06 Banking operations of commercial banks in Vietnam as of July 1, 2024

06 Banking operations of commercial banks in Vietnam as of July 1, 2024 (Internet image) 

Regarding this matter, LawNet would like to answer as follows:

What is commercial bank under the law in Vietnam?

“Commercial bank” means a type of bank which may conduct all banking operations and other business activities under the Law on Credit Institutions 2024 for profit purposes.

(Clause 23, Article 4 of the Law on Credit Institutions 2024)

06 Banking operations of commercial banks in Vietnam as of July 1, 2024

Banking operations of commercial banks in Vietnam as of July 1, 2024 include:

(1) Receive demand deposits, term deposits, savings deposits and other types of deposits.

(2) Issuing certificates of deposit.

(3) Granting credit in the following forms:

- Loans;

(Lending is a form of credit granting through the lender delivering or committing to deliver to the customer a sum of money to use for a specified purpose, within a certain period of time, on the principle of full repayment. Principal and interest as agreed to the lender.)

- Discount, re-discount;

(Discount is a form of credit granting through term purchase or purchase with reservation of recourse to negotiable instruments and other valuable papers of the beneficiary before payment is due.

Rediscounting is the discounting of negotiable instruments and other valuable papers that have been discounted before payment is due.)

- Bank guarantee;

(Bank guarantee is a form of credit granted to customers through a credit institution or foreign bank branch committing to the guarantee recipient to perform financial obligations on behalf of the obligor. When the obligor fails to perform or does not fully perform the committed obligations; the customer must accept the debt and repay the credit institution or foreign bank branch as agreed.)

- Issuing credit cards;

- Domestic factoring; International factoring for banks licensed to make international payments;

(Factoring is a form of credit granting through the purchase of receivables from the seller or advance payment on behalf of the buyer under a contract to purchase and sell goods or provide services between the buyer and the seller. .)

- Letter of credit;

(Letter of credit is a form of credit granting through issuance, confirmation, payment negotiation, and repayment of letters of credit.)

- Other forms of credit according to regulations of the Governor of the State Bank.

(4) Open a payment account for customers.

(5) Providing payment facilities.

(6) Providing payment services through the following accounts:

- Providing domestic payment services including checks, payment orders, payment orders, collections, collection orders, money transfers, bank cards, collection and payment services;

- Perform international payment services after receiving written approval from the State Bank; Other payment services according to regulations of the Governor of the State Bank.

(Providing payment services via account means providing payment means; providing payment services for checks, payment orders, payment orders, collection, authorized collection, bank cards, and other payment services to the customer through the customer's payment account.)

(Article 107 of the Law on Credit Institutions 2024)

Other business activities of commercial banks in Vietnam

In addition to the banking operations mentioned above, commercial banks also have other business activities as follows:

(1) Commercial banks may carry out other business activities in accordance with regulations of the Governor of State Bank. To be specific:

- Cash management, treasury services provided for credit institutions and foreign bank branches, asset management and preservation and leasing of security cabinets and safes.

- Money transfer, collection, payment and other payment services without accounts;

- Purchase and sale of the State Bank’s bills and corporate bonds; purchase and sale of other valuable papers, except for the valuable papers specified at Point a, Clause 2 of Article 114 of the Law on Credit Institutions 2024;

- Monetary brokerage services;

- Gold trade;

- Other services related to factoring and letters of credit;

- Consultancy on banking operations and other business activities specified in licenses.

(2) Commercial banks may carry out other business activities in accordance with regulations of relevant laws. To be specific:

- Purchasing and selling debt instruments of the Government, government-backed bonds, and local government bonds;

- Issuing bonds;

- Conducting securities depository activities;

- Carrying out supervisory bank activities;

- Acting as agents that manage collateral of lenders which are international financial institutions, foreign credit institutions, credit institutions, foreign bank branches.

(3) Commercial banks are entitled to carry out other business activities related to banking operations other than those specified in (1) and (2) according to regulations of the Governor of the State Bank and other relevant laws.

(Article 114 of the Law on Credit Institutions 2024)

Law on Credit Institutions 2024 takes effect on July 1, 2024, except for Clause 3, Article 200 and Clause 15, Article 210 of the Law on Credit Institutions 2024 which take effect on January 1, 2025.

The Law on Credit Institutions 2010 (amended 2017) expires from the date the Law on Credit Institutions 2024 takes effect, except for the provisions in Clauses 1, 2, 3, 4, 8, 9, 12 and 14 Article 210 of the Law on Credit Institutions 2024.

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