Legal Counselling

Handling of entities subject to banking inspection and supervision in Vietnam

Kim Linh

15:24, 01/10/2011

The Law on the State Bank of Vietnam 2010 was promulgated on June 16, 2010, of which one of the basic contents is the regulation on handling of entities subject to banking inspection and supervision.

Specifically, according to the Law on the State Bank of Vietnam 2010, entities subject to banking inspection and supervision that violate the monetary and banking laws shall, depending on the nature and severity of their violations, be disciplined, administratively sanctioned or examined for penal liability. If causing damage, they shall pay compensation under law.

Depending on the nature and degree of risks, the State Bank shall also apply the following handling measures to entities subject to banking inspection and supervision:

- Restricting the distribution of dividends, transfer of shares or transfer of assets;

- Restricting the expansion of the scale, scope and areas of operation;

- Restricting, terminating or suspending one or several banking operations;

- Requesting credit institutions to increase their charter capital to meet prudential requirements in banking operations;

- Requesting credit institutions to transfer their charter capital or equity capital; or requesting major shareholders or shareholders holding control or dominant shares to transfer their shares;

- Deciding on a credit growth limit applicable to credit institutions in case of necessity so as to ensure the safety for credit institutions and the system of credit institutions;

- Applying one or several prudential ratios higher than the prescribed ones.

This is the content specified in Article 59 of the Law on the State Bank of Vietnam 2010, effective from January 01, 2011.

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