Circular No. 08/2017/TT-NHNN on the procedures and formalities for banking supervision

 CIRCULAR

Rules 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 Organizations dated June 16, 2010;

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;

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

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

Based on Decision No. 35/2014/QĐ-TTg dated June 12, 2014 of the Prime Minister stipulating the functions, tasks, powers, and organizational structure of the Banking Inspection and Supervision Authority 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 issues this Circular stipulating the procedures and formalities for bank supervision.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular stipulates the procedures and formalities for bank supervision concerning credit institutions and foreign bank branches.

Article 2. Applicability

1. Banking inspection and supervision.

2. State Bank branch in provinces and centrally governed cities (hereinafter referred to as State Bank branch).

3. Credit institutions and foreign bank branches.

4. Agencies, organizations, and individuals related to the supervision of credit institutions and foreign bank branches.

Article 3. Definitions

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

1. Bank supervision is the activity of the unit implementing bank supervision in collecting, consolidating, and analyzing information about the supervised bank entities through the information system and reports with the aim of preventing, detecting, blocking, and promptly addressing risks that cause instability in banking operations, violations of regulations on safe banking operations, and other relevant laws.

2. The unit implementing bank supervision is a unit within the organizational structure of the State Bank of Vietnam (hereinafter referred to as the State Bank), assigned the task of implementing micro-prudential supervision and macro-prudential supervision, including: the Banking Inspection and Supervision Authority, the State Bank branch Inspection and Supervision Authority (hereinafter referred to as the Banking Inspection and Supervision Authority).

3. The entity being followed up, urged, and inspected are agencies, organizations, and individuals responsible for or related to the implementation of inspection conclusions.

4. Bank supervision reports are micro-prudential supervision reports, macro-prudential supervision reports, and other reports established by the unit implementing bank supervision as prescribed in this Circular.

5. Banking crisis is a situation where sudden withdrawals of deposits spread throughout the entire system of credit institutions and foreign bank branches and may lead to the bankruptcy of these institutions.

6. Compliance supervision is a method of bank supervision whereby the unit implementing bank supervision monitors the activities of the supervised bank entities by following and evaluating compliance with regulations on limits and ratios ensuring safe banking operations, other laws on currency and banking; directives and requirements of the State Bank; implementation of inspection conclusions and recommendations and warnings on bank supervision.

7. Risk is the possibility of loss leading to a reduction in capital, income, thereby reducing the safety ratio or limiting the ability to achieve business objectives of credit institutions and foreign bank branches.

8. Systemic risk is the possibility of losses spreading from the failure of a single credit institution or foreign bank branch to other credit institutions and foreign bank branches, disrupting the operations of the entire system of credit institutions and foreign bank branches and the entire economy.

9. Risk supervision is a method of bank supervision whereby the unit implementing bank supervision monitors the activities of the supervised bank entities by assessing the types of risks each supervised entity is currently facing or will face, including credit risk, market risk, liquidity risk, operational risk, and other types of risks; assessing systemic risk of credit institutions and foreign bank branches to allocate supervisory resources and implement appropriate measures.

10. Post-inspection supervision is the follow-up, urging, and inspecting the implementation of inspection conclusions by the entity being followed up, urged, and inspected.

11. Contact with the supervised bank entity is the work of the Banking Inspection and Supervision Authority interacting with the supervised bank entity to check and verify the truthfulness, accuracy, and completeness of documents, information, and reports, and clarify issues related to risks and compliance with legal regulations on ensuring safe banking operations for the purpose of bank supervision.

12. Credit institutions and foreign bank branches of systemic importance are credit institutions and foreign bank branches capable of having a negative impact on the entire system of credit institutions and foreign bank branches and/or systemic risk causing disruption to the operations of the entire system of credit institutions and foreign bank branches and the entire economy in the event of insolvency or inability to pay.

13. Database management is the establishment, updating, and maintenance to meet requirements for accessing and using documents, information, and data for bank supervision activities.

14. The bank supervision handbook is a guide for the Banking Inspection and Supervision Authority on the use of methods, tools, and indices for bank supervision activities. The bank supervision handbook includes the following main contents:

a) Content, form, methods (compliance supervision and risk supervision) and principles of bank supervision;

b) Tools and indices serving micro-prudential supervision and macro-prudential supervision (including criteria for determining credit institutions and foreign bank branches of systemic importance);

c) Collection, consolidation, and processing of information, data, and documents;

d) Analysis and evaluation of contents related to micro-prudential supervision and macro-prudential supervision;

đ) Bank supervision reports and proposals for measures to address issues in bank supervision;

e) Bank supervision files.

