Implementation of the Roadmap to Ensure Compliance with Regulations on limits of contribution of capital to and purchase of shares by Credit Institutions in Vietnam

Nguyen Thi Diem My

11:18, 08/07/2024

On June 28, 2024, the Governor of the State Bank of Vietnam promulgated Circular 16/2024/TT-NHNN stipulating the development and implementation of a Roadmap to Ensure Compliance with Regulations on limits of contribution of capital to and purchase of shares stipulated in Clause 5 of Article 137 of Law on Credit Institutions 2024 by credit institutions and their subsidiaries.

Implementation of the Roadmap to Ensure Compliance with Regulations on limits of contribution of capital to and purchase of shares by Credit Institutions in Vietnam

- Credit institutions and related organizations and individuals involved in implementing the compliance roadmap are responsible for following the compliance roadmap submitted to the State Bank of Vietnamas stipulated in Circular 16/2024/TT-NHNN and other relevant legislation.

- During the period of implementing the compliance roadmap, if necessary, credit institutions shall cooperate with related organizations and individuals to adjust the applied measures and the implementation roadmap. However, they must ensure adherence to the compliance roadmap deadline specified in Article 3 of Circular 16/2024/TT-NHNN. The credit institution shall send the adjusted compliance roadmap directly or via postal service to the State Bank Vietnam Vietnam (through the Banking Inspection and Supervision Agency) and the subsidiaries of the credit institution, shareholders, major shareholders, and contributing members of the relevant credit institution.

- The Banking Inspection and Supervision Agency shall monitor and supervise the implementation of the compliance roadmap by the credit institution.

- If the subsidiary of the credit institution fails to adhere to the compliance roadmap, the credit institution must reduce the capital contribution ratio, reduce the proportion of shares held in the subsidiary, or take other measures to ensure compliance with the regulations in Clause 5, Article 137 of the Law on Credit Institutions 2024.

- If the credit institution or its subsidiary fails to adhere to the compliance roadmap, depending on the nature and extent, the State Bank will consider and implement measures as stipulated by law.

- If, by the end of the compliance roadmap period, the credit institution or its subsidiary has not complied with Clause 5, Article 137 of the Law on Credit Institutions 2024, the credit institution or its subsidiary must temporarily suspend any new capital contributions or share purchases until compliance is achieved.

More details can be found in Circular 16/2024/TT-NHNN, effective in Vietnam from August 15, 2024.

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