1. LEGAL DOCUMENTS ARE EFFECTIVE FROM 01/04/2022

1.1. Circular No. 27/2021/TT-NHNN amending and supplementing a number of articles of the System of accounting accounts of credit institutions promulgated together with Decision No. 479/2004/QD-NHNN dated April 29, 2004 and the Financial reporting regime for credit institutions issued together with Decision No. 16/2007/QD-NHNN dated April 18, 2007 of the Governor of the State Bank of Vietnam

• Name of legal document: Circular No. 27/2021/TT-NHNN issued on 31/12/2022 by the State Bank of Vietnam amending and supplementing a number of articles of the System of accounting accounts of credit institutions promulgated together with Decision No. 479/2004/QD-NHNN dated April 29, 2004 and the Financial reporting regime for credit institutions issued together with Decision No. 16/2007/QD-NHNN dated April 18, 2007 of the Governor of the State Bank of Vietnam (referred to as the “Circular No. 27/2021/TT-NHNN”).

• Effective date: 01/04/2022.

Some contents should be noted:

• Firstly, replacing some phrases of the System of accounting accounts of credit institutions promulgated together with Decision No. 479/2004/QD-NHNN dated April 29, 2004 by the Governor of the State Bank (amended and supplemented).

Specifically, clause 3 Article 1 of Circular No. 27/2021/TT-NHNN stipulates: “Article 1. Amending and supplementing a number of articles of the System of accounting accounts of credit institutions promulgated together with Decision No. 479/2004/QD-NHNN dated April 29, 2004 by the Governor of the State Bank (amended and supplemented by Circular No. 10/2014/TT-NHNN dated March 20, 2014, Circular No. 49/2014/TT-NHNN dated December 31, 2014, Circular No. 22/2017/ TT-NHNN dated December 29, 2017)

…

3. Replacing some phrases of the System of accounting accounts of credit institutions promulgated together with Decision No. 479/2004/QD-NHNN dated April 29, 2004 by the Governor of the State Bank (amended and supplemented) as follows:a) Replacing the phrase “Balance sheet” with the phrase “Report of financial position” in Decision No. 479/2004/QD-NHNN (amended and supplemented);b) Replacing the phrase “to ensure that payment and credit service provision activities are performed according to signed contracts and commitments” with the phrase “to ensure the performance of obligations in accordance with regulations of law” in the accounting content of account 427- Deposit in Viet Nam Dong, account 428- Deposit in foreign currency specified in Decision No. 479/2004/QD-NHNN (amended and supplemented);c) Replacing the phrase “lost” with the phrase “risks have been dealt with”, the phrase “loss debt” becomes “risk-resolved debt” in account 97- Bad debts settled at Section II- System of accounting accounts and accounting contents of accounts 97- Bad debts handled in Section III- Accounting contents of accounts specified in Decision No. 479/2004/QD-NHNN (amended and supplemented).”

• Secondly, abrogating a number of provisions in Circular No. 10/2014/TT-NHNN dated March 20, 2014 amending and supplementing a number of accounts in the System of accounting accounts of credit institutions issued under Decision No. 479/2004/QD-NHNN dated April 29, 2004 by the Governor of the State Bank and Circular No. 22/2017/TT-NHNN dated December 29, 2017 amending and supplementing a number of articles of the System of accounting accounts of credit institutions promulgated together with Decision No. 479/2004/QD-NHNN dated April 29, 2004 and Financial reporting regime for credit institutions issued together with Decision No. 16/ 2007/QD-NHNN dated 18/4/2007 of the Governor of the State Bank.

Specifically, Article 3 of Decision No. 422/QD-NHNN stipulates: “Article 3. Abrogating

1. Abrogating Clauses 5, 14, 25 Article 3 of Circular No. 10/2014/TT-NHNN dated March 20, 2014 amending and supplementing a number of accounts in the System of accounting accounts of credit institutions issued under Decision No. 479/2004/QD-NHNN dated April 29, 2004 of the Governor of the State Bank.

2. Abrogating Point c, point h (i) Clause 2 Article 1 of Circular No. 22/2017/TT-NHNN dated December 29, 2017 amending and supplementing a number of articles of the System of accounting accounts of credit institutions issued together with Decision No. 479/2004/QD-NHNN dated April 29, 2004 and Financial reporting regime for credit institutions issued together with Decision No. 16/2007/QD-NHNN dated April 18, 2007 by the Governor of the State Bank.”

1.2. Circular No. 24/2021/TT-NHNN amending and supplementing to some articles of Circular No. 39/2011/TT-NHNN December 15, 2011 of the Governor of the State bank of Vietnam providing independent audit of credit institutions and foreign bank branches

• Name of legal document: Circular 24/2021/TT-NHNN issued on 31/12/2021 by the State Bank of Vietnam amending and supplementing to some articles of Circular No. 39/2011/TT-NHNN December 15, 2011 of the Governor of the State bank of Vietnam providing independent audit of credit institutions and foreign bank branches (referred respectively to as the “Circular No. 24/2021/TT-NHNN” and “Circular No. 39/2011/TT-NHNN”).

• Effective date: 15/04/2022.

The content should be noted: Amending and supplementing regulations on contents with at least in independent audit of operations of the internal control system of credit institutions and foreign bank branches.

Specifically, Clause 2 Article 1 of Circular No. 24/2021/TT-NHNN stipulates: “Article 1. Amending and supplementing a number of articles of Circular No. 39/2011/TT-NHNN

…

2. Amending and supplementing Clause 2, Article 8 as follows:

“2. Independently audit the operation of the internal control system of a credit institution or foreign bank branch with at least the following contents:

a) Auditing the internal control system of credit institutions, foreign bank branches (including internal mechanisms, policies, processes and regulations) in compliance with current law provisions and regulations of the State Bank on the internal control system of credit institutions and foreign bank branches.

For the contents of the internal control system that have been audited for compliance without any change, such content is not required to be re-audited;

b) Auditing the operation of the internal control system for the preparation and presentation of financial statements;

c) In addition to the audit contents specified at Points a and b of this Clause, the commercial bank or foreign bank branch must audit the operation of the internal control system for the content of the internal assessment on the sufficient capital level of commercial banks and foreign bank branches in accordance with the State Bank’s regulations on internal control system.””

2. LEGAL DOCUMENTS ARE ISSUED IN 03/2022

Decision No. 422/QD-NHNN issuing the Action plan of the banking industry implementation of the Government’s Resolution No.11/NQ-CP dated January 30, 2022

• Name of legal document: Decision No. 422/QD-NHNN issued on 18/03/2022 by the State Bank of Vietnam issuing the Action plan of the banking industry implementation of the Government’s Resolution No.11/NQ-CP dated January 30, 2022 (referred to as the “Decision No. 422/QD-NHNN”).

• Effective date: 18/03/2022.

The content should be noted: Regulation on organization of implementation ofr credit institutions and foreign bank branches.

Specifically, Item 2 Part III of Decision No. 422/QD-NHNN stipulates: “III. ORGANIZATION OF IMPLEMENTATION

…

2. Credit institutions, foreign bank branches

2.1. Continuing to drastically implement measures to support customers affected by the COVID-19 epidemic to ensure the right regulations and right subjects. In particular, focusing on classifying customers affected by the COVID-19 epidemic and assessing the full repayment ability of customers to ensure that the support is appropriate to the level of impact of the epidemic. Prioritize and focus on lending to industries and sectors that are encouraged, serving production, import-export, international payment, etc., according to the socio-economic development orientation approved by the Party, National Assembly, Government and the Prime Minister to create favorable conditions for enterprises and people to access credit sources to restore production and business after the COVID-19 epidemic.

2.2. Improving financial capacity, strictly implement the direction of the State Bank in Directive No. 01/CT-NHNN in 2022 and 2023 on minimizing operating costs, reducing profit targets, paying dividends, increasing strengthen risk provisioning to strive to continue to reduce lending interest rates as prescribed in point 1, Section II of this Action Plan, and at the same time improve resisting ability for negative and unpredictable impacts of the COVID-19 epidemic.

2.3. Researching and deploying appropriate payment service fee exemption and reduction policies to support enterprises and people facing difficulties due to the impact of the COVID-19 epidemic. At the same time, strictly and regularly supervising and inspecting the observance of the provisions of the law on interest rates and lending fees. Actively reviewing and promptly detecting violations to take appropriate handling measures.