Article 4. Principles of Banking Supervision

1. Banking supervision must comply with current laws; ensure accuracy, objectivity, honesty, transparency, and timeliness; and not hinder the normal operations of the supervised banking entities.

2. Combine compliance monitoring with risk monitoring.

3. Combine micro-prudential safety monitoring with macro-prudential safety monitoring.

4. Banking supervision must be conducted regularly and continuously for all activities of the supervised banking entities.

5. Closely coordinate between banking supervision activities and banking inspection activities; between banking supervision activities and the issuance, supplementation, and revocation of banking operation licenses.

6. Ensure concentration and unity in directing and implementing tasks from central to local levels.

Article 5. Content, procedures, and formalities of banking supervision

1. Content of bank supervision:

a) Collecting, compiling, and processing documents, information, and data of the supervised banking entities according to supervisory requirements;

b) Reviewing and monitoring the implementation of regulations on limits and ratios ensuring safe banking operations and other relevant legal provisions; the execution of inspection conclusions and supervisory recommendations and warnings issued to the supervised banking entities;

c) Regularly analyzing and assessing the financial situation, operations, management, governance, and risk levels of each credit institution, foreign bank branch, and the entire system of credit institutions and foreign bank branches; ranking credit institutions and foreign bank branches according to the State Bank's regulations;

d) Identifying and warning about factors affecting, negative trends, risks causing operational instability, and risks and threats leading to violations of monetary and banking laws for each credit institution, foreign bank branch, and the credit institution system;

đ) Recommending and proposing preventive, blocking, and handling measures for risks and legal violations of supervised entities according to legal provisions.

2. Procedures and formalities of banking supervision shall be carried out as follows:

a) Step 1: Collecting, compiling, processing, and storing documents, information, and data in accordance with the provisions of Section 1, Chapter II of this Circular;

b) Step 2: Analyzing and evaluating the supervised banking entities through two forms including micro-prudential and macro-prudential supervision according to the provisions of Sections 2 and 3, Chapter II of this Circular;

c) Step 3: Proposing intervention actions and adjustments including measures for handling in banking supervision according to the provisions of Section 6, Chapter II of this Circular;

d) Step 4: Post-inspection supervision upon receiving inspection conclusions on the supervised banking entities from the banking inspection units.

Chapter II

SPECIFIC PROVISIONS ON PROCEDURES AND FORMALITIES

BANKING SUPERVISION

Section 1

COLLECTION, COMPILE, PROCESSING, AND STORAGE OF DOCUMENTS,

INFORMATION, DATA

Article 6Collection of documents, information, and data

The unit responsible for banking supervision collects documents, information, and data of the supervised banking entities from the following sources:

1. Reports under current laws on statistical reporting systems and the State Bank's information provision requirements for credit institutions and foreign bank branches to serve state management in the monetary and banking sectors.

2. Documents, information, and data from interactions with the supervised banking entities, including:

a) Minutes of direct meetings with the supervised banking entities;

b) Explanatory documents and file materials of the supervised banking entities provided at the request of the banking supervision unit during interactions with the supervised banking entities.

3. Based on supervisory requirements, when necessary, the Chief Inspector of the banking sector, the Governor of the State Bank branch in provinces and centrally-administered cities without a Banking Inspection and Supervision Bureau shall study, develop, and submit to the Governor for approval the content of requests for the supervised entities to provide additional documents, information, and data beyond those specified in Clause 1 of this Article to serve banking supervision activities.

4. Documents, information, and data serving state management from units under the Banking Inspection and Supervision Bureau, other units under the State Bank, and other sources.

