What are the requirements for issuance of licenses for establishment and operation of credit institutions in Vietnam from July 01, 2024?
- What are the other business activities of microfinance institutions in Vietnam under the Law on Credit Institutions 2024?
- Vietnam: Is a microfinance institution a credit institution?
- What are the requirements for issuance of licenses for establishment and operation of credit institutions in Vietnam from July 01, 2024?
- What are the cases of revocation of licenses for establishment and operation of credit institutions in Vietnam?
- Who is the legal representative of the credit institution in Vietnam?
What are the other business activities of microfinance institutions in Vietnam under the Law on Credit Institutions 2024?
Pursuant to the provisions of Article 130 of the Law on Credit Institutions 2024, other business activities of microfinance institutions include:
- Entrusting capital or receiving capital under entrustment by organizations and individuals for giving loans;
- Acting as agents that provide payment services for banks with respect to their clients;
- Supplying money transfer, collection and payment services to their clients;
- Acting as insurance agents in accordance with the law on insurance business within the scope of insurance agency activities as specified by the Governor of State Bank;
- Giving advice on banking operations and other business activities specified in licenses.
What are the requirements for issuance of licenses for establishment and operation of credit institutions in Vietnam from July 01, 2024?
Vietnam: Is a microfinance institution a credit institution?
Pursuant to the provisions of Clause 38, Article 4 of the Law on Credit Institutions 2024:
“Credit institution” means a business organization that has juridical person and conducts one, some or all banking operations according to regulations of this Law. Credit institutions include banks, non-bank credit institutions, microfinance institutions and people's credit funds.
Thus, a microfinance institution is a type of credit institution according to the law.
What are the requirements for issuance of licenses for establishment and operation of credit institutions in Vietnam from July 01, 2024?
Pursuant to the provisions of Clause 1, Article 29 of the Law on Credit Institutions 2024, a credit institution may obtain a license when fully meeting the following requirements:
- Its charter capital is not smaller than the legal capital;
- Its owner is a single-member limited liability company and its founding shareholders or members are juridical persons that are legally operating and financially capable for capital contribution. Its founding shareholders or members are individuals that have full legal capacity and are financially capable for capital contribution;
- Its managers, executives and members of the Board of Controllers fully meet the criteria and requirements under Article 41 of the Law on Credit Institutions 2024;
- Its Charter complies with the Law on Credit Institutions 2024 and other relevant laws;
- It has an establishment plan and a feasible business plan which neither affect the safety and stability of the credit institution system nor create monopoly or restrict competition or create unfair competition within the credit institution system
Note: “Credit institution” means a business organization that has juridical person and conducts one, some or all banking operations according to regulations of this Law. Credit institutions include banks, non-bank credit institutions, microfinance institutions and people's credit funds.
What are the cases of revocation of licenses for establishment and operation of credit institutions in Vietnam?
Pursuant to the provisions of Article 36 of the Law on Credit Institutions 2024, the State Bank shall revoke a license when:
- The application for license contains false information in order to be eligible for obtainment of the license;
- The credit institution is divided or acquired; undergoes amalgamation, dissolution, bankruptcy or change in legal forms;
- The credit institution, foreign bank’s branch or foreign representative office operates at variance with its license;
- The credit institution or foreign bank’s branch seriously violates the law on compulsory reserves and safety ratios;
- The credit institution or foreign bank’s branch fails to abide by or fully abide by the State Bank's decisions to assure safety for banking operations;
- The foreign credit institution or another foreign institution which is engaged in banking operations and commercially present in Vietnam is dissolved or goes bankrupt or has its license revoked or has its operation suspended by a competent authority of the country where it is headquartered.
Decisions to revoke licenses shall be published by the State Bank on its web portal.
The credit institution or foreign bank’s branch that has its license revoked shall terminate its business activities from the effective date of the State Bank's decision to revoke its license.
Who is the legal representative of the credit institution in Vietnam?
Pursuant to the provisions of Article 11 of the Law on Credit Institutions 2024, a legal representative of a credit institution shall be defined in that credit institution’s Charter and must be one of the following persons:
- President of the Board of Directors or the Board of Members of the credit institution;
- General Director (Director) of the credit institution
The Law on Credit Institutions 2024 comes into force from July 1, 2024, except for Clause 3, Article 200 and Clause 15, Article 210 of the Law on Credit Institutions 2024, which come into force from January 1, 2025.
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