Regulations on foreign exchange trade and provision of foreign exchange services and derivative products of commercial banks in Vietnam as of July 1, 2024

Regulations on foreign exchange trade and provision of foreign exchange services and derivative products of commercial banks in Vietnam as of July 1, 2024 (Internet image) 

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

On January 18, 2024, the National Assembly officially passed the Law on Credit Institutions 2024.

Regulations on foreign exchange trade and provision of foreign exchange services and derivative products of commercial banks in Vietnam as of July 1, 2024

According to Article 112 of the Law on Credit Institutions 2024, regulations on foreign exchange trade and provision of foreign exchange services and derivative products of commercial banks in Vietnam are as follows:

- After obtaining the State Bank's written approval, commercial banks may trade and provide domestic and foreign clients with the following products and services:

+ Foreign exchange;

+ Derivatives regarding interest rates, foreign exchange, currency and other financial products.

- The Governor of State Bank shall provide for the scope of foreign exchange trade, provision of foreign exchange services, trade and provision of derivative products; conditions, documents and procedures for approval for foreign exchange trade, provision of foreign exchange services, and trade and provision of derivative products by commercial banks.

- Foreign exchange trade and provision of foreign exchange services by commercial banks for clients shall comply with the law on foreign exchange.

Other business activities of commercial banks in Vietnam as of July 1, 2024

According to Article 114 of the Law on Credit Institutions 2024, regulations on other business activities of commercial banks in Vietnam are as follows:

- Commercial banks may carry out other business activities in accordance with regulations of the Governor of State Bank. To be specific:

+ Cash management, treasury services provided for credit institutions and foreign bank branches, asset management and preservation and leasing of security cabinets and safes.

+ Money transfer, collection, payment and other payment services without accounts;

+ Purchase and sale of the State Bank’s bills and corporate bonds; purchase and sale of other valuable papers, except for the valuable papers specified at Point a, Clause 2 of Article 114 of the Law on Credit Institutions 2024;

+ Monetary brokerage services;

+ Gold trade;

+ Other services related to factoring and letters of credit;

+ Consultancy on banking operations and other business activities specified in licenses.

- Commercial banks may carry out other business activities in accordance with regulations of relevant laws. To be specific:

+ Purchasing and selling debt instruments of the Government, government-backed bonds, and local government bonds;

+ Issuing bonds;

+ Conducting securities depository activities;

+ Carrying out supervisory bank activities;

+ Acting as agents that manage collateral of lenders which are international financial institutions, foreign credit institutions, credit institutions, foreign bank branches.

- Commercial banks are entitled to carry out other business activities related to banking operations other than those specified in Clause 1 and Clause 2 of Article 114 of the Law on Credit Institutions 2024 according to regulations of the Governor of the State Bank and other relevant laws.

More details can be found in the Law on Credit Institutions 2024 taking 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 as amended in the Law amending Law on Credit Institutions 2017 will no longer be effective from the date the Law on Credit Institutions 2024 takes effect, except for the provisions in Clauses 1, 2, 3, 4, 8, 9, 12 and 14 Article 210 of the Law on Credit Institutions 2024.

To Quoc Trinh

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