Article 7. Compilation, processing, and storage of documents, information, and data

1. Compilation and processing of documents, information, and data shall be carried out according to the following contents:

a) Documents, information, and data on banking supervision objects, after being collected from different sources, shall be checked, compared, cross-referenced, and compiled for use in evaluating and analyzing banking supervision objects;

b) Verify the accuracy of information on the balance sheet and financial reports based on accounting principles;

c) Compare and cross-reference collected documents, information, and data with historical data to detect abnormal cases;

d) Compare and cross-reference documents, information, and data from various sources specified in Article 6 of this Circular to ensure consistency;

đ) Base on actual circumstances to make judgments and evaluations regarding the rationality of documents, information, and data;

e) If missing, erroneous, incorrect, or unsuitable documents, information, and data are discovered, the banking supervision entity shall require the banking supervision object to provide timely explanations and resubmit accurate information in accordance with the forms of contact with the banking supervision object stipulated in Section 4, Chapter II of this Circular.

2. Organization of storing documents, information, and data:

After compilation and processing, documents, information, and data must be stored and managed to serve banking inspection and supervision work according to the following principles:

a) Documents, information, and data must be stored scientifically and completely in individual files for each banking supervision object and the entire system;

b) Documents, information, and data must be stored in a common database, in a historical data chain, and facilitate retrieval and use;

c) Collected documents, information, and data must be stored in accordance with current laws on archiving and used in accordance with current laws on state secrets protection.

Section 2

MICROPRUDENTIAL SUPERVISION

Article 8. Contents of microprudential supervision

Based on collected, compiled, and processed documents, information, and data from sources specified in Articles 6 and 7 of this Circular and the characteristics of credit institutions' operations and foreign bank branches, the microprudential supervision entity shall implement some or all of the following contents:

1. Monitor and evaluate compliance with regulations on limits and ratios ensuring safe banking operations, reporting and statistical systems, and other legal provisions on currency and banking for credit institutions and foreign bank branches.

2. Analyze and assess risks of credit institutions and foreign bank branches according to some or all of the following contents:

a) Credit risk: is the risk arising when customers fail to fulfill or lack the ability to fulfill part or all of their debt obligations under contracts or agreements with banks or foreign bank branches;

b) Market risk: is the risk due to adverse fluctuations in interest rates, exchange rates, stock prices, and commodity prices in the market. Market risk includes:

- Interest rate risk: is the risk due to adverse fluctuations in market interest rates affecting the value of securities, financial instruments with interest rates, and interest rate derivatives on the books of credit institutions and foreign bank branches;

- Foreign exchange risk: is the risk due to adverse fluctuations in exchange rates in the market when credit institutions and foreign bank branches have foreign currency positions;

- Stock price risk: is the risk due to adverse fluctuations in stock prices in the market affecting the value of stocks and derivative securities on the books of credit institutions and foreign bank branches;

- Commodity price risk: is the risk due to adverse fluctuations in commodity prices in the market affecting the value of commodity derivatives and the value of spot transactions subject to commodity price risk at credit institutions and foreign bank branches.

c) Liquidity risk: is the risk due to:

- Credit institutions and foreign bank branches not having the ability to fulfill their debt obligations when they become due; or

- Credit institutions and foreign bank branches having the ability to fulfill their debt obligations when they become due but having to incur high costs to do so.

d) Operational risk: is the risk due to incomplete or erroneous internal procedures, human factors, system errors or failures, or external factors causing financial losses or non-financial negative impacts on credit institutions and foreign bank branches (including legal risk). Operational risk does not include reputation risk and strategic risk;

đ) Reputation risk: is the risk due to negative reactions from customers, partners, shareholders, investors, or the public regarding the reputation of credit institutions and foreign bank branches;

e) Strategic risk: is the risk due to credit institutions and foreign bank branches having or not having timely response strategies or policies to changes in the business environment, reducing the ability to achieve business strategies and profit targets;

g) Other types of risks arising during the operation of credit institutions and foreign bank branches.

3. Analyze and evaluate the operational situation of credit institutions and foreign bank branches according to the following contents:

a) The situation of ensuring safety and developing capital (including shareholder, share, and stock situations);

b) The situation of raising funds from entities meeting the conditions to participate in transactions under current laws including individuals, economic organizations, credit institutions, foreign bank branches, and other organizations;

c) The situation of using funds:

- Providing credit to entities meeting the conditions to participate in transactions under current laws including individuals; economic organizations; credit institutions, foreign bank branches; and other organizations;

- Investing in securities;

- Other fund usage activities.

d) The situation of bad debts and bad debt resolution;

d) Results of business operations.

