Vietnam: Standards and conditions of the Members' Council of Microfinance Institutions

Standards and Conditions for the Board of Members of a Microfinance Institution (Image from the internet)

On June 30, 2024, the Governor of the State Bank of Vietnam issued Circular 33/2024/TT-NHNN stipulating the dossier, procedures for licensing, organization, and operation of microfinance institutions.

Standards and conditions for the Board of Members of a Microfinance Institution

According to Article 13 of Circular 33/2024/TT-NHNN of the State Bank of Vietnam, the standards and conditions for the Board of Members of a microfinance institution are as follows:

- Not be subject to the provisions of Clause 1, Article 42 and Article 43 of the Law on Credit Institutions of Vietnam.

- Not be a manager or executive of a microfinance program or project; of a non-governmental organization implementing a microfinance program or project.

- Possess professional ethics.

- Hold a university degree or higher.

- Meet one of the following conditions:

+ Have at least 2 years as a manager or executive of a credit institution;

+ Have at least 3 years as a manager of an enterprise operating in the field of finance, accounting, auditing, or of another enterprise with owner equity at least equal to the legal capital of a microfinance institution as prescribed by law;

+ Have at least 5 years working directly in the business division of a credit institution, foreign bank branch;

+ Have at least 5 years working directly in the field of microfinance or at least 5 years working directly in the finance, banking, accounting, auditing division.

Regarding the assessment of professional ethics for the personnel expected to be elected or appointed as members of the Board of Directors

- Those in any of the following cases are considered to lack professional ethics:

+ Persons held responsible according to inspection, examination conclusions leading to a credit institution or foreign bank branch being administratively fined in the highest monetary bracket for violations related to licenses, governance, operation, shares, capital contributions, capital share purchases, credit extension, corporate bond purchases, safety ratios as prescribed by the law on administrative handling of monetary and banking violations;

+ Persons mentioned in the inspection or examination conclusions responsible for a credit institution or foreign bank branch being administratively fined in monetary and banking domains which the credit institution or foreign bank branch has not yet completed the administrative fine implementation;

+ Persons administratively fined for monetary and banking violations within one year from the full compliance date of the administrative penalty decision or one year from the expiration of the administrative penalty execution time limit;

+ Persons personally responsible for violations related to licenses, governance, operation, shares, capital contributions, capital share purchases, credit extension, corporate bond purchases, safety ratios, asset classification, off-balance sheet commitments, reserve provisioning and usage for risk handling according to inspection, examination conclusions of the State Bank which recommendations related to such violations have not yet been addressed.

- Expected personnel not in cases stipulated in Clause 1, Article 17 of Circular 33/2024/TT-NHNN must comply with the following regulations:

+ Expected personnel currently or formerly working at a credit institution, foreign bank branch must comply with the professional ethics codes and standards issued by such credit institution, foreign bank branch as per the regulations of the State Bank regarding the internal control system and internal audit applicable to credit institutions, foreign bank branches;

+ Expected personnel must comply with the professional ethics codes and standards issued by the microfinance institution as per the regulations of the State Bank regarding the internal control system and internal audit applicable to microfinance institutions.

- The microfinance institution where the expected personnel currently or formerly worked must assess the professional ethics of the personnel to be elected or appointed as members of the Board of Directors, the Board of Members, the Supervisory Board, General Director (Director) of other credit institutions, foreign bank branches upon personnel request.

(Article 17 of Circular 33/2024/TT-NHNN)

Le Nguyen Anh Hao

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