LEGAL UPDATE RELATING TO FINANCE AND CREDIT  (MONTHLY LEGAL UPDATE – 05/2024)

LEGAL UPDATE RELATING TO FINANCE AND CREDIT (MONTHLY LEGAL UPDATE – 05/2024)

1. LEGAL DOCUMENTS ARE ISSUED IN 05/2024

1.1. Circular No. 02/2024/TT-NHNN amending and supplementing a number of articles of Circular No. 17/2016/TT-NHNN dated June 30, 2016 of the Governor of the State Bank of Vietnam on money brokerage operations of commercial banks and branches of foreign banks

  • Name of legal document: Circular No. 15/2023/TT-NHNN issued on 05/12/2023 by the State Bank of Vietnam regulating credit information activities of the State Bank of Vietnam (referred to as the “Circular No. 02/2024/TT-NHNN”).

  • Effective date: 01/01/2025.

The content should be noted:

  • Firstly, amending and supplementing regulations on interpretation of the term “Money brokerage”.

Specifically, Clause 2 of Article 1 of Circular No. 02/2024/TT-NHNN stipulates: Article 1. Amending and supplementing a number of articles of Circular No. 17/2016/TT-NHNN

…2. Amend and supplement Clause 1, Article 3 as follows:

“1. Money brokerage is an intermediary job with a brokerage fee to arrange the implementation of banking activities and other business activities according to the provisions of the Law on Credit Institutions between credit institutions and branches of foreign banks.””

  • Secondly, amending and supplementing regulations on scope of brokerage.

Specifically, Clause 3 of Article 1 of Circular No. 02/2024/TT-NHNN stipulates: Article 1. Amending and supplementing a number of articles of Circular No. 17/2016/TT-NHNN

…3. Amend and supplement Article 5 as follows:

“Article 5. Scope of currency brokerage

Commercial banks and foreign bank branches are allowed to provide currency brokerage services to customers to carry out banking activities and other business activities specified in the Law on Credit Institutions.””

Need-to-know Joint children of spouses

Need-to-know Joint children of spouses

NEED-TO-KNOW

JOINT CHILDREN OF SPOUSES

1. What is the purpose of determining the joint child of the spouses?

The determination of joint children of spouses is intended to record the relationship of father, mother and child, thereby serving as a basis for resolving issues of child custody when divorcing, inheritance, fulfillment of alimony obligations,…

2. When to call a joint child of the spouses?[i]

  • Children born (including assisted reproductive births, surrogacy for humanitarian purposes) during marriage period or because the wife becomes pregnant during the marriage are joint children of the
  • Children born within 300 days from the time of termination of marriage are considered children due to the wife’s pregnancy during the marriage period.
  • Children born before the date of marriage registration and recognized by their parents as joint children of the spouses.

3. What about exceptions?

  • If the father and/or the mother does not admit the child, if there is evidence (e.g. the results of the AND assessment), a petition must be filed and it must be determined by the Court.[ii]
  • In case the natural father and/or mother wants to recognize a child, if there is evidence (such as the results of the AND assessment), the application for registration of adoption shall be submitted to the commune-level People’s Committee.3

[i] Clause 1 of Articles 88, 93 and 94 of the Law on Marriage and Family No. 52/2014/QH13

[ii] Clause 2, Article 88 of the Law on Marriage and Family No. 52/2014/QH13

3 Article 25 of the Law on Civil Status No. 60/2014/QH13

LEGAL UPDATE RELATING TO FINANCE AND CREDIT  (MONTHLY LEGAL UPDATE – 05/2024)

LEGAL UPDATE RELATING TO FINANCE AND CREDIT (MONTHLY LEGAL UPDATE – 03/2024)

1. Legal documents are effective in 03/2024

1.1. Circular No. 24/2023/TT-NHNN amendments to some articles of circulars on submission, presentation and provision of information and documents on population upon carrying out administrative procedures related to establishment and operation of banks

  • Name of legal document: Circular No. 24/2023/TT-NHNN issued on 29/12/2023 by the State Bank of Vietnam amendments to some articles of circulars on submission, presentation and provision of information and documents on population upon carrying out administrative procedures related to establishment and operation of banks (referred to as the “Circular No. 24/2023/TT-NHNN”).
  • Effective date: 01/03/2024.