4. Analysis and evaluation of the management and operational capacity of credit institutions and foreign bank branches.

5. Analysis and evaluation of derivative transactions of credit institutions and foreign bank branches.

6. Forecasting the financial situation of credit institutions and foreign bank branches.

7. Ranking credit institutions and foreign bank branches according to the regulations of the State Bank of Vietnam.

8. Analysis and evaluation of other contents as prescribed by law.

9. The Banking Inspection and Supervision Authority and the Branches of the State Bank of Vietnam for inspection and supervision must implement micro-prudential supervision according to the contents stipulated in Clauses 1, 3, 7, and 8 of this Article. In cases where the supervised entity is a branch of a credit institution, the Banking Inspection and Supervision Authority and the Branches of the State Bank of Vietnam for inspection and supervision shall not be required to supervise the contents stipulated in Point a Clause 3, Clause 7 of this Article, and the provisions on limits and ratios ensuring safe banking operations, and the reporting and statistical system of the State Bank of Vietnam as stipulated in Clause 1 of this Article.

10. Based on the characteristics of the activities of the supervised entities, the Head of the Banking Inspection and Supervision Authority, and the Governor of the State Bank of Vietnam's branch in provinces and centrally-administered cities without a Banking Inspection and Supervision Bureau shall decide to implement micro-prudential supervision according to the contents stipulated in Clauses 2, 4, 5, and 6 of this Article.

11. For supervised entities that are credit institutions and foreign bank branches with systemic importance as defined in Clause 2 of Article 10 of this Circular, in addition to the micro-prudential supervision contents stipulated from Clause 1 to Clause 10 of this Article and the frequency of compiling micro-prudential supervision reports stipulated in Clause 2 of Article 9 of this Circular, they must also implement other supervision contents and frequencies of compiling micro-prudential supervision reports as guided in the Banking Supervision Handbook issued by the Governor of the State Bank of Vietnam.

12. The supervision contents stipulated in Clauses 1, 2, 3, 4, 5, 6, 7, and 8 of this Article are detailed in the Banking Supervision Handbook issued by the Governor of the State Bank of Vietnam.

Article 9. Micro-Prudential Supervision Reports and Micro-Prudential Supervision Files

1. On the basis of evaluations and analyses carried out in accordance with the provisions of Article 8 of this Circular, the unit responsible for micro-prudential supervision shall prepare micro-prudential supervision reports suitable for the type and specific nature of activities of each supervised entity.

2. Micro-prudential supervision reports are prepared quarterly (excluding the fourth quarter), annually, and ad hoc when requested by the Governor of the State Bank of Vietnam. Quarterly micro-prudential supervision reports must be completed before the last day of the second month of the following quarter. Annual micro-prudential supervision reports must be completed before the last day of the first quarter of the following year.

3. The unit responsible for micro-prudential supervision prepares a micro-supervision file for each supervised entity. The supervision file includes documents, information, and data collected from sources specified in Article 6 of this Circular, micro-prudential supervision reports, files of contact with supervised entities, post-inspection supervision files, and files on measures taken during supervision. The micro-supervision file of each supervised entity is stored in accordance with current laws on storage and used in accordance with current laws on protecting state secrets.

Section 3

MACRO-PRAUDENTIAL SUPERVISION

Article 10. Content of macro prudential supervision

1. Based on information, documents, data collected, compiled, and processed from sources specified in Article 6 and Article 7 of this Circular and micro prudential supervision reports, the entity conducting macro prudential supervision shall follow and assess groups and the entire system of credit institutions and foreign bank branches according to one or more of the following contents:

a) Analyze financial soundness levels;

b) Evaluate interbank activities;

c) Assess ownership and investment situations;

d) Identify, evaluate the current status, trends, risk levels, and potential impacts on groups and the entire system of credit institutions and foreign bank branches;

đ) Test resilience against changes in macroeconomic policies and environments for groups and the entire system of credit institutions and foreign bank branches;

e) Potential occurrence of banking crises and response measures;

g) Analyze and evaluate other contents as prescribed by law.

