Circular No. 04/2018/TT-NHNN amending and supplementing certain provisions of Circular No. 08/2017/TT-NHNN dated August 1, 2017 of the Governor of the State Bank of Vietnam on the procedures and processes for bank supervision.

CIRCULAR

Amending and supplementing some articles of Circular No. 08/2017/TT-NHNN dated August 1, 2017 of the Governor of the State Bank of Vietnam on the procedures and formalities for bank supervision

Pursuant to the Law on the State Bank of Vietnam dated June 16, 2010;

Pursuant to the Law on Credit Institutions dated June 16, 2010 and the Law amending and supplementing certain articles of the Law on Credit Institutions dated November 20, 2017;

Pursuant to Government Decree No. 16/2017/NĐ-CP dated February 17, 2017 on the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;

Pursuant to Decree No. 26/2014/NĐ-CP dated April 7, 2014 of the Government on the organization and operation of the Inspection and Supervision of the Banking Industry;

Pursuant to Decree No. 33/2015/NĐ-CP dated March 27, 2015 of the Government on the implementation of inspection conclusions;

Pursuant to Decision No. 35/2014/QĐ-TTg dated June 12, 2014 of the Prime Minister, stipulating the functions, tasks, powers, and organizational structure of the Inspection and Supervision Agency under the State Bank of Vietnam;

At the proposal of the Director of Banking Inspection and Supervision;

The Governor of the State Bank of Vietnam promulgates this Circular amending and supplementing some articles of Circular No. 08/2017/TT-NHNN dated August 1, 2017 of the Governor of the State Bank of Vietnam on the procedures and formalities for bank supervision.

Article 1. Amending and supplementing some articles of Circular No. 08/2017/TT-NHNN of the Governor of the State Bank of Vietnam on the procedures and formalities for bank supervision

1. Article 17 shall be amended and supplemented as follows:

"Article 17. Measures for handling in bank supervision

Measures for handling in bank supervision include:

1. Recommendations, warnings.

2. Administrative penalties in accordance with the provisions of the law.

3. Early intervention measures.

4. Proposing competent authorities to apply other supervisory measures in accordance with the provisions of the law."

2. Add Article 18a after Article 18 as follows:

"Article 18a. Early intervention measures for supervised entities

1. Based on legal documents regulating supervised entities, materials, information, data on the operational situation of supervised entities:

a) The Head of the Inspection and Supervision Agency, the Director of the State Bank Branches in provinces and centrally-administered cities without an Inspection and Supervision Bureau shall submit to the Governor of the State Bank for consideration and issuance of documents applying early intervention measures for supervised entities falling into one of the cases provided for in Clause 1, Article 130a of the Law on Credit Institutions (as amended and supplemented), except for the cases provided for in points b and c of this Clause;

b) The Head of the Inspection and Supervision Agency shall consider and issue documents applying early intervention measures for supervised credit unions and microfinance organizations within the jurisdiction of the Inspection and Supervision Bureau falling into one of the cases provided for in Clause 1, Article 130a of the Law on Credit Institutions (as amended and supplemented);

c) The Director of the State Bank Branches in provinces and centrally-administered cities without an Inspection and Supervision Bureau shall consider and issue documents applying early intervention measures for supervised credit unions and microfinance organizations within the jurisdiction falling into one of the cases provided for in Clause 1, Article 130a of the Law on Credit Institutions (as amended and supplemented).

2. Within thirty days from the date of receipt of the early intervention measure document, the supervised entity shall be responsible for submitting a written report to the State Bank (through the unit implementing bank supervision) explaining the current situation, causes, remediation plans, and implementation organization. The remediation plan of the supervised entity must include one or more measures provided for in Clause 4, Article 130a of the Law on Credit Institutions (as amended and supplemented). During the implementation process, if there is a need to adjust or supplement the remediation plan, the supervised entity shall submit a written report to the State Bank (through the unit implementing bank supervision) explaining the reasons, adjusted or supplemented remediation plan, and implementation organization.

3. In case it is deemed necessary:

a) The Head of the Inspection and Supervision Agency, the Director of the State Bank Branches in provinces and centrally-administered cities without an Inspection and Supervision Bureau shall submit to the Governor of the State Bank for consideration and issuance of documents requesting the supervised entity to adjust or supplement the remediation plan, except for the cases provided for in points b and c of this Clause;

b) The Head of the Inspection and Supervision Agency shall consider and issue documents requesting the supervised credit unions and microfinance organizations within the jurisdiction of the Inspection and Supervision Bureau to adjust or supplement the remediation plan;

c) The Director of the State Bank Branches in provinces and centrally-administered cities without an Inspection and Supervision Bureau shall consider and issue documents requesting the supervised credit unions and microfinance organizations within the jurisdiction to adjust or supplement the remediation plan.

