Are financial companies in Vietnam allowed to take deposits of individuals or organizations according to current regulations?
Is a financial company a non-bank credit institution?
According to Clause 4, Article 4 of the 2010 Law on Credit Institutions in Vietnam, non-banking credit institutions are regulated as follows:
Interpretation of terms
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4. Non-bank credit institution means a type of credit institution which may conduct one or some banking operations under this Law, except taking deposits of individuals and providing services of payment via client accounts. Non-bank credit institutions include finance companies, financial leasing companies and other non-bank credit institutions.
Financial leasing company means a type of finance company whose principal operation is financial leasing under this Law.
According to the above regulations, non-bank credit institution means a type of credit institution which may conduct one or some banking operations under this Law, except taking deposits of individuals and providing services of payment via client accounts.
Non-bank credit institutions include finance companies, financial leasing companies and other non-bank credit institutions.
Thus, a financial company is one of the non-banking credit institutions.
Are financial companies in Vietnam allowed to take deposits of individuals or organizations according to current regulations?
Are financial companies in Vietnam allowed to take deposits of individuals or organizations?
According to Clause 13, Article 4 of the 2010 Law on Credit Institutions in Vietnam explains that deposit taking means receiving money from an organization or individual as demand or term deposit, savings deposit, issuing deposit certificates, bills or treasury bills, and other forms of receiving deposits on the principles of full payment of principals and interests to depositors under agreement.
At the same time, according to Clause 1, Article 108 of the 2010 Law on Credit Institutions in Vietnam, a financial company may conduct one or some banking operations below:
Banking operations of finance companies
1. Finance companies may conduct one or some banking operations below:
a/ Taking deposits of organizations;
b/ Issuing deposit certificates, promissory notes, bills or bonds to raise capital from organizations;
c/ Borrowing loans from domestic and overseas credit institutions and financial institutions under law; borrowing loans from the State Bank in the form of re-financing under the Law on the State Bank of Vietnam;
d/ Providing loans, including amortized loans and consumer loans;
e/ Providing bank guarantee;
f/ Discounting and re-discounting negotiable instruments and other valuable papers;
g/ Issuing credit cards, factoring, financial leasing and other forms of credit extension after obtaining the State Bank's approval.
2. The Government shall specify conditions for finance companies to conduct banking operations prescribed in Clause 1 of this Article.
According to the above provisions, financial companies are allowed to take deposits of organizations.
At the same time, financial companies are not allowed to take deposits of individuals, but only take deposits of organizations.
Where should a financial company that takes deposits open a deposit account?
According to Clause 1, Article 109 of the 2010 Law on Credit Institutions in Vietnam as follows:
Opening of accounts by finance companies
1. A finance company that takes deposits shall open a deposit account at the State Bank and maintain on this account an average credit balance not lower than the compulsory reserve ratio.
2. A finance company may open a payment account at a commercial bank or foreign bank branch.
3. A finance company licensed to issue credit cards may open accounts at foreign banks under the foreign exchange law.
4. A finance company may open deposit accounts and loan accounts for their clients.
According to the above regulations, a finance company that takes deposits shall open a deposit account at the State Bank and maintain on this account an average credit balance not lower than the compulsory reserve ratio.
Can a financial company act as an insurance agent?
Pursuant to Article 111 of the 2010 Law on Credit Institutions in Vietnam stipulating as follows:
Other business activities of finance companies
1. Receiving capital entrusted by the Government, organizations and individuals for investment in production and business projects or licensed credit extension; entrusting capital to credit institutions for credit extension. The receipt of capital entrusted by individuals and capital entrustment to credit institutions for credit extension comply with the State Bank's regulations.
2. Participating in the monetary market under Article 104 of this Law.
3. Selling and purchasing government bonds and corporate bonds.
4. Underwriting the issue of government bonds and corporate bonds; acting as agents to issue bonds, stocks and other valuable papers.
5. Providing foreign exchange services under the State Bank's regulations.
6. Acting as insurance agents.
7. Providing banking, financial and investment consultancy services.
8. Providing asset management and preservation services.
According to the above provisions, a financial company may act as an insurance agent.
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