Entry into force of the Law on Credit Institutions 2024 of Vietnam

Entry into force of the Law on Credit Institutions 2024 of Vietnam (Internet image) 

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

On the morning of January 18, 2024, at the 5th Extraordinary Session, the 15th National Assembly passed the Law on Credit Institutions 2024.

Entry into force of the Law on Credit Institutions 2024 of Vietnam

The 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 takes effect on January 1, 2025.

The Law on Credit Institutions 2010 will expire from July 1, 2024, except for the provisions in Clauses 1, 2, 3, 4, 8, 9, 12 and 14, Article 210 of the Law on Credit Institutions 2024.

Prohibited acts under the Law on Credit Institutions 2024 of Vietnam

Prohibited acts according to Article 15 of the Law on Credit Institutions 2024 include:

- Credit institutions and foreign bank branches conduct banking operations and business activities other than those stated in their licenses granted by the State Bank.

- Organizations and individuals that are not credit institutions and foreign bank branches conduct banking operations, except for margin trading and purchase and sale of securities by securities companies.

- Organizations or individuals illegally intervene in banking operations and other business activities of credit institutions and foreign bank branches.

- Credit institutions and foreign bank branches engage in anti-competitive practices or unfair competition which are/is likely to cause harm or cause(s) harm to the implementation of the national monetary policy, safety of the credit institution system, interests of the State and the lawful rights and interests of organizations and individuals.

- Credit institutions and foreign bank branches, and their managers, executives and employees combine sale of optional insurance and provision of banking products and services in all forms.

Regulations on legal representatives of credit institutions in Vietnam

Regulations onlegal representatives of credit institutions according to Article 11 of the Law on Credit Institutions 2024 are as follows:

- 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 legal representative of the credit institution shall reside in Vietnam. When he/she is absent from Vietnam, he/she shall authorize in writing another person who is a manager or an executive of the credit institution currently residing in Vietnam to perform his/her rights and obligations.

- The credit institution shall notify the State Bank of its legal representative within 10 days from the date of election and appointment to the legal representative according to regulations in the credit institution’s Charter or change in the legal representative under law. The State Bank shall give a notification of the legal representative of the credit institution to a business registration authority for update on the national information system in terms of registration of enterprises/cooperatives.

Regulations on information provision under the Law on Credit Institutions 2024 of Vietnam

Regulations on providing information according to Article 12 of the Law on Credit Institutions 2024 are as follows:

- Credit institutions and foreign bank branches shall provide account holders with information on transactions and credit balances of their accounts as agreed upon with these holders.

- Credit institutions and foreign bank branches are responsible for reporting on information related to business activities to the State Bank and are entitled to receive from the State Bank information on clients who have credit relations with them under regulations of the Governor of the State Bank.

- Credit institutions and foreign bank branches may exchange with each other information on their activities.

- When carrying out transactions with credit institutions and foreign bank branches, clients shall provide information, documents and data in honest, accurate, full and prompt manner and assume responsibilities for such provision.

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