Conditions for factoring financial companies to conduct factoring activities in Vietnam

According to Decree No. 39/2014/NĐ-CP of Vietnam’s Government, conditions for factoring financial companies to conduct factoring activities include:

- Its banking operations are indicated in its establishment and operation license granted by the State Bank (below referred to as the license).

- It has a contingent of professionally qualified employees, physical facilities, technologies, means, equipment and internal regulations in accordance with law for conducting banking operations indicated in the license.

- For banking operations related to foreign exchange activities, it shall comply with the law on foreign exchange management.

- It satisfies all professional conditions for banking operations prescribed by the State Bank.

- They have internal regulations on process, procedures and principles of client identification to strictly supervise and prevent the abuse of financial companies for money laundering, terrorism financing and other criminal activities.

- The factoring debit balance makes up at least 70% of the total credit balance or equals another ratio prescribed by the State Bank for each period.

Besides, factoring financial companies may perform the activities specified at Points a and e, Clause 1, Article 108 of the Law on Credit Institutions, Articles 6, 7, 8, 11 and 14 of this Decree if satisfying all the conditions prescribed in this Decree, except the following:

- Guaranteeing the issuance of corporate bonds and buying and selling corporate bonds;

- Receiving entrusted capital from the Government, organizations and individuals for investment in production and business projects;

- Entrust capital to other credit institutions to grant credits.

Moreover, Decree No. 39/2014/NĐ-CP also stipulates conditions for consumer credit financial companies to provide consumer credit as follows:

- The conditions prescribed in Article 9 and/or Article 12 of this Decree;

- The consumer credit debit balance makes up at least 70% of the total credit balance or equals another ratio prescribed by the State Bank for each period.

View more details at Decree No. 39/2014/NĐ-CP of Vietnam’s Government, effective from June 25, 2014.

Le Hai

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