2. The groups of supervised entities are divided as follows:

a) Grouping based on impact on the system:

- A group of credit institutions and foreign bank branches with systemic importance and the remaining group within the system;

- Criteria for determining systemic importance, content of macro prudential supervision, frequency of compiling macro prudential supervision reports for the group of credit institutions and foreign bank branches with systemic importance are guided in the Banking Supervision Handbook issued by the Governor of the State Bank of Vietnam. Based on the criteria in the Banking Supervision Handbook, the Chief Inspector and Supervisor of Banking shall submit to the Governor of the State Bank of Vietnam for decision the list of credit institutions and foreign bank branches with systemic importance in each period.

b) Grouping based on type and ownership:

- A group of joint venture banks, wholly foreign-owned banks, foreign bank branches, joint venture finance companies, wholly foreign-owned finance companies, joint venture leasing companies, wholly foreign-owned leasing companies;

- A group of domestic credit institutions including state-owned commercial banks, joint-stock commercial banks, cooperative banks, policy banks, finance companies, leasing companies, people's credit funds, microfinance organizations.

c) Groups of supervised entities are divided based on other criteria decided by the Governor of the State Bank of Vietnam in each period.

3. The Banking Inspection and Supervision Authority must conduct macro prudential supervision according to the contents prescribed in Points a, b, c, d, and g Clause 1 of this Article.

4. Based on the characteristics of the activities of the supervised entities in each period, the Chief Inspector and Supervisor of Banking decides the implementation of macro prudential supervision according to the contents prescribed in Points đ and e Clause 1 of this Article.

5. The contents of supervision prescribed in Clause 1 of this Article are detailed in the Banking Supervision Handbook issued by the Governor of the State Bank of Vietnam.

Article 11. Macro Prudential Supervision Reports and Macro Supervision Files

1. Based on evaluations and analyses conducted as prescribed in Article 10 of this Circular, the entity conducting macro prudential supervision shall establish various types of macro prudential supervision reports for groups and the entire system of credit institutions and foreign bank branches according to the contents prescribed in Clause 1 and Point a Clause 2 of Article 10 of this Circular.

2. Macro prudential supervision reports are established quarterly (excluding the fourth quarter), annually, and ad hoc when requested by the Governor of the State Bank of Vietnam, except for the cases prescribed in Point a Clause 2 of Article 10 of this Circular. Quarterly macro prudential supervision reports are completed before the last day of the second month of the subsequent quarter. Annual macro prudential supervision reports are completed before the last day of the first quarter of the following year.

3. The entity conducting macro prudential supervision establishes macro supervision files for groups and the entire system. Macro supervision files include documents, information, and data collected from sources specified in Article 6 of this Circular, macro prudential supervision reports, and related documents. Macro supervision files are stored in accordance with current laws on storage and are used in accordance with current laws on protecting state secrets.

Section 4

CONTACT WITH THE OBJECTS OF BANKING SUPERVISION

Article 12. Forms of Contact with Banking Supervision Subjects

Contact with banking supervision subjects shall be carried out through the following forms:

1. Sending a written request for explanation.

2. Direct working sessions.

Article 13. Sending a Written Request for Explanation

1. In cases where erroneous, incorrect, or unsuitable documents, information, data, or issues related to risks and compliance with laws on ensuring safe operations of banking supervision subjects are discovered, the unit implementing banking supervision shall submit to the Head of the Banking Inspection and Supervision Department, the Director of the Banking Inspection and Supervision Bureau, or the Governor of the State Bank Branch in provinces and centrally-administered cities without a Banking Inspection and Supervision Bureau for approval of a written request for the banking supervision subject to provide an explanation.

2. Based on the deadline for providing explanations specified in the written request for explanation, the banking supervision subject shall submit a written explanation, including corrections and supplements (in cases where documents, information, or data are erroneous, incorrect, incomplete, or unsuitable), to the unit implementing banking supervision.

Article 14. Direct Working Sessions

1. When necessary, upon discovering erroneous, incorrect, or unsuitable documents, information, data, or issues related to risks and compliance with laws on ensuring safe operations of banking supervision subjects, the unit implementing banking supervision shall submit to the Head of the Banking Inspection and Supervision Department, the Director of the Banking Inspection and Supervision Bureau, or the Governor of the State Bank Branch in provinces and centrally-administered cities without a Banking Inspection and Supervision Bureau for approval to establish a working group to conduct direct working sessions with the banking supervision subject (hereinafter referred to as the working group).

2. At least five working days prior to contacting the banking supervision subject through direct working sessions, the unit implementing banking supervision must notify the banking supervision subject in writing; the notification must clearly state the content, deadline, location, and composition of the working group.