The content should be noted: Amendment to and replacement of some points and appendices of the Circular No. 22/2018/TT-NHNN dated September 05, 2018 of the Governor of the State Bank of Vietnam on guidelines for procedures and applications for approval for provisional lists of personnel of commercial banks, non-bank credit institutions and foreign bank branches.

Specifically, Article 8 of the Circular No. 24/2023/TT-NHNN stipulates: Article 8. Amendment to and replacement of some points and appendices of the Circular No. 22/2018/TT-NHNN dated September 05, 2018 of the Governor of the State Bank of Vietnam on guidelines for procedures and applications for approval for provisional lists of personnel of commercial banks, non-bank credit institutions and foreign bank branches

1. Point b Clause 1 Article 7 shall be amended as follows:

“b) Full name; title and supervisory unit; ID card number or personal identification number of the Director General (Director) expected to be appointed (in case where he/she holds Vietnamese nationality); number of passport or a valid passport alternative of the Director General (Director) expected to be appointed (in case where he/she does not hold Vietnamese nationality), date of issue, place of issue;”.2. The Appendix 01 and Appendix 02 shall be replaced by the Appendix 16 and Appendix 17 issued together with this Circular respectively.”

LEGAL UPDATE RELATING TO FINANCE AND CREDIT  (MONTHLY LEGAL UPDATE – 05/2024)

Legal update relating to Finance and Credit (Monthly Legal Update – 01/2024)

LEGAL DOCUMENTS ARE ISSUED IN 12/2023

1. Circular No. 15/2023/TT-NHNN regulating credit information activities of the State Bank of Vietnam

  • Name of legal document: Circular No. 15/2023/TT-NHNN issued on 05/12/2023 by the State Bank of Vietnam regulating credit information activities of the State Bank of Vietnam (referred to as the “Circular No. 15/2023/TT-NHNN”).
  • Effective date: 01/01/2025.

The content should be noted: Stipulating on rights and obligations of credit institutions.

Specifically, Article 16 of Circular No. 15/2023/TT-NHNN stipulates: “Article 16. Rights and obligations of credit institutions

  1. Establish an information infrastructure to meet the requirements of data creation and control of data provided to CIC; promulgate internal regulations and manage the credit information criteria system throughout the system.
  2. Pay in full and on time the fees for exploiting and using credit information services according to the contract signed with CIC.
  3. Send officials and employees to participate in credit information training courses organized or coordinated by CIC.
  4. Implement other rights and obligations as agreed with CIC and relevant provisions of law.”

2. Decision No. 2345/QD-NHNN on implementing safe and secure solutions in online payments and bank card payments

  • Name of legal document: Decision No. 2345/QD-NHNN issued on 18/12/2023 by the State Bank of Vietnam on implementing safe and secure solutions in online payments and bank card payments (referred to as the “Decision No. 2345/QD-NHNN”).
  • Effective date: 01/01/2025.

The content should be noted: Stipulating on applying authentication methods to online payment.

Specifically, Article 1 of Circular No. Decision No. 2345/QD-NHNN stipulates: “Article 1. Credit institutions, foreign bank branches (FBBs), organizations providing payment services shall, in accordance with the categorization in Appendix 01 hereof, apply authentication methods to online payment (internet banking, mobile banking) as follows:

No. Transaction1 Minimum authentication methods2
Individual customers Organization customers
1 Category A transactions – Username, password or PIN (if a customer has been authenticated during log-in, authentication is not required during transaction) – Username, password or PIN (if a customer has been authenticated during log-in, authentication is not required during transaction)
2 Category B transactions

– OTP sent by SMS or Voice or Email; or

– OTP Matrix Card; or

– Basic OTP generated by soft/hard token; or

– Two-factor authentication method; or

– The customer’s handheld device3, or

– Advanced OTP generated by soft/hard token; or

– FIDO Authentication; or

– Safe electronic signature.

– OTP sent by SMS or Voice or Email; or

– OTP Matrix Card; or

– Basic OTP token without authentication of token user; or

– Handheld device biometrics of the customer’s legal representative or accountant 3.

