TT-NHNN amending and supplementing a number of articles of the Circular No. 40/2011/TT-NHNN issued on December 15th, 2011 issued by the Government of the State bank of Viet Nam 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 Viet Nam

Name of legal document: Circular No. 28/2018/TT-NHNN issued on 30/11/2018 by the State Bank of Viet Nam amending and supplementing a number of articles of the Circular No. 40/2011/TT-NHNN issued on December 15th, 2011 issued by the Government of the State bank of Viet Nam 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 Viet Nam.

(Circular No. 40/2011/TT-NHNN issued on December 15th, 2011 issued by the Government of the State bank of Viet Nam 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 Viet Nam hereinafter referred to as the “Circular No. 40/2011/TT-NHNN”

Circular No. 28/2018/TT-NHNN issued on 30/11/2018 by the State Bank of Viet Nam amending and supplementing a number of articles of the Circular No. 40/2011/TT-NHNN issued on December 15th, 2011 issued by the Government of the State bank of Viet Nam 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 Viet Nam hereinafter referred to as the “Circular No. 28/2018/TT-NHNN”).

Effective date: 15/01/2019.

Some contents should be noted:

Firstly, amending and supplementing regulations on payment fees for License[4].

Specifically, Clause 2 Article 1 of Circular No. 28/2018/TT-NHNN stipulates: “2. Clause 2 of Article 6[5] is amended and supplemented as follows:

“2. The fee level for issuance of a license shall comply with the law on charges and fees.””

Secondly, amending and supplementing regulations on documents that must be included in the dossiers of shareholders being individuals contributing capital to establish for dossiers of application for establishment and operation of commercial joint stock banks.

Specifically, Clause 8 Article 1 of Circular No. 28/2018/TT-NHNN stipulates: “Point a (iii) clause 3 Article 15[6] is amended and supplemented as follows:

(iii) Besides the above components, founding shareholders are required to submit following documents:

– A Curriculum of vitae in accordance with the form as provided for in Appendix 03 of this

Circular; criminal record issued by the agency managing the criminal record database, which must have sufficient information on criminal status (including deleted criminal record and unexplained criminal record) and information on prohibiting of holding of posts, establishment, management of enterprises and cooperatives;

Criminal record must be issued by competent agencies before the time of submitting dossiers of application for permits for no more than 6 (six) months;;

– Financial statements of 03 consecutive years prior to the year of applying for the license of the enterprise managed by the founding shareholders or the copy of university qualification or higher in economics or law profession;

– A list of assets which have the value of 100 million VND or above, debts and related documentations of individuals in accordance with the form as provided for in Appendix 07 of this Circular;”

Thirdly, amending the regulations on procedures for renewing the License, granting additional operational contents to the License.

Specifically, Clause 1 Article 2 of Circular No. 28/2018/TT-NHNN stipulates: “Article 2.

Remove “and shall apply for registration of such amendments to its Charter with the State Bank according to the provisions of Clause 3 Article 27 of this Circular” at Point c, Clause 3, Article 18b[7] of Circular No. 40/2011/TT-NHNN (supplemented by Clause 3 Article 1 Circular No. 17/2017/TT-NHNN dated November 20th, 2017 of the Governor of the State Bank of Viet Nam amending and supplementing a number of articles of Circular No. 40/2011/TT-NHNN)”

2. LEGAL DOCUMENTS ISSUED IN 12/2018

2.1. Consolidated document No. 20/VBHN-NHNN providing for the issuance of license and the organization, operation of commercial banks, foreign bank branches, representative offices of foreign credit institutions, other foreign organizations having banking activities in Viet Nam

Name of legal document: Consolidated document No. 20/VBHN-NHNN issued on 12/12/2018 by the State Bank of Viet Nam providing for the issuance of license and the organization, operation of commercial banks, foreign bank branches, representative offices of foreign credit institutions, other foreign organizations having banking activities in Viet Nam.
Effective date: 12/12/2018.

The content should be noted: Consolidating the provisions stipulated at Circular No. 40/2011/TT-NHNN; Circular No. 17/2017/TT-NHNN dated November 20th, 2017 of the Governor of the State Bank of Viet Nam amending and supplementing a number of articles of Circular No. 40/2011/TT-NHNN; Circular No. 17/2018/TT-NHNN dated August 14th, 2018 of the Governor of the State Bank of Viet Nam amending and supplementing a number of articles of the Circulars providing for the issuance of licenses, operation networks and foreign exchange activities of credit institutions, foreign bank branches; Circular No. 28/2018/TT-NHNN.

2.2. 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 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:

Contributing charter capital to establish an economic organization in accordance with the law of the investment recipient country.
Contributing capital to implement business cooperation contracts (BCC contracts) in foreign countries.
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.
The demand for capital for making offshore investment in the form prescribed at Point đ, Clause 1, Article 52[8] 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:

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.
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.
Having offshore investment projects and plans evaluated as feasible by credit institutions and customers capable of repaying credit institutions.
There are 2 consecutive years without bad debt incurred until the time of loan request.”

2.3. Circular No. 35/2018/TT-NHNN amending and supplementing a number of articles of Circular No. 35/2016/TT-NHNN dated December 29th, 2016 of the Governor of the State Bank of Viet Nam providing regulations on safety and confidentiality over provision of banking services on the internet

Name of legal document: Circular No. 35/2018/TT-NHNN issued on 24/12/2018 by the State Bank of Viet Nam amending and supplementing a number of articles of Circular No. 35/2016/TT-NHNN dated December 29th, 2016 of the Governor of the State Bank of Viet Nam providing regulations on safety and confidentiality over provision of banking services on the internet.

