What is financial leasing? When shall financial companies conduct financial leasing activities in Vietnam?

According to Decree No. 39/2014/NĐ-CP of Vietnam’s Government: “Financial leasing means medium-term and long-term credit activities based on financial leasing contracts between the lessors and the lessees. The lessors commit to buying assets for financial leasing at the request of the lessees and hold the ownership over financially leased assets during the lease term. The lessees use the leased assets and pay rents therefor during the lease term under the financial leasing contracts.”

Besides, financial companies may conduct financial leasing activities under the provisions on financial leasing in Chapter III of this Decree if satisfying all the following conditions:

- Its banking operations are indicated in its establishment and operation license granted by the State Bank (below referred to as the license).

- It has a contingent of professionally qualified employees, physical facilities, technologies, means, equipment and internal regulations in accordance with law for conducting banking operations indicated in the license.

- It satisfies all professional conditions for banking operations prescribed by the State Bank.

- Having 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.

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

- The conditions prescribed at Points a and b, Clause 2, Article 12 of this Decree;

- Having a minimum operation duration and a financial leasing plan prescribed by the State Bank.

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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