2.4. Strictly controlling credit quality, minimizing bad debt arising, especially in potentially risky fields; promptly detecting and strictly handling violations of laws and internal regulations in credit extension activities; balancing capital sources, using capital for medium and long-term loans, especially strictly controlling credit granting for the purposes of investment, real estate business, BOT, BT transport, investment in corporate bonds…; ensure liquidity and strictly comply with regulations on safety limits and ratios in banking activities and relevant laws.

2.5. Implementing drastically measures to recover bad debts, debts that have used provisions to handle risks, minimize losses for credit institutions, ensure the legitimate interests of the State, shareholders and depositors. Continuing to comprehensively apply solutions to handle bad debts according to Resolution No. 42/2017/QH14 in order to quickly and effectively handle bad debts.”

1. LEGAL DOCUMENTS ARE EFFECTIVE FROM 01/02/2022

1.1. Circular No. 25/2021/TT-NHNN amending and supplementing a number of articles of Circular No. 01/2015/TT-NHNN dated January 6, 2015 defining trading, supply of interest rate derivative products of commercial banks, branches of foreign banks

• Name of legal document: Circular 25/2021/TT-NHNN issued on 31/12/2021 by the State Bank of Vietnam amending and supplementing a number of articles of Circular No. 01/2015/TT-NHNN dated January 6, 2015 defining trading, supply of interest rate derivative products of commercial banks, branches of foreign banks (referred respectively to as the “Circular No. 25/2021/TT-NHNN” and “Circular No. 01/2015/TT-NHNN”).

• Effective date: 14/02/2022.

The content should be noted: Adding provisions on defining trading, supply of interest rate derivative products by electronic means

Specifically, Clause 4 Article 1 of Circular No. 25/2021/TT-NHNN stipulates: “Article 1. Amending and supplementing a number of articles of Circular No. 01/2015/TT-NHNN

…

4. Adding Article 4a as follows:

“Article 4a. Defining trading, supply of interest rate derivative products by electronic means

1. Commercial banks, foreign bank branches defining trading and supplying interest rate derivative products by electronic means must develop a business process for providing interest rate derivative products by electronic means in accordance with the provisions of this Circular, the provisions of the law on prevention and combat of money laundering, the law on electronic transactions and relevant legal provisions, ensuring the safety and confidentiality of customer information and safe operation of commercial banks and foreign bank branches.

2. Commercial banks and foreign bank branches must fully store information related to the defining trading and supply of interest rate derivatives by electronic means to serve the inspection, compare, settle tracing, complaints, disputes and provide information upon request from competent state management agencies.””

1.2. Circular No. 23/2021/TT-NHNN amendments to Circular No. 52/2018/TT-NHNN dated December 31, 2018 of Governor of State Bank of Vietnam prescribing credit rating of credit institutions and foreign bank branches

• Name of legal document: Circular 23/2021/TT-NHNN issued on 31/12/2021 by the State Bank of Vietnam amendments to Circular No. 52/2018/TT-NHNNdated December 31, 2018 of Governor of State Bank of Vietnam prescribing credit rating of credit institutions and foreign bank branches (referred respectively to as the “Circular No. 23/2021/TT-NHNN” and “Circular No. 52/2018/TT-NHNN”).

• Effective date: 15/02/2022.

The content should be noted: Amending and supplementing regulations on word interpretation in a number of clauses of Article 3 of Circular No. 52/2021/TTBYT-NHNN.

Specifically, Point a Clause 1 Article 1 of Circular No. 23/2021/TT-NHNN stipulates: “Article 1. Amendments to Circular No. 52/2018/TT-NHNN

1. Article 3 is amended as follows:a) Clauses 1, 2, 3, 4, 5 Article 3 are amended as follows:

“1. Capital adequacy ratio means an indicator that is calculated according to SBV’s regulations on prudential limits and ratios for operations of credit institutions and foreign bank branches (hereinafter referred to as “FBB”).

2. Tier 1 capital ratio means an indicator calculated according to the following provisions:

a) If a credit institution or FBB applies the capital adequacy ratio defined according to SBV’s regulations on prudential limits and ratios for operations of credit institutions and FBBs (excluding the Circular No. 41/2016/TT-NHNN dated December 30, 2016 and its amending and superseding documents (if any)), its tier 1 capital ratio shall be calculated adopting the following formula:

Standalone tier 1 capital and total standalone risk-weighted assets shall be calculated according to SBV’s regulations on prudential limits and ratios for operations of credit institutions and FBBs;

b) If a credit institution or FBB applies the capital adequacy ratio defined according to the Circular No. 41/2016/TT-NHNN , its tier 1 capital ratio shall be calculated adopting the following formula:

Where:

– RWA: Total credit risk-weighted assets

– KOR: Capital required for operational risks

– KMR: Capital required for market risks

Tier 1 capital, RWA, KOR, KMR shall be calculated according to the Circular No. 41/2016/TT-NHNN .

3. Debt restructured as potentially bad debt means the balance of debt which is not written off as bad debt at a credit institution or FBB as it is rescheduled or its interest is exempted or reduced and classification group to which it belongs remains unchanged.

4. Debts sold to VAMC as bad debts yet to be disposed of means bad debts which have been purchased using special bonds by VAMC (Vietnam Asset Management Company) and have yet to be disposed or recovered.

5. Customer with a large outstanding balance means a customer (except credit institutions and FBBs) having the outstanding balance making up at least 5% of the equity of a credit institution or FBB.  With regard to cooperative banks, customers with large outstanding balances include people’s credit funds that are their members.”.”

1.3. Circular No. 26/2022/TT-NHNN guiding foreign currency trading between the State Bank of Vietnam and credit institutions permitted to engage in foreign exchange

• Name of legal document: Circular 26/2021/TT-NHNN issued on 31/12/2021 by the State Bank of Vietnam guiding foreign currency trading between the State Bank of Vietnam and credit institutions permitted to engage in foreign exchange (referred to as the “Circular No. 26/2021/TT-NHNN”).

• Effective date: 15/02/2022.

Some contents should be noted:

·        Firstly, stipulating on trading method.

Specifically, Article 8 of Circular No. 26/2022/TT-NHNN stipulates: “Article 8. Trading method

SBV shall perform foreign currency trade with permitted credit institutions which have foreign currency trading connection with the SBV via:

1. Spot trade.

2. Forward trade.

3. Foreign currency swap.

4. Foreign exchange option.

5. Other trading methods decided by SBV from time to time.”

• Secondly, stipulating on Instruments and languages of trade

Specifically, Article 8 of Circular No. 26/2022/TT-NHNN stipulates: “Article 10. Instruments and languages of trade

1. SBV shall trade with permitted credit institutions via online trading systems such as Refinitiv, Bloomberg, telephones, or other instruments decided by SBV from time to time.

2. Verified foreign currency trades on instruments under Clause 1 of this Article means the commitment is unchanged. Revision or cancellation must be agreed upon by both parties.

3. If foreign currency trade is performed via telephones, permitted credit institutions must make sure that telephones can record audio, store audio recording, and trace the agreed trade. Once the agreement is made via telephones, on the trade date, SBV and permitted credit institutions shall verify again via physical or electronic documents which will be signed by competent authorities.

4. Language used in trade across foreign currency trading instruments is Vietnamese or English.”

1.4. Circular No. 28/2021/TT-NHNN amendments to Circular No. 40/2011/TT-NHNN dated December 15, 2011 of the Governor of the State bank of Vietnam on the issuance of licenses and the organization, operation of commercial banks, foreign bank branches, representative offices of foreign credit institutions, other foreign organizations having banking activities in Vietnam

• Name of legal document: Circular 28/2021/TT-NHNN issued on 31/12/2021 by the State Bank of Vietnam amendments to Circular No. 40/2011/TT-NHNNdated December 15, 2011 of the Governor of the State bank of Vietnam on the issuance of licenses and the organization, operation of commercial banks, foreign bank branches, representative offices of foreign credit institutions, other foreign organizations having banking activities in Vietnam (referred respectively to as the “Circular No. 28/2021/TT-NHNN” and “Circular No. 40/2011/TT-NHNN”).

• Effective date: 01/03/2022.

The content should be noted: Amending and supplementing regulations on principles for replacement of license and addition of activities to the license.

