Authority to decide in special control over credit institutions in Vietnam from July 1, 2024

Authority to decide in special control over credit institutions in Vietnam from July 1, 2024 (Image from the Internet)

On July 1, 2024, the Governor of the State Bank of Vietnam issued Circular 39/2024/TT-NHNN regulating the special control over credit institutions in Vietnam.

Authority to decide in special control over credit institutions from July 1, 2024

Article 3 of Circular 39/2024/TT-NHNN stipulates the authority to decide in special control over credit institutions as follows:

(1) The Governor of the State Bank of Vietnam shall consider and decide on the following matters for credit institutions, except for people's credit funds:

- Placing credit institutions that fall under the cases specified in Clause 1, Article 162 of the Law on Credit Institutions 2024 into special control;- Forms of special control;- Establishing the Special Control Board;- The duration of special control;- Notification of special control;- Disclosure of special control information;- Extension of the special control period;- Termination of special control;- Other matters under the authority of the State Bank of Vietnam (hereinafter referred to as the State Bank) as stipulated in the Law on Credit Institutions 2024 and Circular 39/2024/TT-NHNN.

(2) The Director of the State Bank's provincial or city branch under central authority shall consider and decide on the following matters for people's credit funds headquartered in the area:

- Matters stipulated at points a, b, c, d, e, g, and h, Clause 1, Article 3 of Circular 39/2024/TT-NHNN;- Matters prescribed in Clause 2, Article 163; Clauses 4 and 5, Article 166; Clause 9, Article 167; Clauses 3 and 5, Article 169; Clause 3, Article 172; Clauses 2, 5, and 6, Article 174; Clause 2, Article 176; Clauses 3 and 4, Article 178; Clauses 2 and 3, Article 187 (except for the content specified at point c, Clause 3, Article 3 of Circular 39/2024/TT-NHNN), Clause 3, Article 188 (except for the content specified at point b, Clause 3, Article 3 of Circular 39/2024/TT-NHNN), Clauses 3 and 4, Article 190 of the Law on Credit Institutions 2024;- Other matters under the authority of the State Bank's provincial or city branch under central authority (hereinafter referred to as the State Bank's branch) as stipulated in Circular 39/2024/TT-NHNN and relevant laws.

(3) The Director of the State Bank's branch reports and proposes the following matters to the Governor of the State Bank (through the Bank Supervision and Inspection Agency) for people's credit funds headquartered in the area:

- Submit to the Government of Vietnam the decision to apply special measures stipulated in Clause 4, Article 162 of the Law on Credit Institutions 2024;- Submit to the Prime Minister of the Government of Vietnam the decision on deposit insurance payout limits for depositors as stipulated in Clause 3, Article 188 of the Law on Credit Institutions 2024;- Approve support measures beyond the authority as specified at point i, Clause 1, Article 171; Clause 11, Article 174; and Clause 3, Article 187 of the Law on Credit Institutions 2024;- Other matters beyond the authority of the State Bank's branch as stipulated in Circular 39/2024/TT-NHNN and relevant laws.

Forms of special control over credit institutions in Vietnam from July 1, 2024

Based on the current situation and the level of risk in the operation of credit institutions, the Governor of the State Bank or the Director of the State Bank’s branch shall consider and decide on placing credit institutions under special control in the form of special supervision or comprehensive control.

In detail:

- Special supervision is placing the credit institution under the direct control of the State Bank through directive activities, direct remote control, on-site inspection by the Special Control Board of the activities of the credit institutions under special control.- Comprehensive control is placing the credit institution under the direct control of the State Bank through directive activities, direct on-site control by the Special Control Board of the daily activities of the credit institutions under special control.

(Clauses 1, 2, 3, Article 4 of Circular 39/2024/TT-NHNN)

More details can be found in Circular 39/2024/TT-NHNN, which comes into force in Vietnam from July 1, 2024, replacing Circular 11/2019/TT-NHNN except for Clause 2, Article 21 of Circular 39/2024/TT-NHNN.

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