(amending and supplementing a number of articles of Circular No. 35/2016/TT-NHNN dated December 29th, 2016 of the Governor of the State Bank of Viet Nam providing regulations on safety and confidentiality over provision of banking services on the internet hereinafter referred to as the “Circular No. 35/2016/TT-NHNN”

Circular No. 35/2018/TT-NHNN issued on 24/12/2018 by the State Bank of Viet Nam amending and supplementing a number of articles of Circular No. 35/2016/TT-NHNN dated December 29th, 2016 of the Governor of the State Bank of Viet Nam providing regulations on safety and confidentiality over provision of banking services on the internet hereinafter referred to as the “Circular No. 36/2018/TT-NHNN”).

Effective date: 01/07/2019.

Some contents should be noted:

Firstly, amending and supplementing regulations on Database management system.

Specifically, Clause 4 Article 1 of Circular No. 35/2018/TT-NHNN stipulates: “4. Clause 2 Article 6[9] (Circular No. 35/2016 / TT-NHNN) is amended and supplemented as follows:

“2. The Internet Banking system must have a disaster backup database capable of replacing the main database and ensuring no loss of customers’ online transaction data.””.

Secondly, amending and supplementing regulations on compulsory functions of the application.

Specifically, Clause 5 Article 1 of Circular No. 35/2018/TT-NHNN stipulates: “5. Points c and đ, Clause 6, Article 7[10] (Circular No. 35/2016/TT-NHNN) are amended and supplemented as follows:

“c) Session control: the system has a mechanism that shall automatically disconnect the session when the user does not manipulate for a period of time specified by the unit or applies other protection measures”;

“đ) For institutional customers, application software is designed to ensure the transaction execution includes at least two steps: creating, approving transactions and being executed by different people. In case the customer is an organization permitted by law to apply a simple accounting regime, the execution of the transaction is similar to that of individual customers”.”

2.4. 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.

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:

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.

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[11] (Circular No. 13/2018/TT-NHNN) is amended and supplemented as follows:

2.5. 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”

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

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.
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

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.
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.
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. “”

2.6. 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[12] 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;””

2.7. 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.

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:

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] “Article 4. Classification of information and information system

3. Institutions shall classify their information system by importance prescribed in Clause 2 this Article. The list of information system categorized by importance must be approved by the legal representative of such institution.”

[2] “Institution includes credit institutions (except for people’s credit funds and microcredit institutions), branches of foreign banks and intermediary payment service providers.” (Clause 2, Article 1 Circular No. 18/2018/TT-NHNN).

[3] “Article 5. Currency used for loan repayment

1. With regard to foreign currency loans, prescribed in Point a, Point c, Point d Clause 1 and Clause 2 Article 3 hereof, which borrowers have sufficient foreign currency revenues to repay: borrowers shall pay the loan principal and interest by the currency that they borrow; in case borrowers repay debts by another foreign currency, they shall be bound to the agreement between the credit institutions and borrowers in conformity with relevant laws.

On the due date of the foreign currency loan, if borrower’s late repayment in foreign currency is caused by unexpected events such as borrower’s deferred collection of foreign-currency operating revenues, borrower’s inadequacy of foreign currency earned from production and business activities or other legal revenues to repay loans after being inspected and confirmed in writing by the lending credit institution, the lending credit institution shall sell foreign currency to the borrower for the borrower to repay the loan, and the borrower shall make a commitment to resell such foreign currency back to the lending credit institution when earning enough foreign currency from their business operation.

2. With regard to foreign currency loans, prescribed in Point b Clause 1 and Clause 2 Article 3 hereof, which borrowers lack legal foreign currency revenues to repay, the lending credit institution shall sell foreign currency to the borrower in order for the borrower to repay principal and interest.”

[4] “License shall include establishment and operation License of a commercial bank, establishment License of a foreign bank’s branch, establishment License of a representative office issued by the State Bank. Documents issued by the State Bank on the amendment, supplement of the License is an integral part of the License.” (Clause 1 Article 2 Circular No. 40/2011/TT-NHNN)

[5] “Article 6. Payment of fee for issuance of License

…

2. The fee level for issuance of a license shall be in accordance with provisions of the Ministry of Finance on licensing fee.”

[6] “Article 15. Application file for the establishment and operation license of a joint-stock commercial bank

…

3. Profile of shareholders who contribute capital for establishment:

a) For individuals:

…

(iii) Besides the above components, founding shareholders are required to submit following documents:

– A Curriculum of vitae in accordance with the form as provided for in Appendix 03 of this

Circular, a criminal record (or similar document) in compliance with provisions of applicable laws;

– A written commitment of each shareholder on providing financial support to the bank to solve difficulty in case where the bank faces difficulties concerning capital or liquidity;

[7] “Article 1. Amendments to the Circular No. 40/2011/TT-NHNN dated December 15, 2011 providing for issuance of license and organization and operation of commercial banks, branches of foreign banks, representative offices of foreign credit institutions and other foreign organizations performing banking activities in Viet Nam (hereinafter referred to as the Circular No. 40/2011/TT-NHNN)

…

3. Addition of Section 4 into Chapter II:

Section 4: REGULATIONS ON REPLACEMENT OF LICENSE AND ADDITION OF ACTIVITIES TO THE LICENSE

…

Article 18b. Procedures for application for replacement of license and addition of activities to the license

…

3. When the replacement of License or the addition of activities to the license is granted approval by the State Bank, the commercial bank or the branch of foreign bank shall:

…

c) The commercial bank shall make amendments to its Charter in conformity with the contents of the new License or the license containing activities added, and shall apply for registration of such amendments to its Charter with the State Bank according to the provisions of Clause 3 Article 27 of this Circular.”

[8] “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.”