3 Category C transactions

– The customer’s biometric identifier that: (i) matches the biometric data in the customer’s ID card issued by the police authority4; or (ii) is authenticated by the customer’s electronic identification account created by the electronic identification and authentication system5; or

– The customer’s biometric identifier that matches the customer’s biometric data in the biometric database6. It is recommended to combine with SMS/Voice OTP or OTP generated by soft/hard token.

– Basic OTP soft/hard token with authentication of software/token user; or

– Two-factor authentication method.

4 Category D transactions

The customer’s biometric identifier that: (i) matches the biometric data in the customer’s ID card issued by the police authority4; or (ii) is authenticated by the customer’s electronic identification account created by the electronic identification and authentication system; or (iii) matches the biometric data stored in the verified biometric database6, combined with one of the following authentication methods:

– Advanced OTP generated by soft/hard token; or

– FIDO authentication; or

– Safe electronic signature.

– Advanced OTP generated by soft/hard token; or

– FIDO authentication; or

– Safe electronic signature.

Notes:

– Authentication methods of Category A, B, C transactions can be applied to Category D transactions.

– Authentication methods of Category A, B transactions can be applied to Category C transactions.

– Authentication methods of Category A transactions can be applied to Category B transactions.

– Units that apply authentication methods other than the methods specified above shall send written reports to State Bank of Vietnam (via Information Technology Department) at least 03 months before application.”

3. Circular No. 17/2023/TT-NHNN regulating inspection of compliance with monetary and banking policies and laws

  • Name of legal document: Circular No. 17/2023/TT-NHNN issued on 25/12/2023 by the State Bank of Vietnam regulating inspection of compliance with monetary and banking policies and laws (referred to as the “Circular No. 17/2023/TT-NHNN”).
  • Effective date: 08/02/2024.

The content should be noted:

  • Firstly, stipulating inspection principles.

Specifically, Article 5 of Circular No. 17/2023/TT-NHNN stipulates: “Article 5. Inspection principles

  1. The inspection is carried out within authority and on the basis of legal regulations.
  2. Inspections are conducted regularly according to plan or unexpectedly.
  3. Ensure accuracy, objectivity, honesty, democracy, timeliness, and effective coordination.
  4. Ensure there is no overlap or duplication of content, time, or inspection objects between inspection activities of inspection units, between inspection activities and inspection activities.

When conducting inspection activities, if overlap or duplication is detected between inspection activities and inspection activities, carry out inspection activities; If overlap or duplication is detected in inspection activities, heads of inspection units shall agree to conduct an inspection.”

  • Secondly, stipulating on inspection objects of the inspection unit.

Specifically, Article 8 of Circular No. 17/2023/TT-NHNN stipulates: “Article 8. Inspection objects of inspection units

  1. The Banking Inspection and Supervision Agency checks the compliance with monetary and banking policies and laws for inspection subjects, including:a) Credit institutions, except for those specified in Points a and c, Clause 3 of this Article;b) Foreign bank branches as assigned by the Governor of the State Bank;c) Organize credit information activities;d) Subjects of inspection by the State Bank branch, inspection and supervision of the State Bank branch if deemed necessary.
  2. The unit under the Bank Inspection and Supervision Agency inspects the inspection subjects specified in Clause 1 of this Article who are the unit’s banking inspection and supervision subjects according to their assigned functions and tasks.
  3. State Bank branches, inspection and supervision of State Bank branches check the observance of policies and laws on currency and banking for subjects of inspection in the province or centrally city where the State Bank branch is headquartered, including:a) People’s Credit Fund;b) Foreign bank branches, except for the subjects specified in Point b, Clause 1 of this Article;c) Branches and transaction offices of credit institutions;d) Representative offices in Vietnam of foreign credit institutions and other foreign organizations with banking activities;e) Organizations with foreign exchange activities and gold trading activities; The organization providing intermediary payment services is not a bank.
  4. Other administrative units under the State Bank inspect the observance of policies and implement legal documents within the scope of their advisory functions and assist the Governor of the State Bank in implementing management of that unit for inspection objects, including:a) Credit institutions, except for those specified in Point a, Clause 3 of this Article;b) Foreign bank branches;c) Organizations with foreign exchange activities and gold trading activities; The organization providing intermediary payment services is not a bank.