3. The content of the working session with the banking supervision subject shall be decided by the Head of the Banking Inspection and Supervision Department, the Director of the Banking Inspection and Supervision Bureau, or the Governor of the State Bank Branch in provinces and centrally-administered cities without a Banking Inspection and Supervision Bureau; it must be recorded in a minutes document and signed by representatives of the working group and the banking supervision subject. The format of the working session minutes is stipulated in Appendix I attached to this Circular.

4. The composition of the working group and the duration of work with each banking supervision subject shall be decided by the Head of the Banking Inspection and Supervision Department, the Director of the Banking Inspection and Supervision Bureau, or the Governor of the State Bank Branch in provinces and centrally-administered cities without a Banking Inspection and Supervision Bureau, but the composition of the working group shall not exceed five people and the duration of work shall not exceed five working days.

5. The banking supervision subject must fully comply with all contents required in the notification from the Banking Inspection and Supervision Department and provide files and documents to prove and explain according to the requirements of the working group.

Section 5

POST-SUPERVISORY INSPECTION

Article 15. Responsibilities of Units Implementing Post-Audit Supervision

The unit assigned the task of post-audit supervision shall follow up, urge, and inspect the implementation of audit conclusions by the entities being supervised in accordance with the provisions set forth in Chapter III of Decree No. 33/2015/NĐ-CP dated March 27, 2015, of the Government on the Implementation of Audit Conclusions.

Article 16. Responsibilities of Heads of Agencies Issuing Audit Conclusions, Audited Entities, and Related Agencies, Organizations, and Individuals

1. The responsibilities of heads of agencies issuing audit conclusions are stipulated in Section 2, Chapter II of Decree No. 33/2015/NĐ-CP dated March 27, 2015, of the Government on the Implementation of Audit Conclusions.

2. The responsibilities of audited entities and related agencies, organizations, and individuals are stipulated in Section 3, Chapter II of Decree No. 33/2015/NĐ-CP dated March 27, 2015, of the Government on the Implementation of Audit Conclusions.

Chapter 6

MEASURES FOR HANDLING IN BANK SUPERVISION

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. Propose to competent authorities other measures for handling bank supervision as prescribed by law.

Article 18. Recommendations and Warnings for Bank Supervision Targets

1. Based on legal documents regulating bank supervision targets, relevant materials, information, and data on the operational situation of bank supervision targets, and the analysis and assessment of the units implementing bank supervision, the Head of the Banking Inspection and Supervision Department, the Director of the Banking Inspection and Supervision Bureau, and the Governor of the State Bank Branches in provinces and centrally-administered cities where there is no Banking Inspection and Supervision Bureau shall be responsible for approving the form of recommendations and warnings for areas with potential risks that may cause operational instability or lead to violations of monetary and banking laws.

2. Units implementing bank supervision shall issue recommendations and warnings about potential risks to bank supervision targets based on the following grounds:

a) When the results of supervision are reflected in quantitative indicators of bank supervision targets exceeding warning thresholds. Warning thresholds are determined based on the average value and quantile value of bank supervision targets within the same group. Calculation methods for average values and quantiles are detailed in the Handbook on Banking Supervision issued by the Governor of the State Bank.

b) Qualitative information reflecting potential risks of bank supervision targets from supervision results combined with audit conclusions, independent audit results, internal audit results, and information from other state management agencies;

c) When requested by the Governor of the State Bank based on practical state management needs in the monetary and banking sectors.

3. Upon receiving recommendations and warnings from units implementing bank supervision, bank supervision targets must take responsibility:

a) To promptly report and explain recommendations and warnings from units implementing bank supervision, including at least the current situation, causes, and plans for rectification to be submitted to the units implementing bank supervision. The deadline for submitting reports and explanations by bank supervision targets is decided by the units implementing bank supervision and specified in the document sent to recommend and warn the bank supervision targets;

b) In cases where bank supervision targets continue to pose significant risks, potentially causing operational instability or leading to violations of monetary and banking laws after implementing rectification plans, units implementing bank supervision shall propose to competent authorities to apply measures for handling bank supervision as prescribed by law.

Article 19. Monitoring, urging, and handling the implementation of recommendations and warnings of the banking supervision object

1. The unit implementing banking supervision shall be responsible for regularly collecting information and situations regarding progress, results, difficulties, and obstacles related to the implementation of recommendations and warnings of the banking supervision object.