[9] “Article 6. Database management system

…

2. The Internet Banking system must have backup database at the Disaster Recovery Center. The backup database must be updated within at least one hour compared to official database. The database shall be copied daily. Copies shall be managed and stored safely.”

[10] “Article 7. Internet Banking application

…

6. Compulsory functions of the application:

…

c) Have a mechanism to control transaction sessions and assess time of websites and applications. In a case where a user fails to manipulate within a certain time prescribed by the service provider but not exceeding five minutes, the system shall automatically disconnect the session or apply other protective measures;

…

đ) With regard to a client being an organization, the application is designed in a manner to ensure that the transaction will be conducted in two steps as follows: creating and approving transaction and conducted by at least two different persons.”

[11] “Article 64. Principles of internal audit

1. The principles of internal audit are:

a) Independence:

…

[12] “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;”

Legal update relating to Finance and Credit (Monthly Legal Update – 10/2018)

by QNT | Sep 28, 2018 | Banking, EN, Legal Update

1. LEGAL DOCUMENTS ARE EFFECTIVE FROM 01/10/2018

Decree No. 116/2018/NĐ-CP amending and supplementing a number of articles of the government’s Decree No. 55/2015/NĐ-CP dated on June 9th, 2015 on the credit policy for agricultural and rural development

Name of legal document: Decree No. 116/2018/NĐ-CP issued on 07/9/2018 by Government amending and supplementing a number of articles of the Government’s Decree No. 55/2015/NĐ-CP dated on June 9th, 2015 on the credit policy for agricultural and rural development (hereinafter referred to as the “Decree No. 116/2018/NĐ-CP”).
Effective date: 01/11/2018.

The content should be noted: Amending and supplementing the regulation on scope of application of the Government’s Decree No. 55/2015/NĐ-CP dated on June 9th, 2015 on the credit policy for agricultural and rural development.

Specifically, Clause 1 Article 1 of Decree No. 116/2018/NĐ-CP stipulates: “Article 1. amending and supplementing a number of articles of the Government’s Decree No. 55/2015/NĐ-CP dated on June 9th, 2015 on the credit policy for agricultural and rural development, including:

1. Amending Clause 2 of Article 2 and to add Clause 3 to Article 2 as follows:

“2. Customers borrowing capital at credit institutions are individuals and juridical persons, including:

a) Individuals which reside within rural localities, or are carrying out agricultural production or business operations, farm owners;

b) Juridical persons include:

(i) Co-operatives, unions of cooperatives which are in rural areas or engage in production and business activities in agriculture;

(ii) Enterprises engaging in production and business activities in rural areas, except: real estate business enterprises, mining enterprises, electricity production units and enterprises not defined in Point b (ii), Clause 2 of this Article located in industrial parks and export processing zones;

(iii) Enterprises providing agricultural inputs for agricultural production and enterprises producing, purchasing, processing and marketing agricultural products and by-products.

3. Family households, artels and other non-juridical persons organizations, when participating in the loan relations, members of other family households, cooperative groups or non-juridical persons organizations are subjects of participating in establishing, executing loan transactions or authorize the representatives to participate in the establishment and implementation of loan transactions. Authorization must be made in writing, unless otherwise agreed. when there is a change of representative, it must inform the party participating in the loan relationship. In case a member of a household, a cooperative group or other non-juridical persons organizations participate in the loan relationship is not authorized by another member to act as a representative, the member is the subject of the loan relationship he/she has established and implemented.

Family households, cooperative groups and other non-juridical persons organizations specified in this Clause include:

a) Family households which reside within rural localities, or are carrying out agricultural production or business operations;

b) Family households operating within rural localities;

c) Artels which are located within rural localities, or carrying out agricultural production or business operations;

d) Enterprises carrying out their business operations in rural localities, except for the following entities: real estate enterprises, mining enterprises, hydropower and thermopower generation facilities, and enterprises that are not governed by Point d Clause 3 of this Article and are located at industrial parks or processing and exporting zones;

e) Enterprises supplying agricultural raw materials and inputs to the agricultural production and those manufacturing, purchasing, processing and consuming agricultural produce and byproducts.””

2. LEGAL DOCUMENTS ISSUED IN 08/2018 AND 09/2018

2.1. Circular No. 18/2018/TT-NHNN on information system security in banking operations

Name of legal document: Circular No. 18/2018/TT-NHNN issued on 21/8/2018 by the State Bank of Vietnamon information system security in banking operations (hereinafter referred to as the “Circular No. 18/2018/TT-NHNN”).
Effective date: 01/01/2019.

Some contents should be noted:

Firstly, stipulating on management of information technology assets.

Specifically, Article 6 of Circular No. 18/2018/TT-NHNN stipulates: “Management of information technology assets

1. Information technology assets include:

a) Information assets such as digital data and information which are processed and stored through the information system;

b) Physical assets such as information technology equipment, means of media, information-bearing objects and equipment that support operation of the information system;

c) Software assets such as software systems, utility software, middleware, database, application programs, source codes and development tools.

3. According to the importance of information systems, the institution shall adopt management and protection methods suitable for each type of information technology asset.

Secondly, stipulating work which institution[2] shall do When an employee in an institution terminates or change employment.

Specifically, Article 15 of Circular No. 18/2018/TT-NHNN stipulates: “Employment termination or change

When an employee in an institution terminates or change employment, such institution shall:

determine responsibilities of such employee at the date of employment termination or change
request such employee to hand over the information technology assets
revoke the right to access to the information system of the employee resigning from his/her job
timely change the access right to information system of the employee who changes his/her employment in order to conform to the principle that such right is given adequately for him/her to perform the assigned duty.
at least every six months, carry out review, inspection and comparison between personnel management department and department in charge of management of granting and revocation of rights to access to information systems for the purpose of complying with regulations specified in Clause 3 and 4 this Article
inform the State Bank of Vietnam (Information Technology Authority) of cases in which individuals working in information technology sector of the institution have been disciplined in forms of dismissal, discharge or legal proceedings on account of violations against information security regulations.”