Specifically, Clause 2 Article 1 of Circular No. 28/2021/TT-NHNN stipulates: “Article 1. Amendments to Circular No. 40/2011/TT-NHNN

…

2. Amendments to Clause 3 Article 18a (amended by Clause 3 Article 1 of Circular No. 17/2017/TT-NHNN dated November 20, 2017 of the Governor of the State Bank of Vietnam on amendments to Circular No.40/2011/TT-NHNN):

“3. A commercial bank or FBB may perform the activities specified in Clause 26 Article 4 of the form in Appendix 01a and Clause 24 Article 4 of the form in Appendix 01b after obtaining the approval from the State Bank; procedures for application for addition of such activities to the License shall be carried out in accordance with specific regulations of the State Bank and other relevant law provisions.””

1.5. Circular No. 01/2022/TT-NHNN amendment to Circular No. 21/2013/TT-NHNN dated September 9, 2013 of Governor of State Bank of Vietnam on operation network of commercial banks

• Name of legal document: Circular 01/2022/TT-NHNN issued on 28/01/2022 by the State Bank of Vietnam amendment to Circular No. 21/2013/TT-NHNNdated September 9, 2013 of Governor of State Bank of Vietnam on operation network of commercial banks (referred respectively to as the “Circular No. 01/2022/TT-NHNN” and “Circular No. 21/2013/TT-NHNN”).

• Effective date: 15/03/2022.

The content should be noted: Amending and supplementing regulations on opening of operation of domestic branches and transaction offices.

Specifically, Clause 7 Article 1 of Circular No. 01/2022/TT-NHNN stipulates: “Article 1. Amendments to Circular No. 21/2013/TT-NHNN

…

7. Amendments to Article 14:

“Article 14. Opening of operation of domestic branches and transaction offices

1. Requirements for opening of domestic branches and transaction offices:a) Have the right to own or legally utilize head office of the branches and transaction offices; head office must ensure storage of instruments (except for transaction offices), convenience and safety for transactions and assets, be installed with security, protection systems, constant electricity and communication supply systems satisfactory to fire safety;b) Head office of branches where treasury is located must meet the standards of SBV. In case a commercial bank has more than one branch in the same province or central-affiliated city, at least one branch of the commercial bank must have cash treasury in accordance with regulations of SBV and the commercial bank must be responsible for transferring cash of branches without cash treasury to the branch with cash treasury at the end of each working day;c) Branches and transaction offices must be equipped with information technology system that is connected to the head office while transaction offices must be connected to supervisory branches; maintain continuous operations of information technology systems and databases in order to ensure safety and security for professional operations;d) Branches and transaction offices have the required managerial staff including branch directors, vice directors, directors of transaction offices or equivalent titles and professional employees;dd) Branch directors or equivalent titles (for cases of branch opening) must meet all standards and requirements under Clause 5 Article 50 of the Law on Credit Institutions.

2. Commercial banks shall submit reports on satisfaction of requirements for opening domestic branches and transaction offices to SBV braches where the domestic branches and transaction offices are located at least 15 days prior to the opening day.

3. Commercial banks shall carry out the opening for domestic branches and transaction offices after meeting requirements under Clause 1 of this Article and completing procedures for registering branch operation (when opening branches) or issuing notice on business facilities (when opening transaction offices) as per the law.

4. Within 7 working days prior to the expected opening day of domestic branches or transaction offices mentioned under this Article, commercial banks must announce on website of SBV and the commercial banks, a printed daily newspaper in 3 consecutive issues or online newspapers in Vietnam.””

1.6. Decision No. 177/QD-NHNN on the announcement of administrative procedures are amended, supplemented, replaced, and abolished in the field of banking establishment and operations performed at the Single Window Department under the management function of the State Bank of Vietnam

• Name of legal document: Decision No. 177/QD-NHNN issued on 21/02/2022 by the State Bank of Vietnam on the announcement of administrative procedures are amended, supplemented, replaced, and abolished in the field of banking establishment and operations performed at the Single Window Department under the management function of the State Bank of Vietnam (referred to as the “Decision No. 177/QD-NHNN”).

• Effective date: 15/03/2022.

The content should be noted: Abolishing the procedure of approving the change of the name of a domestic branch of a commercial bank and the procedure of approving the eligibility to open a domestic branch or transaction office of a commercial bank within the scope of management function of the State Bank of Vietnam.

Specifically, Item 3 Part 1 of Decision No. 177/QD-NHNN stipulates: “PART I. LIST OF ADMINISTRATION PROCEDURES

3. Lis of administration procedures abolished within the scope of management function of the State Bank of Vietnam

”

1.7. Circular No. 24/2021/TT-NHNN amending and supplementing to some articles of Circular No. 39/2011/TT-NHNN December 15, 2011 of the Governor of the State bank of Vietnam providing independent audit of credit institutions and foreign bank branches

• Name of legal document: Circular 24/2021/TT-NHNN issued on 31/12/2021 by the State Bank of Vietnam amending and supplementing to some articles of Circular No. 39/2011/TT-NHNN December 15, 2011 of the Governor of the State bank of Vietnam providing independent audit of credit institutions and foreign bank branches (referred respectively to as the “Circular No. 24/2021/TT-NHNN” and “Circular No. 39/2011/TT-NHNN”).

• Effective date: 15/04/2022.

The content should be noted: Amending and supplementing regulations on contents with at least in independent audit of operations of the internal control system of credit institutions and foreign bank branches.

Specifically, Clause 2 Article 1 of Circular No. 24/2021/TT-NHNN stipulates: “Article 1. Amending and supplementing a number of articles of Circular No. 39/2011/TT-NHNN

…

2. Amending and supplementing Clause 2, Article 8 as follows:

“2. Independently audit the operation of the internal control system of a credit institution or foreign bank branch with at least the following contents:

a) Auditing the internal control system of credit institutions, foreign bank branches (including internal mechanisms, policies, processes and regulations) in compliance with current law provisions and regulations of the State Bank on the internal control system of credit institutions and foreign bank branches.

For the contents of the internal control system that have been audited for compliance without any change, such content is not required to be re-audited;

b) Auditing the operation of the internal control system for the preparation and presentation of financial statements;

c) In addition to the audit contents specified at Points a and b of this Clause, the commercial bank or foreign bank branch must audit the operation of the internal control system for the content of the internal assessment on the sufficient capital level of commercial banks and foreign bank branches in accordance with the State Bank’s regulations on internal control system.””

1. LEGAL DOCUMENTS ARE EFFECTIVE FROM 01/01/2022

1.1. Decree No. 143/2021/ND-CP amending and supplementing a number of articles of Decree No. 88/2019/ND-CP dated November 14, 2019 penalties for administrative violations in monetary and banking sector

• Name of legal document: Decree No. 143/2021/ND-CP issued on 31/12/2021 by the State Bank of Vietnam amending and supplementing a number of articles of Decree No. 88/2019/ND-CP dated November 14, 2019 penalties for administrative violations in monetary and banking sector (referred respectively to as the “Decree No. 143/2021/ND-CP” and “Decree No. 88/2019/ND-CP”).

• Effective date: 01/01/2022.

The content should be noted: Adding provisions on administrative violations many times.

Specifically, Clause 2, Article 1 of Decree No. 143/2021/ND-CP stipulates: “Article 1. Amending and supplementing to a number of articles of Decree No. 88/2019/ND-CP dated November 14, 2019 of the Government penalties for administrative violations in monetary and banking sector

…

2. Adding Article 2a after Article 2 as follows:

“Article 2a. Administrative violations many times

Organizations and individuals that commit administrative violations many times shall be sanctioned for each violation act, except for repeated administrative violations which are aggravating circumstances specified in Article 5; Article 9; Article 10; Article 11; Article 12; Article 13; Article 14; Article 14a; Article 15; Article 16; Article 17; Article 18; Article 19; Article 20; Article 21; Article 22; Clauses 1, 3, 4, 5, 6, 7, 8 Article 23; Clauses 1, 3, 4, 5, 6, 7, 8 Article 24; Article 25; Article 26; Article 27; Article 28; Article 28a; Article 29; Article 30; Article 31; Article 32; Article 33; Clause 1, Article 34; Article 35; Article 36; Article 37; Article 38; Article 39; Article 40; Article 41; Article 42; Article 43; Article 44; Article 44a; Article 45; Article 45a; Article 46; Article 47; Article 50; Article 51 of this Decree.”.”