2. Upon monitoring, if delays in the implementation of recommendations and warnings are detected, the unit implementing banking supervision shall promptly submit a report to the Director of the State Bank Inspection and Supervision Department, the Director of the Banking Inspection and Supervision Department, or the Governor of the State Bank branch in the centrally governed city or province where there is no Banking Inspection and Supervision Department for approval of a document sent to the banking supervision object or to directly conduct a meeting with the banking supervision object (if necessary) to request a report explaining the reasons and measures to address the delay.

3. After evaluating the results of the implementation of recommendations and warnings by the banking supervision object, the unit implementing banking supervision shall propose supervisory measures according to the provisions of the law.

Chapter III

RESPONSIBILITIES OF ORGANIZATIONS AND INDIVIDUALS INVOLVED IN BANKING SUPERVISION ACTIVITIES

IN THE BANK SUPERVISION ACTIVITY

Article 20. Responsibilities of the Banking Inspection and Supervision Agency

1. Organize the confidentiality of information related to the banking supervision object in accordance with the provisions of the law.

2. Take the lead and coordinate with the State Bank Inspection and Supervision Branches in centrally governed cities and provinces, the Monetary and Financial Stability Department, and other units under the State Bank, and relevant organizations in banking supervision activities aimed at preventing, detecting, stopping, and promptly addressing risks that cause instability in banking operations, violations of limits and ratios ensuring safe banking operations, and other relevant legal provisions of the banking supervision object.

3. Take the lead and coordinate with the State Bank Inspection and Supervision Branches in centrally governed cities and provinces, the Monetary and Financial Stability Department, and other units under the State Bank to develop mechanisms for cooperation, exchange of documents, information, and data to serve banking supervision activities.

4. Based on the provisions of this Circular, take the lead and coordinate with relevant units to develop a Handbook on Banking Supervision for submission to the Governor of the State Bank for issuance.

5. Coordinate and provide information to agencies and units outside the State Bank and foreign supervisory agencies regarding banking supervision activities concerning credit institutions and foreign bank branches in accordance with the law.

6. Take the lead and coordinate with the Information Technology Department and other relevant units under the State Bank to research, invest, build, apply, manage, and develop unified information technology systems to support banking supervision activities within the banking sector in accordance with the law.

7. Other responsibilities as prescribed by law.

Article 21. Responsibilities of the State Bank Branch in centrally governed cities and provinces without a Banking Inspection and Supervision Department

1. Organize the confidentiality of information related to the banking supervision object in accordance with the provisions of the law.

2. Take the lead and coordinate with the Banking Inspection and Supervision Agency, units under the State Bank, and relevant organizations in micro-level safety supervision activities aimed at preventing, detecting, stopping, and promptly addressing risks that cause instability in banking operations, violations of limits and ratios ensuring safe banking operations, and other relevant legal provisions of the banking supervision object within the assigned scope of supervision.

3. Coordinate and provide information about the banking supervision object to the Banking Inspection and Supervision Agency, units under the State Bank, and other organizations and individuals in accordance with the law.

4. Other responsibilities as prescribed by law.

Article 22. Responsibilities of other units related to the State Bank of Vietnam

Other units under the State Bank of Vietnam shall be responsible for coordinating and providing information, documents, and data as required by banking inspection and supervision according to this Circular and in accordance with the law.

Article 23. Responsibilities of banking supervision objects

1. Implement the rights and obligations of banking supervision objects as prescribed in Sections 1, 4, 5, and 6 of Chapter II of this Circular, Article 57 of the Law on the State Bank of Vietnam, and Article 160 of the Law on Credit Organizations.

2. Implement the provision of information, documents, and data as prescribed by law.

3. Other responsibilities as prescribed by law.

Chapter IV

IMPLEMENTING PROVISIONS

Article 24. Effective Date

1. This Circular takes effect from December 1, 2017.

2. Repeal Decision No. 398/1999/QĐ-NHNN3 dated November 9, 1999 of the Governor of the State Bank of Vietnam on the issuance of the Remote Supervision Regulation for credit organizations operating in Vietnam.

Article 25. Responsibilities for Implementation

The Director of the Office, the Head of Banking Inspection and 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 of the Board of Directors, Chairmen of the Board of Members, General Directors (Directors) of credit organizations, and foreign bank branch managers are responsible for organizing the implementation of this Circular.