Thirdly, stipulating on criteria for selecting a third party providing the cloud computing service.

Specifically, Article 33 of Circular No. 18/2018/TT-NHNN stipulates: “Criteria for selecting a third party providing the cloud computing service

Any third party shall be selected if it:

1. is an enterprise;

2. owns information technology infrastructure corresponding to the service requested by the institution which:

a) complies with provisions of Vietnamese laws;

b) is granted an unexpired international certificate of information security.”

2.2. Circular No. 19/2018/TT-NHNN guiding for foreign exchange management for Viet Nam – China border trade

Name of legal document: Circular No. 19/2018/TT-NHNN issued on 28/8/2018 by the State Bank of Vietnam guiding for foreign exchange management for Viet Nam – China border trade (hereinafter referred to as the “Circular No. 19/2018/TT-NHNN”).
Effective date: 12/10/2018.

Some contents should be noted:

Firstly, stipulating on subjects of application of Circular No. 19/2018/TT-NHNN.

Specifically, Article 2 Circular No. 19/2018/TT-NHNN stipulates: “Subjects of application

Vietnamese and Chinese traders conducting Viet Nam – China border trade activities.
Vietnamese border residents, Chinese border residents conducting Viet Nam – China border trade activities.
Commercial banks and branches of foreign banks are allowed to conduct foreign exchange transactions in Viet Nam (hereinafter referred to as licensed banks).
Branches of licensed banks located in border regions and border-gate economic zones of Viet Nam – China (hereinafter referred to as border – bank branches).
Organizations trading in duty-free goods and services providing in isolated areas at international border gates and bonded warehouses at border areas and border-gate economic zones of Viet Nam and China.
Other organizations and individuals involved in payment activities in Viet Nam – China border trade.”

Secondly, stipulating on export and import of CNY in cash and VND in cash.

Specifically, Article 15 Circular No. 19/2018/TT-NHNN stipulates: “Export and import of CNY in cash and VND in cash

1. Banks allowed have border-bank branches may export and import CNY in cash and VND in cash in order to regulate the amount of cash to serve business activities of border-bank branches.

2. Export and import CNY in cash and VND in cash are performed through international border gates and principal border gates in the border areas and border-gate economic zones of Viet Nam and China.

3. Banks allowed have border-bank branches when exporting or importing CNY cash and VND cash, have the following responsibilities:

a) Making border-gate customs declaration according to the provisions of law;

b) Taking measures to manage, supervise and ensure safety in the delivery, preserve and transport CNY in cash and in VND;

c) Bearing risks related to the export and import of cash.”

Thirdly, stipulating on responsibilities of licensed banks in guiding for foreign exchange management for Viet Nam – China border trade.

Specifically, Article 19 of Circular No. 19/2018/TT-NHNN stipulates: “Responsibilities of licensed banks

1. Licensed banks shall have the responsibilities:

a) To fully execute and guide customers to strictly observe the provisions of this Circular;

b) To examine and keep documents in compatibility with actual transactions so as to ensure the provision of foreign exchange services is performed in compliance with right purposes and the provisions of law.

2. Banks allowed have border – bank branches apart from the responsibilities stipulated in Clause 1 of this Article shall also be responsible for:

a) Posting up and announcing the buying and selling exchange rates of CNY/VND at the border – bank branches according to the regulations of the State Bank of Vietnam;

b) Issuing internal documents on entrusted payment activities in CNY and payment activities in CNY in the licensed banking system in accordance with the provisions of this Circular and relevant laws;

c) Observing the provisions of Vietnamese law and treaties to which Vietnam is a contracting party upon the payment cooperation agreement with a Chinese bank.”

2.3. Circular No. 20/2018/TT-NHNN regulating on monitoring of payment systems

Name of legal document: Circular No. 20/2018/TT-NHNN issued on 30/8/2018 by the State Bank of Vietnam regulating on monitoring of payment systems (hereinafter referred to as the “Circular No. 20/2018/TT-NHNN”).
Effective date: 01/01/2019.

Some contents should be noted:

Firstly, explaining the terms “Payment system”, “Important payment system”.

Specifically, Clause 1, Clause 2 Article 3 of Circular No. 20/2018/TT-NHNN stipulates:

a) It is the only payment system or accounts for a large proportion of the total payment value compared to the same type payment systems; or

b) It is a system processing high-value payment transactions; or

c) The system is used to settle accounts for other payment systems or for financial market transactions.

Important payment systems defined in this Circular include: the National Interbank Electronic Payment System; Foreign currency payment system (operated by the Joint Stock Commercial Bank for Foreign Trade of Vietnam); payment system for securities trading; system for compensation, financial transaction switching.”

Secondly, stipulating on supervision contents of the National Interbank Electronic Payment System.

Specifically, Article 8 of Circular No. 20/2018/TT-NHNN stipulates: “The National Interbank Electronic Payment System

The general operation of the National Interbank Electronic Payment System, including information on the duration of operation, status of participants, payment status of each service provided (high-value payment services, low-value payment services, foreign currency payment services, net settlement services for other payment systems).
Risk situation arising and risk management for operational risk, credit risk, liquidity risk and settlement risk of the National Interbank Electronic Payment System.
The observance of legal provisions relating to the management and operation of the National Interbank Electronic Payment System.
Changes in the operation of the National Interbank Electronic Payment System, including changes in system features, procedures and internal procedures.”

Thirdly, issuing annexes for implementing Circular No. 20/2018/TT-NHNN.

