Vietnam: May non-bank credit institutions establish branches?

According to Circular No. 53/2018/TT-NHNN of the State Bank of Vietnam (SBV), a non-bank credit institution that has been operating for at least 12 months (counting from the date of inauguration to the application date) is allowed to establish not more than 03 branches in a fiscal year if it satisfies all of the following requirements:

- Its chartered capital in December 31 of the year preceding the year of application shall not be lower than the legal capital;

- It earns profits from business as stated in its audited consolidated and single financial statements of the year preceding the year of application. A non-bank credit institution that applies for establishment of a branch in the second years after its inauguration is not required to meet this requirement;

- It is not prohibited by a competent authority from expanding its operations at the application date;

- It does not infringe regulations on prudential ratios for operations of non-bank credit institutions at the application date;

- Its bad debt ratio at December 31 of the year preceding the year of application and at the application date shall not exceed 4% of its total outstanding debts or another ratio as decided by the SBV’s Governor in each period;

- The number of members and structure of the Board of Directors, the Board of Members and the Boards of Controllers must comply with applicable laws at the application date; the General Director (or Director) position is not left vacant;

- It does not commit any violations against regulations on internal control system, internal auditing, and classification of assets and risk provisions at the application date;

- It has the Regulations on operating network management as regulated;

- The scheme for establishment of network members is available.

Besides, Circular No. 53/2018/TT-NHNN also stipulates that a non-bank credit institution that has been operating for less than 12 months (counting from the date of inauguration to the application date) is allowed to establish not more than 02 branches if it satisfies all of the following requirements:

- Its chartered capital at the application date shall not be lower than the legal capital;

- Its bad debt ratio on the date closed to the application date shall not exceed 4% of its total outstanding debts or another ratio as decided by the SBV’s Governor in each period;

- It is not prohibited by a competent authority from expanding its operations at the application date;

- It does not infringe regulations on prudential ratios for operations of non-bank credit institutions at the application date;

- The number of members and structure of the Board of Directors, the Board of Members and the Boards of Controllers must comply with applicable laws at the application date; the General Director (or Director) position is not left vacant;

- It does not commit any violations against regulations on internal control system, internal auditing, and classification of assets and risk provisions at the application date;

- It has the Regulations on operating network management as regulated;

- The scheme for establishment of network members is available.

View details at Circular No. 53/2018/TT-NHNN of the State Bank of Vietnam, effective from March 01, 2019.

-Thao Uyen-

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