1.2. Circular No. 17/2021/TT-NHNN on amendments to Circular No. 19/2016/TT-NHNN dated June 30, 2016 of the Governor of the State bank of Vietnam on bank card operations

• Name of legal document: Circular 17/2021/TT-NHNN issued on 16/11/2021 by the State Bank of Vietnam on amendments to Circular No. 19/2016/TT-NHNNdated June 30, 2016 of the Governor of the State bank of Vietnam on bank card operations (referred respectively to as the “Circular No. 17/2021/TT-NHNN” and “Circular No. 19/2016/TT-NHNN”).

• Effective date: 01/01/2022.

Some contents should be noted:

• Firstly, adding provisions on issuance of cards using electronic method.

Specifically, Clause 5 Article 1 of Circular No. 17/2021/TT-NHNN stipulates: “Article 1. Amendments to Circular No. 19/2016/TT-NHNN

…

5. Article 10a shall be added as follows:

“Article 10a. Issuance of cards using electronic method

1. The card issuer shall develop, issue, and make public the procedures for issuance of individual cards using electronic method in accordance with this Article, law on anti-money laundering, law on electronic transactions, relevant regulations of law concerning prudential measures and confidentiality of information of customers and safe operations of the card issuer, at least containing the following:a) Collect necessary information and documents before entering into an agreement on card issuance and usage with the customer to identify the customer and transaction limit of the debit card, personalized prepaid card, credit card as prescribed in clause 5 Article 10, clause 3 of this Article and Article 14 hereof, internal regulations of the card issuer and other regulations of law (if any);b) Inspect, collate, and verify the customer identification information;c) Warn the customer about prohibited acts during the opening and usage of the card issued electronically;d) Provide the customer with an agreement on card issuance and usage with the particulars specified in Article 13 hereof and enter into the agreement on card issuance and usage with the customer in accordance with law on electronic transactions;dd) Notify name of the card issuer, name and trademark of card, card number, validity period (or commencement date of validity) of card, name of cardholder, scope and functions of the card, prohibited acts in law on card usage for customers.

2. The card issuer has discretion over measures, methods, technology to identify and verify the customer for issuance of cards using electronic method; take liability for any risks (if any) and meet the following premium requirements:a) Having solutions and technologies to collect, check, compare, and ensure the correct match between customer identification information, customer’s biometric data (which are biological factors and characteristics associated with the customers for identification purpose, difficult to fake, has a low overlap rate such as fingerprints, face, iris, voice and other biometric factors) with biometric information and factors corresponding on the necessary documents to identify the customer according to the law on anti-money laundering, at the request of the card issuer or with the personal identification data certified by the competent authority or by other credit institutions, foreign bank branches or by the provider of electronic identification and authentication services;b) Take technical measures to confirm that the identified customer agrees with the contents of the agreement on card issuance and usage;c) Develop a process of risk management, control and assessment, including measures to prevent acts of impersonation, interference, modification, or falsification of verification of customer identification information before, during, and after issuing the card to the customer; measures to check and verify customer identification information to ensure that the customer who is performing transaction of the card issued electronically is the principal cardholder.  The process of risk management and control must be regularly reviewed and improved based on updated information and data during the rendering of service;d) Save and store customer identification information and data derived the process of card issuance and use by the customer, such as: customer identification information; the customer’s biometric factors; sound, images, video recordings, sound recordings; phone number used for making transactions; transaction log.  The information and data must be stored safely and confidentially, backed up, ensuring the completeness and integrity of the data to serve the inspection, comparison, settlement of trace requests, complaints, disputes and providing information upon request from competent regulatory agencies.  The storage period complies with the law on anti-money laundering.

3. The card issuer shall, based on the applicable technology when identifying and verifying the customer, assess risks and then decide the transaction limit of the customer’s card opened electronically as specified in Clause 2 of this Article, provided that the total transaction limit (including cash withdrawal, wire transfer, payment) of the customer’s debit or personalized prepaid card or credit card does not exceed 100 (one hundred) million Vietnam Dong in a month and that customer may neither withdraw cash in foreign currency in foreign countries nor make international payments.

4. The card issuer may decide a transaction limit of a card issued electronically higher than the limit specified in Clause 3 of this Article and allow the customer to withdraw cash in foreign currency in foreign countries or make international payments of one of the following measure is taken:a) The card issuer applies technology to check and compare the customer’s biometrics with citizen biometrics data through the citizen identification database;b) The card issuer uses video calls to collect, check and verify customer identification information during the card issuance process in order to ensure that the online identification and verification is performed as effectively as the process done in person.  The video call solution must meet at least the following requirements:  ensure safety and security; high resolution; signal continuity; allow audio and visual interaction with the customer in real time to ensure real person identification; store all audio data, images or video recordings, audio recordings during card issuance to the customer;c) After the cardholder has identified and verified customer information through face-to-face meeting with the cardholder being an individual.

5. The electronic card issuance in this Article does not apply to the entities specified at Point b, Clause 1, Clause 2, Clause 3, Article 16 of this Circular. The card issuer shall only issue cards by electronic method to individual customers who are foreigners according to Clause 4, Article 16 of this Circular as for debit cards.

6. The granting of credit via overdrafted credit or debit cards, in addition to the compliance with this Article, must also comply with Article 15 of this Circular.”.”

• Secondly, amending and supplementing Point g, Clause 1, Article 13 of Circular No. 19/2016/TT-NHNN.

Specifically, Clause 6 Article 1 of Circular No. 17/2021/TT-NHNN stipulates: “Article 1. Amendments to Circular No. 19/2016/TT-NHNN

…

6. Point g Clause 1 of Article 13 shall be amended as follows:

 “g. The credit facility agreement to the cardholder, includes: Card facility agreement and changes of card facility agreement, including overdraft limit (for debit cards) and credit limit; interest rates, how interest is charged on the loan, order of recovery of loan principal and interest (for overdrafted credit and debit cards); credit granting period, terms of credit, loan term, minimum sum of repayment, method of repayment, overdue debt fee (if any).  The credit facility agreement concluded with the cardholder may be specified in the agreement on card issuance and usage or in another document;”.”

1.3. Circular No. 18/2021/TT-NHNN regulations on rediscounting of negotiable instruments between credit institutions, foreign bank branches

• Name of legal document: Circular 18/2021/TT-NHNN issued on 18/11/2021 by the State Bank of Vietnam regulations on rediscounting of negotiable instruments between credit institutions, foreign bank branches (referred to as the “Circular No. 18/2021/TT-NHNN”).

• Effective date: 07/01/2022.

Some contents should be noted:

• Firstly, regulating on principles of rediscounting negotiable instruments.

Specifically, Article 3 of Circular No. 18/2021/TT-NHNN stipulates: “Article 3. Principles of rediscounting negotiable instruments

1. Credit institutions, foreign bank branches may rediscount negotiable instruments when the License issued by the State Bank of Vietnam (hereinafter referred to as the State Bank) contains contents of operation on the rediscounting negotiable instrument.

2. Credit institutions, foreign bank branches shall rediscount negotiable instruments according to the provisions of this Circular, in accordance with the provisions of the Law on Credit Institutions, the Law on negotiable instruments and regulations provisions of relevant laws. In case of rediscounting a negotiable instrument involving foreign elements, the parties shall comply with the provisions of this Circular, the Law on Credit Institutions, the provisions on application of international treaties and international trade practices in relation to negotiable instruments with foreign elements in the Law on negotiable instruments and the provisions of the law on civil relations with foreign elements.

3. Credit institutions, foreign bank branches shall rediscount foreign currency negotiable instruments in accordance with the permitted scope of foreign exchange operations of each credit institution, foreign bank branch.”

• Secondly, regulating on corporate bond purchase limit.

Specifically, Article 6 of Circular No. 18/2021/TT-NHNN stipulates: “Article 6. Rediscount currency

1. For negotiable instruments payable in Vietnam dong, credit institutions, foreign bank branches shall rediscount in Vietnam dong.

2. For negotiable instruments payable in foreign currency:a) Credit institutions, foreign bank branches shall rediscount in foreign currency stated on such negotiable instrument or in Vietnam dong as agreed. In case of rediscount in Vietnam dong, the parties shall agree on the applicable exchange rate in accordance with the regulations of the State Bank on the exchange rate;b) In case of rediscounting of a negotiable instrument by method of term purchase, a credit institution or foreign bank branch shall repurchase the negotiable instrument in the currency of the sale of such negotiable instrument.”