Specifically,

Appendix I issued together with Circular No. 20/2018/TT-NHNN on the operation data of the National Interbank Electronic Payment System.
Appendix II issued together with Circular No. 20/2018/TT-NHNN on the operation data of Foreign currency payment system; payment system for securities trading; system for compensation, financial transaction switching.
Appendix III issued together with Circular No. 20/2018/TT-NHNN on the report on operation of the important payment system.
Appendix IV issued together with Circular No. 20/2018/TT-NHNN on incident notification.
Appendix V issued together with Circular No. 20/2018/TT-NHNN on the report on evaluation of the payment system.

2.4. Decision No. 1403/QĐ-TCT on promulgation of data exchange standards between the General Department of Taxation and Commercial Banks and The unit meeting the electronic tax payment in the form of submission via Internet Banking

Name of legal document: Decision No. 1403/QĐ-TCT issued on 30/8/2018 by The General Director of Taxation on promulgation of data exchange standards between the General Department of Taxation and Commercial Banks and The intermediate payment unit meeting the electronic tax payment in the form of submission via Internet Banking (hereinafter referred to as the “Decision No. 1403/QĐ-TCT”).
Effective date: 30/8/2018.

The content should be noted: Issuing the “Data exchange standards between the General Department of Taxation and Commercial Banks and The unit meeting the electronic tax payment in the form of submission via Internet Banking” attached to the Decision No. 1403/QĐ-TCT (hereinafter referred to as “Data Exchange Standard”). Data Exchange Standard includes some following contents: Exchange data between the General Department of Taxation and Commercial Banks, The intermediate payment unit (Section II of Data Exchange Standard), Data format (Section III of Data Exchange Standard), Category Types (Section IV Data Exchange Standard).

2.5. Circular No. 21/2018/TT-NHNN amending and supplementing a number of articles of Circular No. 37/2016/TT-NHNN dated December 30th, 2016 of the Governor of the State Bank of Vietnam management, operation and use of the national interbank electronic payment system

Name of legal document: Circular No. 21/2018/TT-NHNN issued on 31/8/2018 by the State Bank of Vietnam amending and supplementing a number of articles of Circular No. 37/2016/TT-NHNN dated December 30th, 2016 of the Governor of the State Bank of Vietnam management, operation and use of the national interbank electronic payment system.

(Circular No. 21/2018/TT-NHNN issued on 31/8/2018 by the State Bank of Vietnam amending and supplementing a number of articles of Circular No. 37/2016/TT-NHNN dated December 30th, 2016 of the Governor of the State Bank of Vietnam management, operation and use of the national interbank electronic payment system hereinafter referred to as the “Circular No. 21/2018/TT-NHNN”.

Circular No. 37/2016/TT-NHNN dated December 30th, 2016 of the Governor of 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”.)

Effective date: 31/8/2018.

Some contents should be noted:

Firstly, amending and supplementing the effect of Circular No. 37/2016/TT-NHNN.

Specifically, Article 1 of Circular No. 21/2018/TT-NHNN stipulates: “Effect

This Circular takes effect on November 1st, 2019.
From the effective date of this Circular, the following documents shall expire:
a) The State Bank Governor’s Circular No. 23/2010/TT-NHNN dated November 9th, 2010 providing for the management, operation and use of the inter-bank electronic payment system;
b) The State Bank Governor’s Circular No. 13/2013/TT-NHNN dated June 11th, 2013 amending and supplementing a number of articles of Circular No. 23/2010/TT-NHNN dated November 11th, 2010 of the Governor of the State Bank providing for the management, operation and use of the inter-bank electronic payment system;
c) Article 6 of Circular No. 23/2011 / TT-NHNN issued on August 31st, 2011 by the Governor of the State Bank on the implementation of the simplification of administrative procedures for payment activities and fields according to the Government Resolution on simplification of administrative procedures within the scope of management functions of the State Bank.”

Secondly, Circular No. 23/2017/TT-NHNN issued on December 29th, 2017 by the Governor of the State Bank amending and supplementing a number of articles of Circular No. 37/2016/TT-NHNN expires on August 31st, 2018.

Specifically, Article 3 of Circular No. 21/2018/TT-NHNN stipulates: “This Circular (Circular No. 21/2018/TT-NHNN) takes effect on August 31st, 2018 and replaces Circular No. 23/2017/TT-NHNN dated December 29th, 2017 of The Governor of the State Bank of Vietnam amending and supplementing a number of articles of Circular No. 37/2016/TT-NHNN dated December 30th, 2016 of the Governor of the State Bank of Vietnam management, operation and use of the national interbank electronic payment system.”

2.6. Circular No. 22/2018/TT-NHNN guiding on procedures and documents for approving the list of tentative personnel of commercial banks, non-bank credit institutions and foreign bank branches

Name of legal document: Circular No. 22/2018/TT-NHNN issued on 05/9/2018 by the State Bank of Vietnam guiding on procedures and documents for approving the list of tentative personnel of commercial banks, non-bank credit institutions and foreign bank branches (hereinafter referred to as the “Circular No. 22/2018/TT-NHNN”).
Effective date: 01/11/2018.

Some contents should be noted:

Firstly, proving for necessary documents in the dossier of request for approving the list of tentative personnel of credit institutions.

