Latest regulations on procedures for terminating special control over credit institutions in Vietnam

Latest regulations on procedures for terminating special control over credit institutions in Vietnam (Internet image)

On July 01, 2024, the Governor of the State Bank of Vietnam issued Circular 39/2024/TT-NHNN regulating the special control over credit institutions.

1. Forms of special control over credit institutions in Vietnam in 2024

According to Article 4 Circular 39/2024/TT-NHNN regulating the forms of special control over credit institutions as follows:

- Based on the current situation and risk level in the operation of the credit institution, the Governor of the State Bank or the Director of the State Bank branch considers and decides:

+ Placing the credit institution under special control in the form of special supervision or comprehensive control;

+ The content, scope, measures, and control activities in the Special Control Decision, appropriate to the form of special control and the content specified in Clause 1, Article 11 Circular 39/2024/TT-NHNN.

- Special supervision involves placing the credit institution under the direct control of the State Bank through instructions, direct remote control, and on-site inspections by the Special Control Board over the credit institution's activities under special control.

- Comprehensive control involves placing the credit institution under the direct control of the State Bank through on-site instructions and control by the Special Control Board over the daily activities of the credit institution under special control.

- The change in the form of special control is carried out as follows:

+ Based on the current situation and risk level in the activities of the credit institution under special control, the Special Control Board proposes to the Governor of the State Bank (through the Banking Supervision and Inspection Agency) to change the form of special control for the credit institution under special control as specified in Clause 1, Article 3 Circular 39/2024/TT-NHNN or proposes to the Director of the State Bank branch to change the form of special control for the credit institution under special control as specified in Clause 2, Article 3 Circular 39/2024/TT-NHNN;

+ In case a commercial bank under special control has a compulsory transfer plan approved by the competent authority, the Special Control Board proposes to the Governor of the State Bank (through the Banking Supervision and Inspection Agency) to change the form of special control if necessary;

+ Within 20 days from the date of receipt of the Special Control Board's proposal specified at points a, b of Clause 4, Article 4 Circular 39/2024/TT-NHNN, the Governor of the State Bank or the Director of the State Bank branch considers and decides to change the form of special control for the credit institution under special control under the authority specified in Article 3 Circular 39/2024/TT-NHNN.

2. Regulations on extension of special control over credit institutions in Vietnam in 2024

According to Article 8 Circular 39/2024/TT-NHNN regulating the extension of special control over credit institutions as follows:

- Based on the current operational status of the credit institution under special control, at least 30 days before the expiration of the special control term, the Special Control Board proposes to the Governor of the State Bank (through the Banking Supervision and Inspection Agency) to consider and decide on the extension of the special control term for the credit institution under special control as specified in Clause 1, Article 3 Circular 39/2024/TT-NHNN or proposes to the Director of the State Bank branch to consider and decide on the extension of the special control term for the credit institution under special control as specified in Clause 2, Article 3 Circular 39/2024/TT-NHNN.

- Within 20 days from the date of receipt of the Special Control Board's proposal specified in Clause 1, Article 8 Circular 39/2024/TT-NHNN, the Governor of the State Bank or the Director of the State Bank branch considers and decides to extend the special control term for the credit institution under special control under the authority specified in Article 3 Circular 39/2024/TT-NHNN.

3. Latest regulations on procedures for terminating special control over credit institutions in Vietnam

Specifically, Article 9 Circular 39/2024/TT-NHNN stipulates the procedure for terminating special control over credit institutions in Vietnam as follows:

- When the credit institution under special control meets one of the conditions specified in Article 168 Law on Credit Institutions 2024, the Special Control Board proposes to the Governor of the State Bank (through the Banking Supervision and Inspection Agency) to consider and decide to terminate the special control for the credit institution under special control as specified in Clause 1, Article 3 Circular 39/2024/TT-NHNN or proposes to the Director of the State Bank branch to consider and decide to terminate the special control for the credit institution under special control as specified in Clause 2, Article 3 Circular 39/2024/TT-NHNN.

- Within 20 days from the date of receipt of the Special Control Board's proposal specified in Clause 1, Article 9 Circular 39/2024/TT-NHNN, the Governor of the State Bank or the Director of the State Bank branch considers and decides to terminate the special control for the credit institution under special control under the authority specified in Article 3 Circular 39/2024/TT-NHNN.

- The credit institution under special control is terminated from special control from the effective date of the Decision to terminate special control.

More details can be found in Circular 39/2024/TT-NHNN which comes into force in Vietnam from July 01, 2024, and replace Circular 11/2019/TT-NHNN regulating special control for credit institutions, except as provided for in Clause 2, Article 21 Circular 39/2024/TT-NHNN.

To Quoc Trinh

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