1.4. Circular No. 16/2021/TT-NHNN regulations on corporate bond trading of credit institutions and branches of foreign banks

• Name of legal document: Circular 16/2021/TT-NHNN issued on 10/11/2021 by the State Bank of Vietnam on regulations corporate bond trading of credit institutions and branches of foreign banks (referred to as the “Circular No. 16/2021/TT-NHNN”).

• Effective date: 15/01/2022.

Some contents should be noted:

• Firstly, regulating on corporate bond eligible for trading.

Specifically, Article 5 of Circular No. 16/2021/TT-NHNN stipulates: “Article 5. Corporate bond eligible for trading

A corporate bond is eligible for trading when all requirements below are satisfied:

1. The corporate bond is issued in accordance with regulations and law.

2. The corporate bond is issued in VND.

3. The corporate bond is under legal ownership of the seller, has not reached maturity which requires payment of both principal and interest, is not subject to any dispute, is allowed to be traded as per the law, is not under forward contract or discount contract or rediscount contract as guaranteed by the seller (except for cases where a credit institution purchases corporate bond to sell for the first time).”

• Secondly, regulating on corporate bond purchase limit.

Specifically, Article 8 of Circular No. 16/2021/TT-NHNN stipulates: “Article 8. Corporate bond purchase limit

1. The total corporate bond purchase balance shall be included in total amount of credit extended of a customer or a customer and a related person according to Article 128 of the amended Law on Credit Institutions and regulations of the State Bank of Vietnam on prudential limits and ratios in operations of credit institutions.

2. Credit institutions shall elaborate on corporate bond purchase limits: Corporate bonds of an issuer; corporate bonds of an issuer and a related person; secured bonds; non-secured bond; readily marketable bonds; bonds held until maturity; corporate bonds being traded.”

1.5. Circular No. 25/2021/TT-NHNN amending and supplementing a number of articles of Circular No. 01/2015/TT-NHNN dated January 6, 2015 defining trading, supply of interest rate derivative products of commercial banks, branches of foreign banks

• Name of legal document: Circular 25/2021/TT-NHNN issued on 31/12/2021 by the State Bank of Vietnam amending and supplementing a number of articles of Circular No. 01/2015/TT-NHNN dated January 6, 2015 defining trading, supply of interest rate derivative products of commercial banks, branches of foreign banks (referred respectively to as the “Circular No. 25/2021/TT-NHNN” and “Circular No. 01/2015/TT-NHNN”).

• Effective date: 14/02/2022.

The content should be noted: Adding provisions on defining trading, supply of interest rate derivative products by electronic means

Specifically, Clause 4 Article 1 of Circular No. 25/2021/TT-NHNN stipulates: “Article 1. Amending and supplementing a number of articles of Circular No. 01/2015/TT-NHNN

…

4. Adding Article 4a as follows:

“Article 4a. Defining trading, supply of interest rate derivative products by electronic means

1. Commercial banks, foreign bank branches defining trading and supplying interest rate derivative products by electronic means must develop a business process for providing interest rate derivative products by electronic means in accordance with the provisions of this Circular, the provisions of the law on prevention and combat of money laundering, the law on electronic transactions and relevant legal provisions, ensuring the safety and confidentiality of customer information and safe operation of commercial banks and foreign bank branches.

2. Commercial banks and foreign bank branches must fully store information related to the defining trading and supply of interest rate derivatives by electronic means to serve the inspection, compare, settle tracing, complaints, disputes and provide information upon request from competent state management agencies.””

1.6. Circular No. 24/2021/TT-NHNN amending and supplementing to some articles of Circular No. 39/2011/TT-NHNN December 15, 2011 of the Governor of the State bank of Vietnam providing independent audit of credit institutions and foreign bank branches

• Name of legal document: Circular 24/2021/TT-NHNN issued on 31/12/2021 by the State Bank of Vietnam amending and supplementing to some articles of Circular No. 39/2011/TT-NHNN December 15, 2011 of the Governor of the State bank of Vietnam providing independent audit of credit institutions and foreign bank branches (referred respectively to as the “Circular No. 24/2021/TT-NHNN” and “Circular No. 39/2011/TT-NHNN”).

• Effective date: 15/04/2022.

The content should be noted: Amending and supplementing regulations on contents with at least in independent audit of operations of the internal control system of credit institutions and foreign bank branches.

Specifically, Clause 2 Article 1 of Circular No. 24/2021/TT-NHNN stipulates: “Article 1. Amending and supplementing a number of articles of Circular No. 39/2011/TT-NHNN

…

2. Amending and supplementing Clause 2, Article 8 as follows:

“2. Independently audit the operation of the internal control system of a credit institution or foreign bank branch with at least the following contents:

a) Auditing the internal control system of credit institutions, foreign bank branches (including internal mechanisms, policies, processes and regulations) in compliance with current law provisions and regulations of the State Bank on the internal control system of credit institutions and foreign bank branches.

For the contents of the internal control system that have been audited for compliance without any change, such content is not required to be re-audited;

b) Auditing the operation of the internal control system for the preparation and presentation of financial statements;

c) In addition to the audit contents specified at Points a and b of this Clause, the commercial bank or foreign bank branch must audit the operation of the internal control system for the content of the internal assessment on the sufficient capital level of commercial banks and foreign bank branches in accordance with the State Bank’s regulations on internal control system.””

1. LEGAL DOCUMENTS ARE ISSUED IN 11/2021

1.1. Circular No. 16/2021/TT-NHNN regulations on corporate bond trading of credit institutions and branches of foreign banks

• Name of legal document: Circular 16/2021/TT-NHNN issued on 10/11/2021 by the State Bank of Vietnam on regulations corporate bond trading of credit institutions and branches of foreign banks (referred to as the “Circular No. 16/2021/TT-NHNN”).

• Effective date: 15/01/2022.

Some contents should be noted:

• Firstly, regulating on corporate bond eligible for trading.

Specifically, Article 5 of Circular No. 16/2021/TT-NHNN stipulates: “Article 5. Corporate bond eligible for trading

A corporate bond is eligible for trading when all requirements below are satisfied:

1. The corporate bond is issued in accordance with regulations and law.

2. The corporate bond is issued in VND.

3. The corporate bond is under legal ownership of the seller, has not reached maturity which requires payment of both principal and interest, is not subject to any dispute, is allowed to be traded as per the law, is not under forward contract or discount contract or rediscount contract as guaranteed by the seller (except for cases where a credit institution purchases corporate bond to sell for the first time).”

• Secondly, regulating on corporate bond purchase limit.

Specifically, Article 8 of Circular No. 16/2021/TT-NHNN stipulates: “Article 8. Corporate bond purchase limit

1. The total corporate bond purchase balance shall be included in total amount of credit extended of a customer or a customer and a related person according to Article 128 of the amended Law on Credit Institutions and regulations of the State Bank of Vietnam on prudential limits and ratios in operations of credit institutions.

2. Credit institutions shall elaborate on corporate bond purchase limits: Corporate bonds of an issuer; corporate bonds of an issuer and a related person; secured bonds; non-secured bond; readily marketable bonds; bonds held until maturity; corporate bonds being traded.”

1.2. Circular No. 18/2021/TT-NHNN regulations on rediscounting of negotiable instruments between credit institutions, foreign bank branches

• Name of legal document: Circular 18/2021/TT-NHNN issued on 18/11/2021 by the State Bank of Vietnam regulations on rediscounting of negotiable instruments between credit institutions, foreign bank branches (referred to as the “Circular No. 18/2021/TT-NHNN”).

• Effective date: 07/01/2022.

Some contents should be noted:

• Firstly, regulating on principles of rediscounting negotiable instruments.

Specifically, Article 3 of Circular No. 18/2021/TT-NHNN stipulates: “Article 3. Principles of rediscounting negotiable instruments

1. Credit institutions, foreign bank branches may rediscount negotiable instruments when the License issued by the State Bank of Vietnam (hereinafter referred to as the State Bank) contains contents of operation on the rediscounting negotiable instrument.