Specifically, Article 6 of Circular No. 22/2018/TT-NHNN stipulates that dossier of request for approving the list of tentative personnel of credit institutions includes:

“Documents of the credit institution shall be proposed to the State Bank for approval of the list of tentative personnel” (Clause 1 of Article 6 of Circular No. 22/1018/TT-NHNN);
“The written approval of tentative personnel list of credit institutions (for the Board of Directors, the Board of members and the Control Board must clearly state the term)” (Clause 2 of Article 6 of Circular No. 22/1018/TT-NHNN);
“The personal background of the personnel proposed to be elected or appointed according to the form in Appendix 01 attached to this Circular” (Clause 3 of Article 6 of Circular No. 22/1018/TT-NHNN);
“The judicial record of the personnel proposed to be elected or appointed” (Clause 4 of Article 6 of Circular No. 22/1018/TT-NHNN);
“The list of related persons of the personnel proposed to be elected or appointed according to the form in Appendix 02 attached to this Circular” (Clause 5 of Article 6 of Circular No. 22/1018/TT-NHNN);
“Copies of diplomas and certificates proving the professional qualifications of personnel proposed for election or appointment, of which the diploma of Vietnamese nationality personnel issued by a foreign educational establishment must be approved by the Ministry of Education and Training recognize in accordance with relevant laws” (Clause 6 of Article 6 of Circular No. 22/1018/TT-NHNN);
“Documents evidencing the satisfaction of criteria and conditions for personnel who intend to hold the post of member of the Board of Directors, the Board of members of the credit institution as stipulated in Point d[3] Clause 1 of Article 50 of the Law on credit institutions” (Clause 7 of Article 6 of Circular No. 22/1018/TT-NHNN);
“Documents evidencing the satisfaction of criteria and conditions for personnel expected to hold the post of General Director (Director) of the credit institution as stipulated in Point d[4] Clause 4 of Article 50 of the Law on credit institutions” (Clause 8 of Article 6 of Circular No. 22/1018/TT-NHNN);
“Documents proving the satisfaction of standards and conditions “having at least 03 years working directly in banking, finance, accounting or auditing fields” with regard to personnel expected to hold the post of member of the Control Board Control of credit institutions as stipulated in Point c[5] Clause 3 of Article 50 of the Law on credit institutions: Documents of the authorized representative of the unit where the personnel has been or is working confirming the direct working personnel in banking, finance, accounting or auditing fields and the working time in the field, or copies of documents proving the field of working, working time of personnel in the fields” (Clause 9 of Article 6 of Circular No. 22/1018/TT-NHNN);
“For personnel who are expected to be elected or appointed under the cases specified at Points e[6] and [7]f, Clause 2, Article 33 of the Law on credit institutions: Documents of competent agencies appointing personnel who are expected to act as management representatives contributed capital of the State at credit institutions” (Clause 10 of Article 6 of Circular No. 22/1018/TT-NHNN).

Secondly, issuing written forms of documents in the dossier of request for approving the list of tentative personnel of credit institutions.

Specifically, form of personal background, form of table of related person list, form of Notification of List of people elected, appointment to be members of Board of Directors, the Board of members, the Control Board, General Director (Director), etc. are stipulated in Appendixes 01, 02, 03, etc. respectively issued together with Circular No. 22/2018/TT-NHNN.

2.7. Decree No. 117/2018/NĐ-CP on keeping confidential and providing customer information of credit institutions and foreign bank branches

Name of legal document: Decree No. 117/2018/NĐ-CP issued on 11/9/2018 by Goverment on keeping confidential and providing customer information of credit institutions and foreign bank branches (hereinafter referred to as the “Decree No. 117/2018/NĐ-CP”).
Effective date: 01/11/2018.

Some contents should be noted:

Firstly, providing for the principles of confidentiality and supply of customer information by credit institutions and foreign bank branches.

Specifically, Article 4 of Decree No. 17/2018/NĐ-CP stipulates: “Principles of confidentiality and supply of customer information

Customer information of credit institutions and foreign bank branches must be kept secret and only be provided in accordance with the provisions of the Law on credit institutions 2010, amended and supplemented in 2017, this Decree and related laws.
Credit institutions and branches of foreign banks are not allowed to provide identification customer information when accessing banking services, including secret codes, biometrics data, and access passwords of customers and other identification customer information for any agency, organization or individual, unless agreed by the customer in writing or in another form as agreed with the customer.
State agencies, other organizations and individuals may request credit institutions and foreign bank branches to supply customer information according to the right purposes, contents, scope and competence as prescribed of the law or the acceptance of the customer and are liable for the request for the provision of customer information.
State agencies, other organizations and individuals must keep customer information confidential, use customer information for the right purpose when requesting information and not provide to third parties without approval of customers, except for cases provided under the provisions of law.
Agencies, organizations and individuals must archive and preserve according to the law provisions on archive and preservation of dossiers and documents on customer information, dossiers of request for supply of customer information, the delivery of customer information.”

Secondly, stipulating cases of providing customer information for organizations and individuals.

Specifically, Article 11 of Decree No. 117/2018/NĐ-CP stipulates: “Cases of providing customer information

1. Credit institutions and foreign bank branches may only provide customer information to other organizations and individuals in one of the following cases:

a) Other organizations and individuals may request credit institutions or foreign bank branches to supply customer information specified in laws and resolutions of the National Assembly.

b) Approved by the customers in writing or in another form as agreed with the customers.

2. Credit institutions and foreign banks branches shall be responsible for providing customer information to their customers or their lawful representatives.”

Thirdly, regulating the rights and responsibilities of credit institutions and foreign bank branches in keeping confidential and providing customer information.

Specifically, Article 14 of Decree No. 117/2018/NĐ-CP stipulates: “Rights and responsibilities of credit institutions and foreign bank branches

1. Credit institutions and foreign bank branches have the following rights:

a) Requesting state agencies, other organizations or individuals to supplement information and documents requesting the supply of customer information in accordance with the provisions of this Decree;

b) Refusing to supply customer information to other State bodies, organizations or individuals for requests for supply of customer information not being in accordance with the provisions of laws or this Decree or requests for supply customer information being duplicated, not being within the scope of customer information that the credit institution or foreign bank branches are maintaining in accordance with the law.