5. In case of necessity, inspection units shall carry out inspection on other inspection objects when assigned by the Governor of the State Bank.”

LEGAL UPDATE RELATING TO FINANCE AND CREDIT  (MONTHLY LEGAL UPDATE – 05/2024)

Legal update relating to Finance and Credit (Monthly Legal Update – 11/2023)

LEGAL DOCUMENTS ARE ISSUED IN 11/2023

1. Circular No. 20/VBHN-NHNN regulations on licensing and organization and operation of commercial banks, foreign bank branches, representative offices of foreign credit institutions, and other foreign organizations with banking activities in Vietnam

  • Name of legal document: Circular No. 20/VBHN-NHNN issued on 10/11/2023 by the State Bank of Vietnam regulations on licensing and organization and operation of commercial banks, foreign bank branches, representative offices of foreign credit institutions, and other foreign organizations with banking activities in Vietnam.
  • Consolidation date: 10/11/2023.

The content should be noted: Consolidating the following circulars: Circular No. 40/2011/TT-NHNN dated December 15, 2011 of the Governor of the State Bank of Vietnam, Circular No. 17/2017/TT-NHNN dated November 20, 2017 of the Governor of the State Bank of Vietnam, Circular No. 17/2018/TT-NHNN dated August 14, 2018 of the Governor of the State Bank of Vietnam, Circular No. 28/2018/TT-NHNN dated November 30 2018 of the Governor of the State Bank of Vietnam, Circular No. 25/2019/TT-NHNN dated December 2, 2019 of the Governor of the State Bank of Vietnam, Circular No. 28/2021/TT-NHNN dated December 31 December 2021 of the Governor of the State Bank of Vietnam, and Circular No. 13/2023/TT-NHNN dated October 31, 2023 of the Governor of the State Bank of Vietnam.

2. Circular No. 21/VBHN-NHNN prescribing application and procedures for approval of changes of commercial banks and foreign bank branches

  • Name of legal document: Circular No. 21/VBHN-NHNN issued on 10/11/2023 by the State Bank of Vietnam prescribing application and procedures for approval of changes of commercial banks and foreign bank branches.
  • Consolidation date: 10/11/2023.

The content should be noted: Consolidating the following circulars: The Circular No. 50/2018/TT-NHNN dated December 31, 2018 of the Governor of the State Bank of Vietnam (SBV), The Circular No. 06/2022/TT-NHNN dated June 30, 2022 of the SBV’s Governor and The Circular No. 13/2023/TT-NHNN dated October 31, 2023 of the SBV’s Governor.

3. Circular No. 14/2023/TT-NHNN internal control system of non-bank credit institution

  • Name of legal document: Circular 14/2023/TT-NHNN issued on 20/11/2023 by the State Bank of Vietnam internal control system of non-bank credit institution (referred to as the “Circular No. 14/2023/TT-NHNN”).
  • Effective date: 01/10/2024.

The content should be noted: Stipulating on requirements for internal control system.

Specifically, Article 4 of Circular No. 14/2023/TT-NHNN stipulates:Article 4. Requirements for internal control system

1. The internal control system of a non-bank credit institution shall fulfill the following requirements:

a) Meeting requirements according to regulations of the Law on Credit Institutions;

b) Being appropriate for the scale, conditions and complexity of the non-bank credit institution’s business activities;

c) Having sufficient financial, human and IT resources in order to ensure the internal control system’s effectiveness;

d) Creating and maintaining control culture and work ethics for the non-bank credit institution.

2. The non-bank credit institution shall have internal regulations in compliance with regulations of the Law on Credit Institutions, in which the following requirements shall be met:

a) Being consistent with regulations in this Circular and relevant laws;

b) The Board of Directors or the Council of Members promulgates regulations on the non-bank credit institution ‘s organization, management and activities, except for matters under the competence of the Shareholders’ Council and owner; the Board of Controllers promulgates its own internal regulations; the Director General (Director) promulgates work regulations, processes and procedures (hereinafter referred to as “internal process”);

c) Being subject to regular assessments specified in this Circular and the non-bank credit institution’s regulations on appropriateness of and compliance with the law, and making amendments if necessary.