2. Credit institutions, foreign bank branches shall rediscount negotiable instruments according to the provisions of this Circular, in accordance with the provisions of the Law on Credit Institutions, the Law on negotiable instruments and regulations provisions of relevant laws. In case of rediscounting a negotiable instrument involving foreign elements, the parties shall comply with the provisions of this Circular, the Law on Credit Institutions, the provisions on application of international treaties and international trade practices in relation to negotiable instruments with foreign elements in the Law on negotiable instruments and the provisions of the law on civil relations with foreign elements.

3. Credit institutions, foreign bank branches shall rediscount foreign currency negotiable instruments in accordance with the permitted scope of foreign exchange operations of each credit institution, foreign bank branch.”

• Secondly, regulating on corporate bond purchase limit.

Specifically, Article 6 of Circular No. 18/2021/TT-NHNN stipulates: “Article 6. Rediscount currency

1. For negotiable instruments payable in Vietnam dong, credit institutions, foreign bank branches shall rediscount in Vietnam dong.

2. For negotiable instruments payable in foreign currency:a) Credit institutions, foreign bank branches shall rediscount in foreign currency stated on such negotiable instrument or in Vietnam dong as agreed. In case of rediscount in Vietnam dong, the parties shall agree on the applicable exchange rate in accordance with the regulations of the State Bank on the exchange rate;b) In case of rediscounting of a negotiable instrument by method of term purchase, a credit institution or foreign bank branch shall repurchase the negotiable instrument in the currency of the sale of such negotiable instrument.”

1.3. Official Letter No. 8458/NHNN-TT regarding the application of basic standards on domestic chip cards

• Name of legal document: Official Letter No. 8458/NHNN-TTissued on 31/11/2021 by the State Bank of Vietnam regarding the application of basic standards on domestic chip cards (referred to as the “Official Letter No. 8458/NHNN-TT”)

• The content should be noted in Official Letter No. 8458/NHNN-TT:

“in order to speed up the transition to domestic chip cards, Circular No. 19 (amended and supplemented) stipulates the responsibilities of card issuers (CIs) in implementing the conversion roadmap from domestic magnetic cards to domestic chip cards in circulation and stop issuing domestic magnetic cards after March 31, 2021, there is no regulation on stopping or refusing card transactions for domestic magnetic cards in circulation (still has an expiry date) issued by CIs in Vietnam; at the same time, it stipulates the responsibilities of card payment organizations (CPOs) in implementing the roadmap for converting ATMs and point-of-sale (POS) terminals operating in Vietnam in compliance with the basic standards on domestic chip cards, there is no regulation on refusing to accept card transactions for domestic magnetic cards in circulation.”

1. LEGAL DOCUMENTS ARE ISSUED IN 10/2021

Decision No. 1813/QĐ-TTg on approval of the Project for development of non-cash payment in Vietnam period of 2021 – 2025

• Name of legal document: Decision No. 1813/QĐ-TTg issued on 28/10/2021 by the Prime Minister on approval of the Project for development of non-cash payment in Vietnam period of 2021 – 2025 (referred to as the “Decision No. 1813/QĐ-TTg”).

• Effective date: 28/10/2021.

Some contents should be noted:

• Firstly, regulating on specific objectives by the end of 2025.

Specifically, Section 2 Part II Decision No. 1813/QĐ-TTg stipulates: “II. OBJECTIVES

…

2. Specific objectives by the end of 2025

a) Non-cash payment value is 25 times higher than GDP.b) Non-cash payment in e-commerce reaches 50%.c) From 80% of people aged 15 years and over have transaction accounts at authorized banks or other organizations.d) Increase people’s access to payment services; increase the number of points accepting non-cash payments to over 450,000 points.dd) Objectives of growth in the use of non-cash payment means and services:

– The average growth rate in the number and value of non-cash payment transactions is 20 – 25%/year;

– The average growth rate in the number of transactions via the mobile phone channel reaches 50 – 80%/year and the transaction value reaches 80 – 100%/year;

– The average growth rate of the number and value of transactions via the Internet channel reaches 35-40%/year;

* The rate of individuals and organizations using non-cash payment means through electronic payment channels reaches 40%.

e) Objectives of non-cash payment for public services:

– From 90 to 100% of educational institutions in urban areas accept payment of tuition fees by non-cash payment method; from 90 – 100% of universities and colleges in urban areas deploy online tuition payment on the National Public Service Portal;

– 60% of medical examination and treatment establishments in urban areas accept payment for medical services by non-cash payment methods;

– 60% of people receiving pensions, social insurance allowances and unemployment allowances in urban areas are paid through non-cash payment methods.”

• Secondly, regulating on solutions on completing the legal corridor and mechanisms, policies to develop non-cash payments in the period of 2021-2025.

Specifically, Section 1 Part 3 Decision No. 1813/QĐ-TTg stipulates: “III. NON-CASH PAYMENT DEVELOPMENT SOLUTIONS FOR PERIOD OF 2021 – 2025

1. Complete the legal corridor and mechanisms, policiesa) Review and propose amendments, supplements to a number of provisions related to payment in current legal documents (such as the Law on the State Bank of Vietnam, the Law on Credit Institutions, the Law on Prevention and Combating of Money Laundering and other relevant Law documents).b) Research and develop Project of Law on Payment Systems (according to the tasks assigned in the Prime Minister’s Decision No. 986/QD-TTg dated August 8, 2018 ON APPROVING DEVELOPMENT STRATEGY OF VIETNAM BANKING SECTOR BY 2025 AND VISION TO 2030) to ensure the management and supervision authority of the State Bank of Vietnam over payment systems, services and payment means, in accordance with practical requirements, development trends and international practices.c) Complete the development and promulgation of a Decree replacing Decree No. 101/2012/ND-CP dated November 22, 2012 on non-cash payments and developing guiding documents.d) Review, study and propose amendments, supplements and replacement of Decree No. 222/2013/ND-CP dated December 31, 2013 on cash payment in order to strengthen the management of cash payment activities especially for transactions of buying and selling properties of great value in accordance with the provisions of the Law on Housing, the Law on Real Estate Business, the Law on Prevention and Combat of Money Laundering, and the Law on Prevention and Combat of Corruption.dd) Finalize and promulgate regulations on electronic identification and authentication; promulgate regulations on the protection of personal data; promulgate regulations and guidelines to allow relevant organizations to connect and exploit information from the National Population Database in accordance with laws to serve information authentication and identifying customers by electronic means.e) Complete the development and promulgate of a controlled trial mechanism for financial technology (Fintech) activities in the banking sector in order to create a legal framework, meet management requirements, and promote innovation and creativity. create and deploy new cooperation and business models in payment service provision.g) Review and propose amendments and supplements to legal regulations on electronic transactions, network security, assurance of data safety and security, and user protection, etc. in order to support and facilitate benefits the application of technology and innovation and creativity, ensuring security and safety in payment activities.h) Research and propose mechanisms and policies on national digital currency.i) Develop solutions to continue to encourage non-cash payments to contribute to tax management.k) Implement appropriate policies on non-cash payment service fees, creating favorable conditions for users to access non-cash payment services at a reasonable cost.”

1. LEGAL DOCUMENTS ARE EFFECTIVE FROM 01/10/2021

1.1. Circular No. 11/2021/TT-NHNN prescribing classification of assets, amounts and methods of setting up risk provisions and use of provisions for control and management of risks arising from operations of credit institutions and foreign bank branches

• Name of legal document: Circular 11/2021/TT-NHNN dated July 30, 2021 of the State Bank of Vietnam prescribing classification of assets, amounts and methods of setting up risk provisions and use of provisions for control and management of risks arising from operations of credit institutions and foreign bank branches (referred to as the “Circular No. 11/2021/TT-NHNN”).

• Effective date: 01/10/2021.

The content should be noted: Stipulating on specific provision amounts

Specifically, Article 12 of Circular No. 11/2021/TT-NHNN stipulates: “Article 12. Specific provision amounts

1. The borrower-specific provision amount is calculated according to the following formula:

Where:

– R: Total borrower-specific provision amount;

–  : refers to total provision amount for the borrower owing the outstanding amounts ranging from 1 to n.

Ri refers to the amount of provision for the outstanding balance of the loan i. Ri is calculated according to the following formula:

Ri = (Ai – Ci) x r

Where:

Ai: The outstanding principal i.

Ci: Deductible value of the security property, financial lease assets, negotiable instruments, other securities used in discounting and resale of Government bonds (hereinafter referred to as collateral) of the debt i.

r: Provisioning rates specific to groups prescribed in clause 2 of this Article.

Where Ci > Ai, Ri is calculated as 0 (zero).

2. Provisioning rates specific to debt groups are as follows:

a) Group 1: 0%;

b) Group 2: 5%;

c) Group 3: 20%;

d) Group 4: 50%;

dd) Group 5: 100%.

3. The collateral or security used as a deduction for calculation of the specific provision amount (R) specified in Clause 1 of this Article must satisfy the following conditions:

a) Credit institutions, foreign bank branches may dispose of security or collateral under guarantee contracts and in accordance with law when borrowers fail to perform their agreed obligations;

b) The expected period of disposition of collateral or security property is not more than 01 (one) year if it is not a real property, and not more than 02 (two) years if it is a real property, and starts from the date on which credit institutions, foreign bank branches have the right to dispose of collateral or security;

c) Collateral or security must conform to laws on secured transactions and other relevant laws;

d) In case where the security or collateral fails to satisfy the conditions specified at point a, b and c of this clause, the deductible value of that security or collateral must be deemed 0 (zero).

4. The deductible value of security property or collateral is determined by multiplying the value of security property or collateral specified in clause 5 of this Article by the deduction rate for each type of security or collateral as provided in Clause 6 of this Article.

Credit institutions, foreign bank branches shall, of their own accord, determine the deduction rate for each type of security or collateral on the basis of the assessment of recoverability when disposing of that security or collateral provided that rate does not exceed the maximum deduction rate applied to specific types of collateral or security property in accordance with clause 6 of this Article.

5. Value of collateral or security property used as a basis to calculate the deduction during the process of setting up a risk provision shall be determined as follows:

a) Gold bars: Their value is determined at the buying price at the head office of an enterprise or credit institution that owns the gold bar brand at the end of the trading day prior to the specific provisioning date;

b) Listed securities (including stocks, fund certificates, derivatives, covered warrants that are already listed): Their value is determined at the closing price quoted on the latest trading day prior to the specific provisioning date. In case where securities already listed on the stock exchange are not traded in 30 (thirty) days before the provisioning date, or are delisted or suspended from trades or cease being traded on the provisioning date, credit institutions, foreign bank branches shall value the collateral or security property in accordance with point e of this clause;

c) Stocks registered for trades on Upcom: Their value is determined at the reference price at the latest trading day promptly before the provisioning date announced by the Stock Exchange. In case where securities already listed on Upcom are not traded in 30 (thirty) days before the specific provisioning date, or are delisted or suspended from trades or cease being traded on the provisioning date, credit institutions, foreign bank branches shall value the collateral or security property in accordance with point e of this clause;

d) Government bonds listed on Stock Exchanges: Their value is determined at the average price by averaging trading prices in the firm-commitment offering session in accordance with the Government’s regulations on issuance, registration, depository, listing and trading of Government debt instruments on the stock market; guiding documents of the Ministry of Finance and other amending, supplementing documents or replacement ones (if any). In case where there is no trading price in the above-mentioned firm-commitment offering session, the bond price applied to calculation of the deduction is the average of the trading prices on the secondary market within the last 10 (ten) working days till the date of setting up of the provision for risk. In case where no trade takes place within the last 10 (ten) working days till the date of setting of the provision for risk, credit institutions, foreign bank branches shall use the par value of the collateral or security property;

dd) Municipal bonds, government-guaranteed bonds and corporate bonds (including credit institutions) listed and registered for trades: Their value is determined at the price defined by averaging trading prices on the secondary market within the last 10 (ten) working days before the provisioning date according to the announcement of the Stock Exchange. In case where no trade takes place within the last 10 (ten) working days till the specified provisioning date, credit institutions, foreign bank branches shall use the par value of the collateral or security property;

e) Securities not listed on the Stock Exchanges, promissory notes, bills, certificates of deposit issued by enterprises (including credit institutions, foreign bank branches): Their par value is used.

In case where, on the specific provisioning date, the equity value is lower than the actual investment capital value of the owners at the issuing organization, the value of collateral or security property shall be determined by

Multiplying the par value of stocks or other securities multiplied by (x) the equity of the issuing organization and then divided by (:) the actual investment capital of owners at the issuing organization.

Where:  The actual investment capital of the owners at the issuing organization and the equity of the issuing organization are determined on the latest balance sheet prior to the specific provisioning date in accordance with regulations of the Ministry of Finance, providing instructions about the corporate accounting regime.

In case where the equity of the issuing organization is negative, the value of collateral or security property used for deduction (Ci) must be deemed zero (zero);

g) Financially leased assets: Their value uses the value determined according to point h of this clause, or the value of the financially leased asset remaining over lease periods is calculated according to the formula:

Value of financially leased assets divided by (:) the lease period agreed upon under the contract multiplied by (x) the remaining lease term under the contract;

h) The value of collateral or security property used as deduction for calculation of the specific provision for movable assets, real property and other types of security or collateral, except for the assets specified at point a, b, c, d, dd and e of this clause is calculated as follows:

(i) Credit institutions, foreign bank branches must hire legally licensed valuing organizations to value collateral or security property used as deduction for calculation of the specific amount of provision at the end of the financial year in the following cases:

Collateral or security property valued by credit institutions, foreign bank branches at VND 50 billion or more is provided to secure debts of borrowers who are related to credit institutions, foreign bank branches and other persons subject to restrictions on credit extension as prescribed in Article 127 of the Law on Credit Institutions (amended and supplemented); collateral or security property is valued by credit institutions or foreign bank branches at VND 200 billion or more.

Results of valuation of collateral or security property issued by the legally licensed valuing organization are used by credit institutions, foreign bank branches for valuation of collateral or security property used as deduction for calculation of the specific amount of provision.

In case the licensed valuing organization is not capable of valuing, or no other licensed valuing organization values collateral or security property, credit institutions, foreign bank branches shall use the valuation results according to the internal regulations specified at point h of clause 2 of Article 6 herein. If there is no written document on the valuation of the collateral or security property from the valuing organization, and the value of the collateral or security property cannot be determined according to internal rules and regulations, the value of the collateral or security property used as deduction must be deemed 0 (zero);

(ii) Except for the case specified at point h(i) of this clause, credit institutions, foreign bank branches may value the collateral or security property as deduction when calculating the specific amount of provision according to internal rules and regulations laid down at point h of clause 2 of Article 6 in this Circular.

6. Credit institutions, foreign bank branches shall determine the specific deduction rate of each type of collateral or security property according to the principle that the lower the liquidity of the collateral or security property, and the greater the price fluctuation, then the lower the collateral deduction rate. In this principle, the maximum deduction rate of the collateral or security property is calculated as follows:

a) Borrower’s deposit balance, certificate of deposit in Vietnam Dong at the lending credit institution, foreign bank branch: 100%;

b) Government bonds, gold bars in accordance with law on gold trading activities; borrower’s deposit balance, certificate of deposit in foreign currency at the lending credit institution, foreign bank branch: 95%;

c) Municipal bonds, Government-guaranteed bonds; negotiable instruments, promissory notes, bills, bonds issued by the lending credit institutions; balance of deposits, certificates of deposit, promissory notes, bills issued by other credit institutions, foreign bank branches:

– The time left to maturity of less than 1 year:  95%;

– The time left to maturity of 1 year – 5 years:  85%;

– The time left to maturity of more than 5 year:  80%.

d) Securities issued by other credit institutions and listed on the Stock Exchanges: 70%;

dd) Securities issued by enterprises (except credit institutions) and listed on the Stock Exchanges: 65%;

e) Securities that have not yet been listed on the Stock Exchanges, valuable papers, except those specified at point c of this Clause, issued by other credit institutions that have registered for listing securities on the Stock Exchanges: 50%;

Securities that have not yet been listed on the Stock Exchanges, security instruments, except those specified at point c of this clause, issued by other credit institutions that do not register for listing their securities on the Stock Exchanges: 30%;

g) Securities that have not yet been listed on the Stock Exchanges, security instruments issued by enterprises that register for listing their securities on the Stock Exchanges: 30%;

Securities that have not yet been listed on the Stock Exchanges, security instruments issued by enterprises that do not register for listing their securities on the Stock Exchanges: 10%;

h) Real property: 50%;

i) Others: 30%.

