Conditions for the Establishment of a Transaction Office of a Commercial Bank

To establish a transaction office, a commercial bank must fully meet the conditions listed in Circular 21/2013/TT-NHNN as follows:

- First: Fully meet the conditions as prescribed in Clause 1, Article 6 of Circular 21.- Second: The branch expected to manage the transaction office must meet the following conditions:

- Have a minimum operating time of 12 months from the date of inauguration to the time of the request;- Have a bad debt ratio compared to the total outstanding loans as of December 31 of the year preceding the request year not exceeding 3% or another ratio as decided by the Governor of the State Bank from time to time;- Not be subject to administrative sanctions in the field of currency and banking in the form of fines within the 12 months preceding the time of the request.

- Third: Meet the condition on the number of transaction offices to be established as prescribed in Article 11 of this Circular.

In this context, a transaction office is understood to be a dependent unit of a commercial bank, managed by a domestic branch of the commercial bank, conducting bookkeeping, using a seal, and having a registered office location within the province or city directly under the Central Government where the managing branch is located. The transaction office is not allowed to:

- Decide on granting credit to a customer exceeding two (02) billion Vietnamese dong or equivalent foreign currency, except in cases where the credit grant is fully secured by money, savings cards, valuable papers issued by the same commercial bank, government bonds, or treasury bills issued by the State Treasury;- Provide international payment services.

Illustrative image (source: internet)

Regarding the number of transaction offices that a commercial bank is allowed to establish, Circular 21/2013/TT-NHNN stipulates as follows:

- The number of transaction offices of a commercial bank in the inner city areas of Hanoi and Ho Chi Minh City shall not exceed twice (02) the number of existing branches of the commercial bank in each of these areas.- The number of transaction offices of a commercial bank in the suburban areas of Hanoi and Ho Chi Minh City and other provinces and cities directly under the Central Government shall not exceed three (03) times the number of existing branches of the commercial bank in each of these areas.

See the full text of the regulations in Circular 21/2013/TT-NHNN effective from October 23, 2013.

Thu Ba

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