Is a credit institution an enterprise? What types of credit institutions are allowed to operate in Vietnam nowadays?
Is a credit institution an enterprise?
Pursuant to Clause 1, Article 4 of the 2010 Law on Credit Institutions in Vietnam, the definition of a credit institution is as follows:
Credit institution means an enterprise conducting one, some or all banking operations. Credit institutions include banks, non-bank credit institutions, microfinance institutions and people's credit funds.
Thus, a credit institution is also an enterprise, however, due to the specificity of its operations, specialized laws on credit institutions are prioritized to apply when regulating issues related to the establishment, organization, operation, special control, reorganization, dissolution of credit institutions; the establishment, organization and operation of foreign bank branches, representative offices of foreign credit institutions and other foreign organizations engaged in banking activities.
On the other hand, Article 5 of the 2010 Law on Credit Institutions in Vietnam stipulates that an institution other than credit institution may not use the phrase or word "credit institution," "bank," "finance company," "financial leasing company," or other phrases or words in its name or title or in secondary parts of its name or title or in its transaction documents or advertising if the use of such phrases or words can make clients misunderstand that it is a credit institution.
Is a credit institution an enterprise? What types of credit institutions are allowed to operate in Vietnam nowadays?
What are the banking operations that credit institutions are allowed to perform?
Pursuant to Clause 12, Article 4 of the 2010 Law on Credit Institutions in Vietnam stipulating as follows:
Banking operations means the trading in and regular provision of one or some of the following services:
a/ Deposit taking;
b/ Credit extension:
c/ Via-account payment.
At the same time, Clause 13, Clause 14, Clause 15, Article 4 of the 2010 Law on Credit Institutions in Vietnam stipulate as follows:
Banking operations means the trading in and regular provision of one or some of the following services:
- 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.
- Credit extension means an agreement allowing an organization or individual to use a sum of money or a commitment allowing the use of a sum of money on the repayment principle by such professional operations as lending, discount, financial leasing, factoring, bank guarantee and other credit extension operations.
- Provision of services of via-account payment means the provision of payment instruments; provision of services of payment by check, payment order, payment authorization, collection, collection authorization, bank card, letter of credit and other payment services for clients via their accounts.
What types of credit institutions are allowed to operate in Vietnam nowadays?
Pursuant to Clause 1, Article 4 of the 2010 Law on Credit Institutions in Vietnam, credit institutions include banks, non-bank credit institutions, microfinance institutions and people's credit funds, specifically:
(1) Bank means a type of credit institution which may conduct all banking operations, based on Clause 2, Article 4 of the 2010 Law on Credit Institutions in Vietnam including the following 3 types of banks:
- Commercial bank means a type of bank which may conduct all banking operations and other business activities under this Law for profit, according to Clause 3, Article 4 of the 2010 Law on Credit Institutions in Vietnam.
- Policy bank is a bank established by the Government, operating not for profit in order to implement the State's socio-economic policies, Article 17 of the 2010 Law on Credit Institutions in Vietnam.
- Cooperative bank means a bank of all people's credit funds established by people's credit funds and some legal entities by contributing capital under this Law for the main purposes of systematic link, financial support and capital balancing within the system of people's credit funds, based on Clause 7 Article 4 of the 2010 Law on Credit Institutions in Vietnam.
(2) 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, based on Clause 4, Article 4 of the 2010 Law on Credit Institutions in Vietnam.
Non-bank credit institutions include:
- Finance companies;
- Financial leasing companies
- Other non-bank credit institutions.
(3) Microfinance institution means a type of credit institution which mainly conducts some banking operations to meet the needs of low-income individuals and households and super small-sized enterprises, according to Clause 5, Article 4 of the 2010 Law on Credit Institutions in Vietnam.
(4) People's credit fund means a credit institution established voluntarily by legal entities, individuals and households as a cooperative to conduct some banking operations under the 2010 Law on Credit Institutions and the 2012 Law on Cooperatives for the main purpose of mutual assistance in production and business development and life., based on Clause 6, Article 4 of the 2010 Law on Credit Institutions in Vietnam.
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