4. Within fifteen days from the date of receipt of the document requesting adjustment or supplementation of the remediation plan, the supervised entity shall be responsible for submitting to the State Bank (through the unit implementing bank supervision) the adjusted or supplemented remediation plan (in accordance with the requirements of the State Bank) and organizing its implementation. The maximum implementation period of the remediation plan (including the adjusted or supplemented remediation plan) is one year, starting from the date of the early intervention measure document issued by the State Bank.

5. In case the supervised entity cannot develop a remediation plan in accordance with Clause 3, Article 130a of the Law on Credit Institutions (as amended and supplemented) or fails to rectify the situation stipulated in Clause 1, Article 130a of the Law on Credit Institutions (as amended and supplemented) within the implementation period, depending on the nature and degree of risk:

a) The Head of the Inspection and Supervision Agency, the Director of the State Bank Branches in provinces and centrally-administered cities without an Inspection and Supervision Bureau shall submit to the Governor of the State Bank for consideration and issuance of documents requesting the supervised entity to implement one or more measures provided for in Clause 4, Article 130a of the Law on Credit Institutions (as amended and supplemented), except for the cases provided for in points b and c of this Clause;

b) The Head of Banking Inspection and Supervision shall examine and issue a document requiring credit unions and microfinance organizations under banking supervision to implement one or more measures prescribed in Clause 4, Article 130a of the Law on Credit Institutions (amended and supplemented) within the jurisdiction where there is a Banking Inspection and Supervision Department.

c) The Governor of the State Bank of Vietnam branch in provinces and centrally governed cities without a Banking Inspection and Supervision Department shall examine and issue a document requiring credit unions and microfinance organizations under banking supervision to implement one or more measures prescribed in Clause 4, Article 130a of the Law on Credit Institutions (amended and supplemented) within their jurisdiction.

6. After the supervised entity has remedied the situation stipulated in Clause 1, Article 130a of the Law on Credit Institutions (amended and supplemented), or when the supervised entity is placed under special control:

a) The Head of Banking Inspection and Supervision, the Governor of the State Bank of Vietnam branch in provinces and centrally governed cities without a Banking Inspection and Supervision Department shall submit to the Governor of the State Bank of Vietnam for examination and issuance of a document terminating the early intervention, except in cases provided for in points b and c of this Clause;

b) The Head of Banking Inspection and Supervision shall examine and issue a document terminating the early intervention with respect to credit unions and microfinance organizations under banking supervision within the jurisdiction where there is a Banking Inspection and Supervision Department;

c) The Governor of the State Bank of Vietnam branch in provinces and centrally governed cities without a Banking Inspection and Supervision Department shall examine and issue a document terminating the early intervention with respect to credit unions and microfinance organizations under banking supervision within their jurisdiction.”

3. Supplementing Article 19a following Article 19 as follows:

“Article 19a. Monitoring, Urging, and Evaluating the Implementation of Remediation Plans by Early Intervention Supervised Entities

1. On a monthly basis or at any time upon request of the supervisory unit, the supervised entity shall report the progress and results of implementing the remediation plan.

2. The supervisory unit shall be responsible for continuously monitoring, urging, and evaluating the progress and results, difficulties, and obstacles related to the implementation of the remediation plan by the supervised entity.

3. Upon discovering delays or lack of effectiveness in the implementation of the remediation plan by the supervised entity:

a) The Head of Banking Inspection and Supervision, the Governor of the State Bank of Vietnam branch in provinces and centrally governed cities without a Banking Inspection and Supervision Department shall submit to the Governor of the State Bank of Vietnam for issuance of a document requesting the supervised entity to report and explain the reasons and corrective measures, except in cases provided for in points b and c of this Clause;

b) The Head of Banking Inspection and Supervision shall issue a document requesting credit unions and microfinance organizations under banking supervision within the jurisdiction where there is a Banking Inspection and Supervision Department to report and explain the reasons and corrective measures;

c) The Governor of the State Bank of Vietnam branch in provinces and centrally governed cities without a Banking Inspection and Supervision Department shall issue a document requesting credit unions and microfinance organizations under banking supervision within their jurisdiction to report and explain the reasons and corrective measures.

4. During the monitoring process, based on the results of the implementation of the remediation plan by the supervised entity, the supervisory unit may propose competent authorities to conduct direct meetings,突击检查或突然审计受监管实体，依照法律规定。"

Article 2. Implementation

The Head of the Office, the Head of Banking Inspection and Supervision, the Heads of units under the State Bank of Vietnam, the Governors of the State Bank of Vietnam branches in provinces and centrally governed cities, the Chairpersons of the Management Boards, the Chairpersons of the Board of Members, and the General Managers (Directors) of credit institutions and foreign bank branches shall be responsible for organizing the implementation of this Circular.

Article 3. Implementation Provisions

This Circular takes effect from July 1, 2018./.