Licensing conditions for credit institutions in Vietnam

May I ask what conditions are required for a credit institution to be granted a license? – My Phung (HCMC, Vietnam)

Licensing conditions for credit institutions in Vietnam (Source: internet)

Conditions for granting a license of a credit institution are specified in Article 20 of the Law on Credit Institutions 2010, specifically as follows:

1. Conditions for granting a license of a credit institution in Vietnam

A credit institution may obtain a license when fully meeting the following conditions:

- Its charter or allocated capital is at least equal to the legal capital;

- Its owner is a one-member limited liability company, its founding shareholders or members arc legal entities which arc lawfully operating and financially capable for capital contribution. Its founding shareholders or members arc individuals with full civil act capacity and financially capable for capital contribution.

The State Bank shall provide the conditions for owners of credit institutions being one-member limited liability companies and founding shareholders and members;

- Its managers, executives and Control Board members fully meet the criteria and conditions under Article 50 of Law on Credit Institutions 2010;

- Its charter complies with Law on Credit Institutions 2010 and other relevant laws;

- It has an establishment plan and a feasible business plan which neither affects the safety and stability of the credit institution system nor creates monopoly or restrict competition or create unfair competition within the credit institution system.

2. Conditions for licensing of a joint-venture or wholly foreign-owned credit institution in Vietnam

A joint-venture or wholly foreign-owned credit institution may obtain a license when fully meeting the following conditions:

- The conditions specified in item (1);

- The foreign credit institution may conduct banking operations under the law of the country in which it is headquartered;

- The operations to be conducted in Vietnam are those the foreign credit institution is licensed to conduct in the country in which it is headquartered;

- The foreign credit institution's operations are healthy and it meets requirements on total assets, financial status and safety ratios under the State Bank's regulations:

- The foreign institution makes a written commitment to provide supports in finance, technology, governance, administration and operation for the joint-venture or wholly foreign owned credit institution- It guarantees that the joint-venture or wholly foreign-owned credit institution preserves the actual value of its charter capital not lower than the legal capital and observes regulations on safety assurance under Law on Credit Institutions 2010:

- A competent foreign authority has signed an agreement with the State Bank on inspection and oversight of banking operations and exchange of information on banking safety oversight and made a written commitment on consolidated oversight of the foreign credit institution's operations according international practices.

3. Conditions for licensing of foreign bank branches in Vietnam

A foreign bank branch may obtain a license when fully meeting the following conditions:

- The conditions specified at Points a. b, c and e, Clause 1, and Points b, c, d and f. Clause 2 of Article 20 of Law on Credit Institutions 2010;

- The foreign bank makes a written commitment to be liable for all obligations and commitments of its branch in Vietnam: and to guarantee the actual value of the branch's allocated capital not lower than the legal capital and its observance of regulations on safety assurance under Law on Credit Institutions 2010.

4. Conditions for licensing of a foreign credit institution or another foreign institution engaged in banking operations in Vietnam

A foreign credit institution or another foreign institution engaged in banking operations may obtain a license for a representative office when fully meeting the following conditions:

- It is a legal entity licensed for banking operations overseas;

- Under the law of the country in which it is headquartered, it may set up a representative office in Vietnam.

5. Licensing conditions for cooperative banks, people's credit funds and microfinance institutions in Vietnam

The State Bank shall provide licensing conditions for cooperative banks, people's credit funds and microfinance institutions.

Diem My

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