3. The internal control system shall have three lines of defense as follows:

a) The first line of defense has functions of risk identification, control and minimization carried out by the following departments: business departments (including product development department), other revenue-generating departments; departments responsible for making risk-bearing decisions; departments responsible for risk limit allocation, risk management and risk minimization (affiliated to a business department or an independent department) in each type of transactions and business activities; human resource department, accounting department;

b) The second line of defense has functions of formulation of risk management policies and issuance of internal regulations on risk management and monitoring in accordance with regulations of law, carried out by the following departments: Departments conforming to the regulations in Article 16 of this Circular and risk management department specified in Article 18 of this Circular;

c) The third line of defense has the function of internal audit carried out by the internal audit department specified in the Law on Credit Institutions and this Circular.

4. Discussions and conclusions on the internal control system in meetings held by the Board of Directors, Council of Members, Board of Controllers, Risk Management Committee, and Human Resource Committee shall be recorded in writing, in which agreements and disagreements of members shall be specified.

5. Independent assessment of the internal control system shall be carried out in accordance with the State Bank’s regulations on independent audit in non-bank credit institutions and foreign bank branches.”

LEGAL UPDATE RELATING TO FINANCE AND CREDIT  (MONTHLY LEGAL UPDATE – 05/2024)

Legal update relating to Finance and Credit (Monthly Legal Update – 09/2023)

1.       LEGAL DOCUMENTS ARE EFFECTIVE FROM 01/09/2023

Circular No. 10/2023/TT-NHNN suspending the enforceable effect of a number of contents of Circular No. 39/2016/TT-NHNN dated December 30, 2016 of the Governor of the State Bank of Vietnam prescribing lending transactions of credit institutions and/or foreign bank branches with customers (supplemented in Circular No. 06/2023/TT-NHNN dated June 28, 2023 of the Governor of the State Bank of Vietnam)

  • Name of legal document: Circular No. 10/2023/TT-NHNN issued on 23/08/2023 by the State Bank of Vietnam suspending the enforceable effect of a number of contents of Circular No. 39/2016/TT-NHNN dated December 30, 2016 of the Governor of the State Bank of Vietnam prescribing lending transactions of credit institutions and/or foreign bank branches with customers (supplemented in Circular No. 06/2023/TT-NHNN dated June 28, 2023 of the Governor of the State Bank of Vietnam) (referred to as the “Circular No. 10/2023/TT-NHNN”).
  • Effective date: 01/09/2023.

The content should be noted: Suspending the enforceable effect of Clause 8, Clause 9 and Clause 10, Article 8 of Circular No. 39/2016/TT-NHNN.

Specifically, Article 1 of Circular No. 10/2023/TT-NHNN stipulates:Article 1. Suspension of enforceable effect of Clause 8, Clause 9 and Clause 10, Article 8 of Circular No. 39/2016/TT-NHNN dated December 30, 2016 of the Governor of the State Bank of Vietnam prescribing lending transactions of credit institutions and/or foreign bank branches with customers (supplemented in Circular No. 06/2023/TT-NHNN dated June 28, 2023 of the Governor of the State Bank of Vietnam on amending and supplementing a number of articles of Circular No. 39/2016/TT-NHNN)[1] from September 1, 2023 until the effective date of the new legal document regulating about these issues.”

2.       LEGAL DOCUMENTS ARE ISSUED IN 08/2023

Decision No. 22/2023/QĐ-TTg on credit for people who have completed their prison sentences

  • Name of legal document: Decision No. 22/2023/QĐ-TTg issued on 17/08/2023 by the Prime Minister on credit for people who have completed their prison sentences (referred to as the “Decision No. 22/2023/QĐ-TTg”).
  • Effective date: 10/10/2023.

The content should be noted:

  • Firstly, stipulating on loan objects and conditions.

