Vietnam: When shall financial companies provide factoring?

10:16, 10/05/2014

Specialized financial companies include factoring financial companies, consumer credit financial companies and financial leasing companies as defined in this Decree and guided by the State Bank of Vietnam (below referred to as the State Bank).

According to Decree No. 39/2014/NĐ-CP of Vietnam’s Government, financial companies may provide factoring if satisfying all the following conditions:

- The conditions prescribed in Article 5 of this Decree;

- They have internal regulations on process, procedures and principles of client identification to strictly supervise and prevent the abuse of financial companies for money laundering, terrorism financing and other criminal activities.

Công ty tài chính được thực hiện hoạt động bao thanh toán khi nào, 39/2014/NĐ-CP

Moreover, financial companies established and operating before the effective date of this Decree may add factoring operation if meeting all the conditions prescribed in Clause 1 of this Article and the following conditions:

- Conducting profitable business operation in the year preceding the year of requesting the operation addition;

- Having a minimum operation duration and factoring operation plan prescribed by the State Bank;

- Complying with regulations on safety ratios in banking activities, classification of debts and deduction for setting up risk provisions in all quarters of the year preceding the year of requesting the operation addition;

- The ratio of non-performing loans is below the level prescribed by the State Bank;

- Not being sanctioned for administrative violations in the monetary and banking fields in the year preceding the time of requesting the operation addition.

View more details at Decree No. 39/2014/NĐ-CP of Vietnam’s Government, effective from June 25, 2014.

Le Hai

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