2. Credit institutions and foreign bank branches have the following responsibilities:

a) Providing right scope of customer information provided honestly, fully, timely for the right subjects;

b) Ensuring safety and confidentiality of customer information in the process of supplying, managing, using and storing customer information;

c) Settling complaints of customers in the supply of customer information according to law provisions;

d) Organizing the supervision, inspection and handling of violations of internal regulations on keeping secret, archiving and supplying customer information;

e) Taking responsibility according to the provisions of law, for cases of violating the provisions of this Decree and relevant laws.”

2.8. Circular No. 23/2018/TT-NHNN providing for the reorganization and revocation of licenses and liquidation of assets of people’s credit funds

Name of legal document: Circular No. 23/2018/TT-NHNN issued on 14/9/2018 by the State Bank of Vietnam providing for the reorganization and revocation of licenses and liquidation of assets of people’s credit funds (hereinafter referred to as the “Circular No. 23/2018/TT-NHNN”).
Effective date: 01/11/2018.

Some contents should be noted:

Firstly, providing for the principles of reorganizing people’s credit funds.

Specifically, Article 6 of Circular No. 23/2018/TT-NHNN stipulates: “Principles of reorganizing people’s credit funds

Complying with the provisions of this Circular and relevant law provisions.
The reorganization of people’s credit funds shall be effected on the basis of the reorganization plans approved by the State Bank in accordance with the provisions of law.
Ensuring the safe and continuous operation of people’s credit funds; ensuring the legitimate rights and interests of members of the people’s credit funds and customers in the course of reorganization.
The transfer or sale of assets in the process of reorganizing the people’s credit funds must be public and transparent, comply with law provisions and the agreement of parties, ensure the property safety and does not affect the interests of people’s credit funds to reorganize, organizations and individuals involved in the reorganization.
People’s credit funds after the reorganization inherit of the rights and obligations of the people’s credit funds reorganized in accordance with the provisions of law and agreements between the parties.
The licenses of the divided people’s credit funds or the people’s credit funds participating in the consolidation shall cease to be effective when new people’s credit funds are inaugurated. The license of the merged people’s Credit Fund shall cease to be effective when the people’s credit fund for merger completes the procedures for changing the registration of the cooperative.”

Secondly, providing for cases of revocation of licenses of people’s credit funds.

Specifically, Article 16 of Circular No. 23/2018/TT-NHNN stipulates: “Cases of revocation of licenses

People’s credit funds voluntarily apply for dissolution when they are able to repay all debts and fulfill other property obligations.
A dossier of application for a people’s credit fund has fraudulent information so as to be eligible for a license.
People’s credit funds operate in contravention of the contents prescribed in their permits.
People’s credit funds seriously violate the law provisions on limits and prudential ratios in operation.
People’s Credit Funds fail to implement or implement inadequately handling decisions of the State Bank’s branches to ensure safety in banking operations.
People’s credit funds are divided, merged, consolidated or bankrupt.

7. People’s Credit Funds are expired but did not apply for extension or apply for extension but have not been approved in writing by the State Bank’s branches.”

[1] “Article 4. Classification of information and information system

Institutions shall classify their information system by importance prescribed in Clause 2 this Article. The list of information system categorized by importance must be approved by the legal representative of such institution.”

[2] Institution includes credit institutions (except for people’s credit funds and microcredit institutions), branches of foreign banks and intermediary payment service providers (Clause 2, Article 1 Circular No. 18/2018/TT-NHNN).

[3] “Has at least 03 years’ experience of working as a manager or executive of a credit institution, at least 05 year’s experience of working as an executive of a finance, banking, accounting or audit enterprise or an enterprise whose equity is not smaller than the legal capital of a credit institution, or at least 05 years’ experience of working in a finance, banking accounting or audit department.”

[4] “Has at least 03 years’ experience of working as a manager or executive of a credit institution, at least 05 year’s experience of working as an executive of a finance, banking, accounting or audit enterprise or an enterprise whose equity is not smaller than the legal capital of a credit institution, or at least 05 years’ experience of working in a finance, banking accounting or audit department.”

[5] “Holding a tertiary or higher degree in economics, business administration, law, accounting or audit: having at least 3 years working directly in banking, finance, accounting or audit”

[6] “Cadres and civil servants and managers of division or higher level of enterprises in which the State holds 50% or more of the charter capital, except those appointed to represent the State’s capital share in the credit institution”

[7] “Officers, non-commissioned officers, professional army men and defense workers of agencies and units under the Vietnam People’s Army: officers, professional non-commissioned officers of agencies and units under the Vietnam People’s Police, except those appointed to represent the State’s capital share in the credit institution”

Legal update relating to Finance and Credit (Monthly Legal Update – 07/2018)

by QNT | Jul 1, 2018 | Banking, EN, Legal Update

1. LEGAL DOCUMENTS ARE EFFECTIVE FROM 01/07/2018

1.1. Circular No. 04/2018/TT-NHNN amending and supplementing certain articles of the Circular No. 08/2017/TT-NHNN dated 01/08/2017 of the Governor of the State Bank of Vietnam on banking supervisory processes and procedures

Name of legal document: Circular No. 04/2018/TT-NHNN issued on 12/03/2018 by the Governor of the State Bank of Vietnam amending and supplementing certain articles of the Circular No. 08/2017/TT-NHNN dated 01/08/2017 of the Governor of the State Bank of Vietnam on banking supervisory processes and procedures.
Effective date: 01/07/2018.

Some contents should be noted:

Firstly, adding the “Early intervention action” measure to remedial measures for banking supervision.

