Internal regulations on environmental risk management in credit granting activities in Vietnam

Internal regulations on environmental risk management in credit granting activities in Vietnam​ (Image from Internet)

1. Internal regulations on environmental risk management in credit granting activities in Vietnam

According to Article 6 of Circular 17/2022/TT-NHNN, internal regulation for managing environmental risks in credit granting activities is stipulated as follows:

- Credit institutions establish internal regulations for managing environmental risks in credit granting activities, either independently or integrated within the internal regulations on credit granting and internal control of the credit institution, in compliance with the legal provisions on credit activities and credit risk management.

- The internal regulation for managing environmental risks in the credit granting activities of a credit institution shall include at least the following contents:

+ Identifying and classifying credit proposals that must conduct environmental risk assessments in credit granting activities;

+ Collecting necessary information for managing environmental risks in credit granting activities;

+ Assessing environmental risks in credit granting activities compliant with the provisions of Circular 17/2022/TT-NHNN;

+ Managing environmental risks in credit granting activities during the process of reviewing, appraising, approving, and managing credit;

+ Internal reporting on managing environmental risks in credit granting activities.

2. Information on managing environmental risks in credit granting activities in Vietnam

According to Article 5 of Circular 17/2022/TT-NHNN, the information serving the management of environmental risks in credit granting activities includes:

- Environmental information of the customer's investment project.

- Decision on approving the results of the preliminary environmental impact assessment report, the environmental impact assessment report as prescribed by law, Environmental Permit, Environmental Registration (if any).

- Results of inspection or examination on environmental protection for the investment project by an authority on environmental protection (if any).

- Field survey information, information from competent authorities, social organizations, community residents, and individuals directly impacted by the customer's investment project concerning compliance with environmental protection regulations (if any).

- Reports on environmental protection work from customers to competent state agencies as prescribed by the environmental protection law.

- Reports from customers to credit institutions on executing commitments to mitigate environmental risks in credit granting activities as agreed in the credit granting agreement.

- Reports from agencies and organizations required to report on environmental protection work as prescribed by environmental protection law (if any).

- Other information related to environmental protection activities.

3. Principles of managing environmental risks in credit granting activities in Vietnam

The principles of managing environmental risks in credit granting activities, according to Article 4 of Circular 17/2022/TT-NHNN, are as follows:

- Credit institutions manage environmental risks in credit granting activities in accordance with legal regulations on credit granting and credit risk management in banking activities.

- Credit institutions assess environmental risks in credit granting activities for investment projects to determine credit risks, establish the credit conditions for the credit grant, and manage credit risks for customers' credit grants.

- The credit institution organizes environmental risk assessments of investment projects or uses environmental risk assessment results from competent service providers or other credit institutions as agreed in the service provision contract.

- When evaluating an investment project with environmental risks in credit granting activities, the credit institution agrees with the customer to include in the credit agreement the measures the customer commits to undertake to mitigate environmental risks in credit granting activities.

- The customer is responsible for providing information for managing environmental risks in credit granting activities upon the credit institution's request and is accountable for the accuracy of the information provided.

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE