Circular No. 07/2013/TT-NHNN on special supervision of credit institutions

CIRCULAR

Provisions on special supervision of credit institutions

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Pursuant to the Law on the State Bank of Vietnam number 46/2010/QH12 dated June 16, 2010;1Decision number 156/2013/NĐ-CP dated June 11,

Pursuant to the Law on Credit Organizations No. 47/2010/QH12 dated June 16, 2010;

Based on the Law on Cooperatives No. 18/2003/QH11 dated November 26, 2003;

Pursuant to Law on Enterprises No. 60/2005/QH11 dated November 29, 2005;

Pursuant to Decree No. 96/2008/NĐ-CP dated August 26, 2008 of the Government stipulating the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;

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

The Governor of the State Bank of Vietnam issues this Circulary Regulations on special supervision of credit institutions,

Chapter I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular stipulates on special supervision of credit institutions established and operating under the Law on Credit Institutions.

Article 2. Applicability

1. Credit institution.

2. Organizations and individuals related to the special supervision of credit institutions.

Article 3. Explanation of Terms

In this Circular, the following terms are understood as follows:

1. Special supervision is the direct supervision of a credit institution by the State Bank of Vietnam (hereinafter referred to as the State Bank) due to the risk of inability to pay, inability to settle debts, or serious violation of laws leading to the risk of operational safety.

2. The period of special supervision is the time from when the State Bank decides to place a credit institution under special supervision until the decision to terminate such special supervision is made.

3. The representative of the credit institution is an officer of the credit institution, an officer of the Vietnam Deposit Insurance Corporation, or an officer of the State Bank designated by the Governor of the State Bank to act on behalf of the credit institution to handle matters related to special supervision of the credit institution in cases where the credit institution lacks authorized personnel for this purpose.

Chapter II

GENERAL PROVISIONS

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SPECIAL SUPERVISION"

Article 4. Forms of special supervision

1. Depending on the financial status, level of risk, and legal violations of the credit institution, the State Bank shall consider and decide to place the credit institution under special supervision in the form of enhanced monitoring or comprehensive control as provided for in Clause 2 and Clause 3 of this Article.

2. Enhanced monitoring is a form of special supervision implemented through the State Bank's application of measures to monitor the daily operations of the credit institution.

3. Comprehensive control is a form of special supervision implemented through the State Bank's application of measures to directly and comprehensively control the daily operations of the credit institution.

Article 5. Authority of the State Bank in special supervision

1. Based on the results of inspections and supervision by the State Bank and upon the proposal of the Banking Inspection and Supervision Agency, the State Bank Branch in the province or centrally-administered city where the main office of the credit institution is located (State Bank Branch) or the Special Supervisory Board, the Governor of the State Bank has the authority:

a) To decide to place a credit institution under special supervision;

b) To decide on the duration, extension of the duration, termination of special supervision, and the content of enhanced monitoring, comprehensive control;

c) To establish a Special Supervisory Board; appoint or summon officers to join the Special Supervisory Board; request relevant agencies or organizations to appoint officers to join the Special Supervisory Board;

d) To designate the representative of the credit institution as prescribed in Clause 3, Article 3 of this Circular;

d) To handle issues proposed by the Special Supervisory Board as stipulated in Point d, Clause 2, Article 148 of the Law on Credit Institutions;

e) To require the owners of the credit institution under special supervision to implement capital increase to ensure that the actual value of the registered capital does not fall below the statutory capital requirement, ensuring the operational safety ratios as prescribed by law within a specific timeframe; or to require the owners of the credit institution under special supervision to develop and submit to the State Bank for approval and implementation a restructuring plan or mandatory merger, consolidation, or acquisition with other credit institutions if the credit institution under special supervision is unable or cannot meet the capital increase requirements within the timeframe set by the State Bank;

g) To directly implement or designate another credit institution to participate in contributing capital or purchasing shares of the credit institution under special supervision in cases where the credit institution fails to comply with the requirements specified in Point e, Clause 1 of this Article, or when the State Bank determines that the cumulative losses of the credit institution have exceeded the actual value of its registered capital and reserves recorded in the most recent audited financial report, and the cessation of operations of the credit institution under special supervision may cause systemic risks among credit institutions as stipulated in Clause 3, Article 149 of the Law; CAll credit institutions;

h)||| To decide on the publication of information on special supervision as prescribed in Article 7 of this Circular;

2. The Governor of the State Bank delegates to the Director of the State Bank branch the authority to decide on the matters prescribed in Clause 1 of this Article (except for Point g) regarding people's credit funds.

Article 6. Notification of the Decision to Implement Special Control

The decision to implement special control shall be notified to:

1. The Board of Directors or the Board of Members of the credit organization subject to special control;

2. The Governor of the State Bank of Vietnam in cases where the credit organization subject to special control is a people's credit fund;

3. The branch of the State Bank;

4. The Deposit Insurance Corporation of Vietnam;

5. Credit cooperatives in cases where the credit organization subject to special control is a people's credit fund;

6. The Ministry of Finance in cases where the credit organization subject to special control is a listed company, or where the credit organization subject to special control has subsidiaries or controlling companies operating in the securities or insurance sectors;

7. The People's Committee of the province where the main office of the credit organization is located; The People's Committees of communes and districts (for people's credit funds);y Other relevant agencies and organizations as decided by the Governor of the State Bank of Vietnam.

8. Information about the special control over credit organizations shall include information on measures to strengthen and rectify the credit organization subject to special control that have been approved by the competent authority and other necessary information.

Article 7. Disclosure of Information on Special Supervision

1. Information about the special control over credit organizations shall be published through one or more of the following methods:

2. Publishing in central or local newspapers at least three consecutive issues in the location where the main office of the credit organization is situated;

a) Press conference;

b) Posting news on the website of the credit organization subject to special control or the State Bank of Vietnam;

c) Announcing at the Shareholders' Meeting.

d) The Governor of the State Bank of Vietnam decides the timing, content, and method of publishing information about the special control over credit organizations in each specific case to facilitate the implementation of solutions to address weaknesses of the credit organization subject to special control, except for cases where the credit organization subject to special control is a people's credit fund, which is decided by the Director of the State Bank of Vietnam branch.

3. Article 8. Plan to Strengthen Organization and Operations

The plan to strengthen organization and operations of the credit organization subject to special control (referred to as the Plan) shall be developed by the Board of Directors of the credit organization subject to special control according to the requirements of the Special Control Board.

1. In cases where the Plan developed by the Board of Directors of the credit organization subject to special control does not meet the requirements to resolve difficulties and weaknesses of the credit organization subject to special control, the Governor of the State Bank of Vietnam shall designate the engagement of consulting agencies or other banking experts to develop the Plan. The credit organization subject to special control shall bear all costs related to the engagement of consultants and experts to develop the Plan.

2. The Plan must include the following minimum contents:

3. Name, address, website (if available) of the credit organization;

a) Name, address, telephone number of members of the Board of Directors (for credit organizations established as joint-stock companies), Board of Members (for credit organizations established as limited liability companies), members of the Supervisory Board, General Director (Director) of the credit organization or representative of the credit organization (if applicable);

b) Summary of the current situation regarding management, finance, and operations of the credit organization, including at least the following contents:

c) Organizational structure, management, operation, and ownership of the credit organization;

(i) Current financial status and operations of the credit organization, including clearly stating difficulties, weaknesses, risks, and violations of laws (if any) and their causes;

(ii) Reasons for the credit organization being placed under special control;

d) d) Measures to resolve difficulties and plans to implement one or more of the following measures:

Enhancing payment capacity;

(i) Mobilizing external capital sources;

(ii) Reducing costs;

Consolidating and addressing weaknesses, Financial losses from equity capital;

Selling assets or the entire credit organization subject to special control to another credit organization, potential investors; merging or consolidating with another credit organization; Paying customer deposits; or transferring all customer deposits to one or more other credit organizations for payment and implementing other necessary measures to handle debts, liquidate assets, and revoke the establishment and operation license of this credit organization in accordance with the law;t sImproving management, operational capabilities, internal control systems, and internal auditing;

(i) The planned opening date and compliance with the branch opening requirements specified in point a of this Clause; Rectifying business activities;

Other measures. SPECIAL CONTROL BOARD

(vii) Enhance governance, management, control systems, and internal audit;

(viii) Rectify business activities;

(ix) Other measures.

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SPECIAL SUPERVISORY BOARD

Article 9. Members of the Special Supervisory Board

1. The Governor of the State Bank of Vietnam shall decide on the composition, number, and structure of the Special Supervisory Board in accordance with the special supervision form prescribed in Article 4 of this Circular.

2. Members of the Special Supervisory Board shall be officials from the State Bank of Vietnam, the Deposit Insurance Corporation of Vietnam, banking experts, and officials from credit institutions called upon by the State Bank of Vietnam.

3. The head of the Special Supervisory Board must be one of the following:

a) An official at the Department level or equivalent or higher within specialized units under the State Bank of Vietnam;

b) A leader at the Department level or equivalent or higher in the Banking Inspection and Supervision Authority;

c) A leader of a Branch of the State Bank of Vietnam.

4. Officials participating in the Special Supervisory Board shall not be related to members of the Board of Directors, members of the Board of Members, members of the Supervisory Board, General Director (Director), and major shareholders of the credit institution subject to special supervision.

Article 10. Duties and Authorities of the Special Supervisory Board

1. The Special Supervisory Board has the following duties:

a) Directing the Board of Directors, Board of Members, Supervisory Board, General Director (Director) or representative of the credit institution, as stipulated in Clause 3, Article 3 of this Circular, to develop a Plan;

b) Directing, inspecting, and supervising the implementation of special supervision contents, comprehensive control contents, and solutions set forth in the approved Plan;

c) Regularly or when necessary, reporting to the Governor of the State Bank of Vietnam (through the Banking Inspection and Supervision Authority) and the Director of the State Bank of Vietnam branch on the management, operation, and financial situation of the credit institution subject to special supervision; results, difficulties, and obstacles in implementing the Plan, and proposing measures to ensure the safe operation of the credit institution subject to special supervision and compliance with the approved Plan;

d) Inspecting, supervising, and controlling activities, financial status, management, personnel, and technology of the credit institution subject to special supervision;

d) Promptly reporting to the Governor of the State Bank of Vietnam and the Director of the State Bank of Vietnam branch about unusual developments, potential risks, safety threats, and violations of laws by the credit institution upon discovery;

e) Directing and supervising the credit institution subject to special supervision in increasing its charter capital; developing and implementing restructuring plans or mergers, acquisitions according to the requirements of the State Bank of Vietnam as stipulated in Clause 2, Article 149 of the Law on Credit Institutions and Point e, Clause 1, Article 5 of this Circular;

g) Building and submitting to the Governor of the State Bank of Vietnam (through the Banking Inspection and Supervision Authority) for approval a plan for the State Bank of Vietnam to directly participate in contributing capital or purchasing shares of the credit institution subject to special supervision as stipulated in Article 149 of the Law on Credit Institutions and Point g, Clause 1, Article 5 of this Circular;

h)||| Providing relevant information about the credit institution subject to special supervision when requested in writing by authorized state agencies in accordance with the law;

i) Proposing the Governor of the State Bank of Vietnam to decide on matters specified in Point e and Point g, Clause 1, Article 5 of this Circular;

k) Other tasks assigned by the Governor of the State Bank of Vietnam.

2. The Special Supervisory Board has the following authorities:

a) Authorities stipulated in Clause 2, Article 148 of the Law on Credit Institutions;

b) Requesting the credit institution subject to special supervision to inventory all current assets or hire independent auditing organizations or specialized agencies to assess the financial status, value assets, and determine the enterprise value of the credit institution subject to special supervision and supervise the implementation of these requests;

c) Requesting the credit institution subject to special supervision to invite or directly invite debtors and creditors to reconcile debts with the credit institution subject to special supervision to determine the ability to collect debts and repay debts and supervise the implementation of this request;

d) Requesting units and individuals For power plants invested under the Build-Operate-Transfer (BOT) model, n is determined according to the operational period of the power plant stipulated in the BOT contract.of the credit institution to provide and explain, report fully, promptly, and accurately all relevant information, documents, and files;

d) Preparing files to request competent state agencies to handle individuals who violate the law or intentionally fail to repay debts to the credit institution;

e) Approving before the credit institution implements:

(i) Profit distribution;

(ii) Transactions specified in the Special Supervision Decision;

Consolidating and addressing weaknesses, Changes in accounting policies, financial product policies, customer policies;

Selling assets or the entire credit organization subject to special control to another credit organization, potential investors; merging or consolidating with another credit organization; Other transactions and behaviors aimed at preventing, stopping the concealment, disposal, pledge, mortgage, transfer of assets that may cause damage to the credit institution.

g) Proposing the State Bank of Vietnam to decide on issues arising during the special supervision period that have not been mentioned in the Plan;

h)||| Using the seal of the State Bank of Vietnam during the execution of assigned tasks;

i) Other authorities as prescribed by law.

Article 11. Responsibilities of the Head of the Special Supervisory Board

1. Directs and organizes the implementation of the tasks and powers of the Special Supervisory Board as stipulated in Article 10 of this Circular.

2. Assigns tasks to members of the Special Supervisory Board.

3. Bears responsibility for managing the Special Supervisory Board and overseeing the performance of its members' tasks.

Article 12. Responsibilities of Members of the Special Supervisory Board

1. Performs tasks assigned by the Head of the Special Supervisory Board.

2. Identifies and promptly reports to the Head of the Special Supervisory Board any unusual issues, potential risks, threats to operational safety, and violations of laws by the credit organization under special supervision, while proposing measures to address them.

3. Shall be responsible before the Chairman of the Special Supervision Board and under the law for the performance of assigned tasks.

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SPECIAL SUPERVISION PERIOD, EXTENSION OF THE SPECIAL SUPERVISION PERIOD AND TERMINATION OF SPECIAL SUPERVISION

Article 13. Special Supervision Period

1. The special supervision period is determined by the Governor of the State Bank of Vietnam in the Decision on Special Supervision.

2. Decision to extend the special supervision period, Decision to terminate special supervision for in the Field of Teachers and Educational Institution Managers credit organizations For coal-fired thermal power plants where the enterprise holds 100% of the registered capital and uses 100% of its own capital to invest in the project approved by the competent authority, E is determined as 100%;shall be notified to the agencies and organizations specified in Article 6 of this Circular.

Article 14. Extension of the Special Supervision Period

1. The extension of the special supervision period applies to credit organizations under special supervision that have prospects for normal operations recovery or need additional time to carry out mergers, acquisitions, and takeovers as prescribed by law. Credit organizations are not eligible for an extension of the special supervision period when the special supervision period expires and must terminate special supervision.

2. Based on the actual situation of the credit organization, at least thirty (30) days before the end of the special supervision period, the Special Supervisory Board must submit a written request to the Governor of the State Bank of Vietnam (through the Banking Inspection and Supervision Agency) to decide on extending the special supervision period for non-people's credit funds or the Directorspecialized agency under the People's Committee of the province/city. of the State Bank of Vietnam branch decides on extending the special supervision period for people's credit funds.

3. Upon receiving the written request from the Special Supervisory Board:

a) The Banking Inspection and Supervision Agency collects opinions from related units, compiles them, and submits them to the Governor of the State Bank of Vietnam for consideration and decision on extending the special supervision period for non-people's credit funds before the expiration date of the special supervision period;

b) The Director of the State Bank of Vietnam branch decides on extending the special supervision period for people's credit funds before the expiration date of the special supervision period.

Article 15. Termination of Special Supervision

1. A credit organization may be terminated from special supervision in cases as provided for in Clause 1, Article 152 of the Law on Credit Organizations.

2. When a credit organization is terminated from special supervision by the State Bank of Vietnam due to inability to restore payment capacity, the State Bank of Vietnam sends a written notice to the Court regarding the termination of application of measures to restore payment capacity and requests the credit organization to file a petition with the Courta to initiate bankruptcy proceedings according to the law on bankruptcy.a The Special Supervisory Board submits a written request to the Governor of the State Bank of Vietnam (through the Banking Inspection and Supervision Agency) or the Director of the State Bank of Vietnam branch (for people's credit funds) regarding the termination of special supervision for credit organizations. Upon receipt of the written request to terminate special supervision from the Special Supervisory Board:

3. The Banking Inspection and Supervision Agency collects opinions from related units, compiles them, and submits them to the Governor of the State Bank of Vietnam for consideration and decision on terminating special supervision for non-people's credit funds;

a) The Director of the State Bank of Vietnam branch decides on terminating special supervision for people's credit funds.

b) The decision to terminate special supervision for credit organizations is notified to the agencies and organizations specified in Article 6 of this Circular.

4. The decision to terminate special supervision for credit organizations shall be notified to the agencies and organizations specified in Article 6 of this Circular.

Chapter III

RESPONSIBILITIES OF THE RELATED UNITS

Article 16. Responsibilities of the Banking Inspection and Supervision Agency

1. Based on the results of management, inspection, and supervision work, the Banking Inspection and Supervision Agency shall have the following responsibilities:

a) Inspect, supervise, identify, and report to the Governor of the State Bank when credit organizations face the risk of losing their ability to pay, losing their ability to settle debts, or seriously violating laws leading to risks of operational instability.

b) Propose to the Governor of the State Bank to decide on special control measures, forms, contents, and duration of such measures for credit organizations that are not people's credit funds.

c) Propose the Head of the Special Control Board and its members for credit organizations that are not people's credit funds to be submitted to the Governor of the State Bank for decision.

d) Recommend the State Bank Branch to place people's credit funds under special control.

2. Advise the Governor of the State Bank on directing the implementation of special control measures for credit organizations.

3. Serve as the focal point for receiving reports, proposals, and recommendations from credit organizations that are not people's credit funds, the Deposit Insurance Corporation of Vietnam, State Bank Branches, and the Special Control Board; seek opinions from related units, compile them, and submit to the Governor of the State Bank for decisions on issues related to special control for credit organizations that are not people's credit funds as stipulated in this Circular.

4. Supervise the activities of the Special Control Board for credit organizations that are not people's credit funds.

5. Implement the provisions at point a, Clause 3, Article 14 and point a, Clause 3, Article 15 of this Circular.

6. Be responsible for managing and retaining files related to special control measures for credit organizations that are not people's credit funds according to the law. For coal-fired thermal power plants where the enterprise holds 100% of the registered capital and uses 100% of its own capital to invest in the project approved by the competent authority, E is determined as 100%;ụng nhân dân in accordance with the provisions of the law.

Article 17. Responsibilities of Related Units at the State Bank

1. Based on assigned functions and tasks and directives from the Governor of the State Bank, related units at the State Bank shall participate in special control over credit organizations and provide opinions on issues of credit organizations under special control as required by the Banking Inspection and Supervision Agency within seven (07) days from the date of receipt of the request letter from the Banking Inspection and Supervision Agency.

2. The Office of the State Bank shall be responsible for implementing the publication of information on special control as stipulated in Article 7 of this Circular.

Article 18. Responsibilities of State Bank Branches

1. For credit organizations that are not people's credit funds:

a) Inspect, supervise, identify, and promptly report to the Governor of the State Bank (through the Banking Inspection and Supervision Agency) when credit organizations face the risk of losing their ability to pay, losing their ability to settle debts, or seriously violating laws leading to risks of operational instability.

b) Propose to the Governor of the State Bank (through the Banking Inspection and Supervision Agency) to handle issues related to special control, consolidation, rectification, restructuring, extension, and termination of the special control period for credit organizations under special control based on requests from the credit organization, the Special Control Board, and provisions of this Circular.

c) Appoint staff to join the Special Control Board upon the Governor of the State Bank's request.

d) Coordinate with the Banking Inspection and Supervision Agency, the Special Control Board, and state management agencies in the locality where the credit organization under special control is headquartered during the special control process.

2. For people's credit funds:

a) Inspect, identify, and promptly report to the Governor of the State Bank when people's credit funds face the risk of falling into any of the situations specified in Clause 3, Article 146 of the Law on Credit Organizations.

b) Handle issues related to special control, consolidation, rectification, restructuring, extension, and termination of the special control period for people's credit funds based on requests from the people's credit fund, the Special Control Board, and provisions of this Circular.

c) Decide to place people's credit funds under special control and establish a Special Control Board for people's credit funds according to the provisions of this Circular.

d) Manage and retain files related to special control of people's credit funds according to the law; report monthly or as necessary to the Governor of the State Bank on the results, difficulties, obstacles, and proposed solutions for implementing special control over people's credit funds.

d) Serve as the focal point for coordinating with state management agencies in the locality where the people's credit fund is headquartered to handle issues related to special control over the people's credit fund.

e) Implement the publication of information on special control as stipulated in Article 7 of this Circular.

Article 19. Responsibilities of the Vietnam Deposit Insurance Corporation

In cases where credit institutions under special control participate in deposit insurance, the Vietnam Deposit Insurance Corporation shall be responsible for:

1. Appointing staff to join the Special Control Board at the request of the State Bank of Vietnam.

2. Within a maximum period of seven (07) days from the date of receipt of the document requesting from the Banking Inspection and Supervision Authority, the State Bank of Vietnam branch, or the Special Control Board, the Vietnam Deposit Insurance Corporation shall provide its opinion in writing on issues related to special control over credit institutions. organize credit institutions, foreign bank branches are responsible for organizing the implementation of this Circular.When there is a risk or the credit institution has fallen into a state of inability to pay or inability to settle debts, the Board of Directors (Board of Members) or General Director (Director) of the credit institution must immediately report to the Governor of the State Bank of Vietnam (through the Banking Inspection and Supervision Authority) and the Director of the State Bank of Vietnam branch where the main office is located.

Article 20. Responsibilities of credit institutions

1. The Board of Directors (Board of Members), the Audit Board, the General Director, and the staff of the credit institution under special control shall be responsible for:

2. Strictly implementing decisions and directives of the State Bank of Vietnam

a) Proposing and developing the Credit Institution's Plan to be reviewed and approved by the Special Control Board and organizing its implementation.;

b) Managing, supervising, and directing all aspects of operations and ensuring the safety of assets of the credit institution according to the Charter and legal regulations, except in cases where management, supervision, and direction rights are suspended or temporarily suspended as provided in point b, Clause 2, Article 148 of the Law on Credit Institutions;

c) Adhering to requirements and directives of the Special Control Board as

d) prescribed in points a, b, c, and d, Clause 2, Article 148 of the Law on Credit Institutions. qd) Being responsible for the accuracy of information, documents, and files provided to the Special Control Board.

Circular No. 08/2010/TT-NHNN dated March 22, 2010, issued by the Governor of the State Bank of Vietnam regarding special control over credit institutions and Decision No. 92/2001/QĐ-NHNN dated February 8, 2001, issued by the Governor of the State Bank of Vietnam on the issuance of the Special Control Regulations for People's Credit Funds shall become invalid from the date this Circular takes effect.

Chapter IV

IMPLEMENTING PROVISIONS

Article 21. Effective Date

1. This Circular takes effect from the date 27/4/2013.

2. The Head of the Office, the Head of Banking Inspection and Supervision, the Heads of units under the State Bank of Vietnam, the Directors of State Bank of Vietnam branches in provinces and centrally governed cities, the Chairmen and members of the Board of Directors, the General Director of the Vietnam Deposit Insurance Corporation, the Chairmen and members of the Board of Directors, the Board of Members, the Heads and members of the Audit Board, the General Directors (Directors) of credit institutions are responsible for enforcing this Circular.

Article 22. Implementation organization

The Director of the Office, the Head of the Inspectorate and Banking Supervision, Heads of units under the State Bank of Vietnam, Governors of the State Bank of Vietnam branches in provinces and centrally governed cities, Chairmen and members of the Board of Directors, General Directors of the Deposit Insurance Corporation of Vietnam, Chairmen and members of the Board of Directors, Board of Members, Heads and members of the Supervisory Board, and General Directors (Directors) of credit organizations are responsible for implementing this Circular./.