Specifically, Article 3 of Decision No. 22/2023/QĐ-TTg stipulates:Article 3. Subjects and conditions for borrowing capital

Subjects and conditions for borrowing capital include:

  1. Subjects for borrowing capitala) People who have completely served their prison sentence include people who have completely served their prison sentence and have been granted a certificate of completion of their prison sentence as prescribed in the Law on Execution of Criminal Sentences and people who have been granted special amnesty certificates as prescribed in the Law on Special Amnesty;b) Production and business establishments include small and medium-sized enterprises, cooperatives, artels, and business households that use employees who have completed prison sentences.
  2. Conditions for borrowing capitala) People who have completely served their prison sentence: Having a need for a loan; be on the list of people who have completed their prison sentence and returned to reside in the locality, well obeyed the provisions of law, and did not participate in social evils, drawn up by the Commune Police and certified by the People’s Committe according to the Form No. 01 attached to this Decision. The maximum time from serving the prison sentence to the time of borrowing capital is 05 years;b) Production and business establishments: Legally established and operating according to the provisions of law; Employ at least 10% of the total number of employees who have completed their prison sentences and meet the conditions stated in Point a of this Clause and sign labor contracts according to the provisions of labor law; have a loan plan and have it certified by the Commune People’s Committee where the plan is implemented according to Form No. 02 attached to this Decision.
  3. People who have completed their prison sentences and production and business establishments specified in Clauses 1 and 2 of this Article must have no outstanding debt at the Bank for Social Policies for other credit programs with for the same purpose of using loan capital for vocational training, production, business, and job creation in accordance with the law.”
  • Secondly, stipulating on loan capital amount.

Specifically, Article 6 of Decision No. 22/2023/QĐ-TTg stipulates: Article 6. Loan capital amount

  1. For loans for vocational trainingThe maximum loan capital is 04 million VND/month/person who has completed their prison sentence.
  1. For loans for production, business, and job creationa) People who have completed their prison sentence: The maximum loan capital is 100 million VND/person who has completed their prison sentence;

b) Production and business establishments: Maximum loan capital is 02 billion VND/project and not more than 100 million VND/employee at the production and business establishment.”

[1] Article 8 of Circular No. 39/2016/TT-NHNN supplemented in Circular No. 06/2023/TT-NHNN: Article 1. Amending and supplementing a number of articles of Circular No. 39/2016/TT-NHNN

  1. To amend and supplement Article 8 as follows:

“Article 8: Rejected loan demands

Credit institutions shall not be allowed to approve the following loan demands:

  1. Loans used for doing business or investing in sectors or activities prohibited by the Investment Law.
  2. Loans used for paying expenses or meeting financial demands of business or investment in sectors or activities prohibited by the Investment Law and other transactions or activities prohibited by laws.
  3. Loans used for purchasing or using goods or services in the list of prohibited sectors and activities under the Investment Law.
  4. Loans used for buying gold bullion.
  5. Loans used for repaying loan debts owed to lending credit institutions, except those used for paying loan interests arising during the construction process which are accounted for in the total construction cost estimate approved by a competent authority in accordance with regulations of law.
  6. Loans used for repaying foreign loan debts (excluding foreign loans granted in the form of deferred payment for purchased goods) or repaying loan debts owed to other credit institutions, except for a loan used for making early repayment of an existing loan that meets the following conditions: a) The term of the new loan does not exceed the remaining term of the old one; b) The old loan has not yet undergone any debt rescheduling.
  7. Loans used for sending money to deposit accounts.
  8. Loans used for making capital contribution to, buying or receiving transfer of stakes of a limited liability company or a partnership, or shares of a joint-stock company that is not yet listed on the securities market or registered for trading on the Upcom system.
  9. Loans used for making capital contributions under capital contribution contracts, investment cooperation contracts or business cooperation contracts for executing investment projects that are unfit for sale or for business operation as prescribed by laws when the credit institution issues its lending decision.
  10. Loans used for financial offsetting purposes, except for those meeting the following conditions: a) The customer has used their own funds for paying costs incurred from their business project for a period of less than 12 months by the time of grant of lending decision by the credit institution; b) Costs paid using the customer’s funds for executing a business project are costs to be covered using the fund borrowed from the credit institution under the plan to use borrowed fund submitted to the credit institution when applying for a medium-term or long-term loan for executing that business project.”.”