Specifically, Clause 1, Article 1 of Circular No. 04/2018/TT-NHNN amended and supplemented Article 17 of Circular No. 08/2017/TT-NHNN as follows: “Remedial measures for banking supervision include:

Recommendations and warnings.
Administrative penalties prescribed by laws.
Early intervention action.
Other banking supervisory actions that are suggested to competent authorities in accordance with laws.”

Secondly, stipulating the cases of “Early intervention action”.

Specifically, Clause 2, Article 1 of Circular No. 04/2018/TT-NHNN added Article 18a to Article 18 of Circular 08/2017/TT-NHNN as follows: “…on imposition of early intervention action on entities subject to banking supervision that fall into one of the situations referred to in Clause 1 Article 130a of the (amended and supplemented) Law on Credit Institutions…” (Clause 1, Article 130a of the Law on Credit Institutions: 1. In any of the following cases, the State bank will consider making early intervention in a credit institution that has not been placed under special control according to Article 145 of this Law:

a) The credit institution fails to maintain the solvency ratio specified in Point a Clause 1 Article 130 of this Law for 03 consecutive months;

b) The credit institution fails to maintain the capital adequacy ratio specified in Point b Clause 1 Article 130 of this Law for 06 consecutive months;

c) The credit institution is ranked below average according to the State bank.”)

1.2. Circular No. 14/2018/TT-NHNN guiding the implementation of measures for maganing monetary policy instruments to support credit institutions lending for agriculture and rural development

Name of legal document: Circular No. 14/2018/TT-NHNN issued on 29/05/2018 by the Governor of the State Bank of Vietnam guiding the implementation of measures for maganing monetary policy instruments to support credit institutions lending for agriculture and rural development.
Effective date: 13/07/2018.

The content should be noted: To stipulate cases in which credit institutions shall apply the reserve requirements ratio for supporting deposits in Vietnam Dong lower than normal reserve requirements prescribed by the State Bank of Vietnam.

Specifically, Point a, Clause 2, Article 3 of Circular No. 14/2018/TT-NHNN stipulates: “The reserve requirements applied to the deposit in Vietnam Dong shall be lower than normal reserve requirements prescribed by the State Bank of Vietnam (hereinafter referred to as the State Bank) which vary according on each type of credit institutions and over time meeting the following criteria:

i) For the credit institution whose ratio of loan outstanding for agricultural, rural development over the average total loan outstanding (hereinafter referred to as the average credit ratio for agriculture and rural development) is 70% and higher: The reserve requirement is requested by such credit institution but not lower than 1/20 (one twentieth) of the reserve requirements applied to each deposit at such credit institution prescribed by the State Bank;

ii) For the credit institution whose the average credit ratio for agriculture and rural development is from 40% to less than 70%: The reserve requirement is requested by such credit institution but not lower than 1/5 (one fifth) of the reserve requirement applied to each deposit at such credit institution prescribed by the State Bank;”.

2. Legal documents issued in June 2018

Circular No. 15/2018/TT-NHNN amendments to the Circular No. 22/2016/TT-NHNN dated 30/06/2016 by the Governor of the State Bank of Vietnam on purchase of corporate bonds by credit institutions and branches of foreign banks

Name of legal document: Circular No. 15/2018/TT-NHNN issued on 18/06/2018 by the Governor of the State Bank of Vietnam amendments to the Circular No. 22/2016/TT-NHNN dated 30/06/2016 by the Governor of the State Bank of Vietnam on purchase of corporate bonds by credit institutions and branches of foreign banks.
Effective date: 02/08/2018.

Some contents should be noted:

Firstly, (i) amending and supplementing the internal control over the corporate bond purchase of internal regulations on corporate bond purchase and (ii) adding content related to the regulation of potential risk areas and credit policies, investment in the contents of internal regulations on corporate bond purchase.

Specifically, Clause 1, Article 1 of Circular No. 15/2018/TT-NHNN amended and supplemented Clause 2, Article 3 of Circular No. 22/2016/TT-NHNN as follows: “Amendments to Point d and addition of Point đ to Clause 2 Article 3:

d) Regulations on internal control of purchase of corporate bonds, especially bonds issued for implementation of programs/ projects in sectors posing potential risks according to the evaluation by credit institutions/ branches of foreign banks so as to discover risks or violations and ensure the recovery of corporate bond principals and interests (Point d, Clause 2, Article 3 of Circular No. 22/2016/TT-NHNN stipulates: “…2. The eligible credit institution must have a system of internal credit rating, including the credit rating of corporate bond issuers and issue an internal regulations on purchase of corporate bonds in accordance with this Circular and relevant law provisions, at least including:

…d) Internal control of purchase of corporate bonds.”)

đ) Specific regulations on sectors posing potential risks and credit/ investment policies in these sectors.”

Secondly, stipulating additionally the principle of buying corporate bonds of credit institutions and branches of foreign banks.

Specifically, Clause 2, Article 1 of Circular No. 15/2018/TT-NHNN stipulates: “Addition of Clause 6 to Article 3 (Circular No. 22/2016/TT-NHNN):

Credit institutions and branches of foreign banks are not allowed to purchase corporate bonds issued for the purpose of restructuring debts of the issuer.”

Thirdly, abolishing regulations on corporate bonds purchased.

Specifically, Article 2 of Circular 15/2018/TT-NHNN stipulates: “Article 4 of Circular No. 22/2016/TT-NHNN is abrogated” (Article 4 of Circular No. 22/2016 /TT-NHNN stipulates: “Types of corporate bonds permitted to be bought:

1. Bonds that are issued in accordance with provisions of laws on the issuance of corporate bonds.

2. Bonds that are issued in accordance with provisions of laws on public securities offering, except for the case prescribed in Clause 3 Article 6 of this Circular”).

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