What are the conditions for establishment of branches of microfinance institutions in Vietnam?

According to Article 11 of Circular No. 19/2019/TT-NHNN of the State Bank of Vietnam, an MFI that has been operating for more than 12 months (from the date of inauguration to the application date) is entitled to establish no more than 03 branches in the fiscal year if the following conditions are met:

- The actual value of the charter capital on December 31 of the year preceding the year of submission of the application shall not be lower than the legal capital;

- It has a profitable business according to its audited financial statement of the year preceding the year of submission of the application and according to the latest financial statement before the application date;

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

- It complies with regulations on safety ratios during its operation in the latest report before the application date;

- Its non-performing loan ratio on December 31 of the year preceding the year of submission of the application and in the latest report before the application date shall not exceed 3% or another ratio as decided by the State Bank’s Governor in each period;

- It complies with regulations of law on number and structures of the Board of Members and Board of Controllers. The Director General (or Director) position of the MFI has not been left vacant for more than 06 consecutive months prior to the application date;

- There should be an establishment scheme that contains the contents specified in Clause 3 Article 14 of this Circular;

- The number of branches complies with Article 8 of this Circular.

Moreover, an MFI that has been operating for less than 12 months (from the date of inauguration to the application date) is entitled to establish no more than 02 branches in the fiscal year if the following conditions are met:

- The actual value of the charter capital in the latest report before the application date shall not be lower than the legal capital;

- Its non-performing loan ratio in the latest report before the application date shall not exceed 3% or another ratio as decided by the State Bank’s Governor in each period;

- The conditions set forth in Points c, d, e, g and h Clause 1 of this Clause.

View other provisions at Circular No. 19/2019/TT-NHNN of the State Bank of Vietnam, effective from January 01, 2020.

Thu Ba

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