7. If any credit institution is in the process of execution of the plan for restructuring, amalgamation and merger under the proposal for restructuring of credit institutions associated with dealing with bad debts that is approved by the Prime Minister, and have financial difficulties, they should report to SBV to seek its approval decision on setting up of risk provisions; In case where the amount of provision for risk is larger than the difference between income and expenditure from the annual business results (excluding the amount set aside in advance for provision for risk within the year), the minimum amount of provision for risk shall be equal to the difference between revenue and expenditure and the credit institution must monitor the amount set aside as the provision for risk in full in accordance with this Circular.”

1.2. Circular No. 12/2021/TT-NHNN prescribing credit institutions and foreign bank branches’ trading of promissory notes, treasury bills, deposit certificates and bonds domestically issued by other credit institutions and foreign bank branches

• Name of legal document: Circular No. 12/2021/TT-NHNN issued on 30/07/2021 by the State Bank of Vietnam prescribing credit institutions and foreign bank branches’ trading of promissory notes, treasury bills, deposit certificates and bonds domestically issued by other credit institutions and foreign bank branches (referred to as the “Circular No. 12/2021/TT-NHNN”).

• Effective date: 27/10/2021.

Some contents should be noted:

• Firstly, regulating on rules for trading of financial instruments.

Specifically, Article 3 Circular No. 12/2021/TT-NHNN stipulates: “Article 3. Rules for trading of financial instruments

1. Credit institutions/FBBs are allowed to carry out the trading of financial instruments according to the contents about trading of corporate bonds and/or other financial instruments specified in their licenses issued by SBV.

2. Buyers and sellers shall assume legal responsibility for their compliance with regulations herein and relevant laws when carrying out trading of financial instruments.

3. VND (Vietnamese Dong) shall be the currency used in trading of financial instruments.

4. The financial instrument to be purchased or sold is under the lawful ownership of the seller and is not matured; the seller undertakes that the financial instrument is not in any disputes, is eligible for trading as prescribed by law, and is not undergoing any discounting or rediscounting.

5. Credit institutions/FBBs shall carry out the trading of bonds in accordance with the Law on Credit Institutions, the Law on Securities, Government’s Decrees on issuance of corporate bonds, legislative documents providing guidance on the Law on Securities, relevant laws and this Circular.

6. Credit institutions/FBBs shall only purchase promissory notes, treasury bills and deposit certificates whose remaining term to maturity is less than 12 months.  The remaining term to maturity is the length of time commencing on the date of payment for the financial instrument as prescribed in Clause 3 Article 4 hereof and ending on the maturity date of that financial instrument on which its principal and interest must be fully paid.

7. FBBs shall not be allowed to purchase convertible bonds.

8. Credit institutions/FBBs shall only carry out trading of financial instruments issued by finance companies or finance lease companies with organizations (including credit institutions/FBBs).”

• Secondly, regulating on transaction information.

Specifically, Article 3 Circular No. 12/2021/TT-NHNN stipulates: “Article 4. Transaction information

The form of transactions in financial instruments must comply with relevant laws.  An agreement on trading of financial instrument shall, inter alia, include the following contents:

1. Information about the seller and the buyer.

2. Name of the financial instrument; issuer; term, maturity date and value determined according to face value of the financial instrument.

3. Date of payment for financial instrument.

4. Payment amount for financial instrument.

5. Rights and obligations of the seller and the buyer.”

2. LEGAL DOCUMENTS ARE ISSUED IN 09/2021

Circular No. 14/2021/TT-NHNN amendments to Circular no. 01/2020/TT-NHNN dated march 13, 2020 of the Governor of the State bank of Vietnam providing instructions for credit institutions and foreign branch banks (FBB) on debt rescheduling, exemption or reduction of interest and fees, retention of debt category to assist borrowers affected by Covid-19 pandemic

• Name of legal document: Circular No. 14/2021/TT-NHNN issued on 07/09/2021 by the State Bank of Vietnam amendments to Circular no. 01/2020/TT-NHNNdated march 13, 2020 of the Governor of the State bank of Vietnam providing instructions for credit institutions and foreign branch banks (FBB) on debt rescheduling, exemption or reduction of interest and fees, retention of debt category to assist borrowers affected by Covid-19 pandemic (referred to as the “Circular No. 14/2021/TT-NHNN”).

• Effective date: 07/09/2021.

Some contents should be noted:

• Firstly, amending and supplementing on debt rescheduling.

Specifically, Clause 1 Article 1 of Circular No. 14/2021/TT-NHNN stipulates: “Article 1. Amendments to some Articles of Circular No. 01/2020/TT-NHNN

1. Amendments to Article 4:

“Article 4. Debt rescheduling

An outstanding debt, including the principal and/or interest (including the debts regulated by the Government’s Decree No. 55/2015/ND-CP amended)) may be rescheduled by the credit institution or foreign bank branch (FBB) if it fully satisfies the following conditions:

1. The debt is a loan or finance lease that is granted before 01/8/2021;

2. The principal and/or interest occur during the period from 23/01/2020 to 30/6/2022;

3. The outstanding debt may be rescheduled in one of the following cases:a) The outstanding debt is undue or has been overdue for not more than 10 days according to the concluded agreement, except the cases specified in Point b, Point c, Point d of this Clause;b) The outstanding debt belongs to a debt that occurs before 23/01/2020 and becomes overdue during the period from 23/01/2020 to 30/6/2020;c) The outstanding debt belongs to a debt that occurs during the period from 23/01/2020 to before 10/6/2020 and becomes overdue before 17/5/2021;d) The outstanding debt belongs to a debt that occurs during the period from 10/6/2020 to before 01/8/2021 and becomes overdue during the period from 17/7/2021 to before 07/9/2021.

4. The borrower is assessed by the credit institution or FBB as incapable of paying the principal and/or interest on schedule under the agreement due to decrease in revenue or income caused by Covid-19 pandemic.

5. The borrower applies for rescheduling of the debt and is assessed by the credit institution or FBB as capable of fully paying the principal and/or interest after the debt is rescheduled.

6. Credit institutions and FBBs shall not reschedule debts that violate regulations of law.

7. The rescheduling period (including debt deferral) shall be appropriate for the impacts of Covid-19 pandemic on the borrower and shall not exceed 12 months from the day on which rescheduling is granted by the credit institution/FBB, or from the original deadline for payment of the outstanding debt.

8. Debt rescheduling shall be carried out until 30/6/2022.””

• Secondly, amending and supplementing on reduction and exemption of interest and/or fees.

Specifically, Clause 2 Article 1 of Circular No. 14/2021/TT-NHNN stipulates: “Article 1. Amendments to some Articles of Circular No. 01/2020/TT-NHNN

…

2. Amendments to Article 5:

“Article 5. Reduction and exemption of interest and/or fees

1. Credit institutions and FBBs shall, according to their own rules and regulations, decide reduction and exemption of interest and/or outstanding debts of the debts that arise before 01/8/2021from extend credit (except purchases of corporate bonds) whose principal and/or interest are due during the period from 23/01/2020 to 30/6/2022 but the borrowers are not capable of fully paying the principal and/or interest by the deadline specified in the original agreement due to decrease in revenue or income caused by Covid-19.

2. Reduction and exemption of interest and/or fees shall be carried out until 30/6/2022.”

3. Amendments to Clause 2 Article 6 of Circular No. 01/2020/TT-NHNN , which is already amended by Clause 4 Article 1 of Circular No. 03/2021/TT-NHNN):

“2. Credit institutions and FBBs may retain the categories of the debts that occur during the period from 23/01/2020 to before 01/8/2021 and have been categorized in accordance with regulations of the State bank of Vietnam (SBV) regarding the outstanding debts that have been granted rescheduling, reduction or exemption of interest and/or fees as prescribed in Article 4 and Article 5 of this Circular. To be specific:

a) Retain the categories of debts that are categorized on the latest day before the first rescheduling of the outstanding debts mentioned in Point a Clause 3 Article 4 of this Circular;

c) Retain the categories of debts that are categorized on the latest day before the outstanding debts mentioned in Point c and Point d Clause 3 Article 4 of this Circular are categorized as overdue debts;

c) Retain the categories of debts that are categorized on the latest day before the first reduction or exemption of interests on the outstanding debts mentioned in Article 5 of this Circular.””