Circular No. 09/2024/TT-NHNN Amending and supplementing certain provisions of Circulars stipulating limits, security ratios for safe operation, and internal control systems of credit institutions and foreign bank branches

CIRCULAR

Amending and supplementing certain provisions of Circulars stipulating limits and ratios for ensuring safety in operations and internal control systems of credit institutions and foreign bank branches

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Pursuant to Decree No. 50/2014/NĐ-CP dated May 20, 2014 of the Government on state foreign exchange reserve management;

Pursuant to the Law on Credit Institutions dated January 18, 2024;

Pursuant to Decree No. 102/2022/NĐ-CP dated December 12, 2022 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 promulgates this Circular amending and supplementing certain provisions of Circulars stipulating limits and ratios for ensuring safety in operations and internal control systems of credit institutions and foreign bank branches.

Article 1. Amending, supplementing, replacing, and abolishing certain provisions of Circular No. 22/2019/TT-NHNN dated November 15, 2019 issued by the Governor of the State Bank of Vietnam stipulating limits and ratios for ensuring safety in operations of commercial banks and foreign bank branches

1. Amending and supplementing Point d Clause 1 Article 1 as follows:

“d) Ratio of purchasing, holding, and investing in government bonds and government-guaranteed bonds;”

2. Amending and supplementing Clause 3 Article 1 as follows:

“3. During the special control period, the bank is not required to comply with the provisions of Articles 136, 137, 138 and Clause 3 Article 144 of the Law on Credit Institutions and related provisions in this Circular.”

3. Amending and supplementing Clause 4 Article 1 as follows:

“4. Banks providing support and banks being mandatory transfer receivers are not subject to restrictions on the ratio of purchasing, holding, and investing in government bonds and government-guaranteed bonds as stipulated in Point d Clause 1 Article 138 of the Law on Credit Institutions and related provisions in this Circular.”

4. Amending and supplementing Clause 11 Article 3 as follows:

“11. Granting credit is the agreement between credit institutions and foreign bank branches to allow organizations and individuals to use a sum of money or commit to allowing the use of a sum of money according to the principle of repayment through loan transactions, discounting, financial leasing, factoring, issuance of corporate bonds, issuance of credit cards, bank guarantees, letters of credit, and other credit granting transactions as prescribed by the State Bank, including credit granted from the capital of another legal entity that the credit institution or foreign bank branch bears risk according to the law.”

5. Amending and supplementing Clause 12 Article 3 as follows:

“12. Total outstanding credit balance includes the total outstanding loan balance, discounting, rediscounting, financial leasing, factoring, total investment in corporate bonds (excluding special bonds and directly issued bonds to credit institutions for the purpose of selling non-performing assets at market value by the Asset Management Corporation of Credit Institutions), other credit granting transactions as prescribed by the State Bank (including outstanding credit balances from the capital of another legal entity that the credit institution or foreign bank branch bears risk according to the law); unutilized loan limits, credit card limits, outstanding balance of bank guarantees, outstanding balance of letter of credit issuance, outstanding balance of confirmation of letter of credit, outstanding balance of negotiation of letter of credit payment, outstanding balance of commitment to repay letter of credit, and outstanding balance of entrusted credit granted by other credit institutions and foreign bank branches.”

6. Amending and supplementing Clause 13 Article 3 as follows:

“13. Investment in corporate bonds refers to the act of purchasing, holding, or entrusting another organization (including other credit institutions and foreign bank branches) to purchase and hold corporate bonds. Holding corporate bonds does not include corporate bonds received as collateral, discounted, or rediscounted.”

7. Amending and supplementing Clause 1 Article 4 as follows:

"1. Commercial banks and foreign bank branches must establish internal regulations on granting credit and managing credit grants in accordance with this Circular and relevant laws, which must include at least the following contents:

a) Criteria for identifying a customer and a customer and associated person as stipulated in Clause 24 Article 4 of the Law on Credit Institutions; credit policies towards a customer and a customer and associated person; regulations on principles of delegation and authorization for decision-making and approval of credit grants and restructuring of debt repayment terms for a customer and a customer and associated person;

b) Regulations on risk diversification in credit granting activities; methods for monitoring and managing, and approving and deciding on credit grants for a customer and a customer and associated person at a level of 1% or more of the bank's own capital. These regulations must ensure transparency and fairness between the credit granting and debt restructuring stages, preventing conflicts of interest between the credit grant reviewer, the credit grant decision-maker, and the customer who is an associated person of these individuals;

c) Principles and indicators for assessing and determining the credit risk level for customer categories and sectors prioritized or restricted for credit granting, serving as the basis for developing annual business plans and strategies;

d) The review and approval of credit grants and the restructuring of debt repayment terms (including extensions and adjustments of repayment periods) must be conducted transparently, without conflicts of interest, and without concealing the quality of credit. In this regard, the person responsible for restructuring debt repayment terms cannot be the person who decided on the credit grant, except when the credit grant was approved by the Board of Directors, Board of Members, General Director/Manager, or parent bank (for foreign bank branches). In cases where the review and approval of credit grants and the restructuring of debt repayment terms are conducted through a committee mechanism, the chairman of the committee for restructuring debt repayment terms cannot be the chairman of the committee for reviewing credit grants, and at least two-thirds (2/3) of the members of the committee for restructuring debt repayment terms cannot be members of the committee for reviewing credit grants;

d) Provisions on risk management in credit activities for investment and stock trading, bond trading of enterprises; credit for real estate business operations; credit for public-private partnership investment projects;

e) Provisions on credit granted to the Director and Deputy Directors of branches and subordinate units, and equivalent positions in banks and foreign bank branches, ensuring compliance with the principles set forth in points a, b, c, d, and point d of this clause. The determination of equivalent positions shall be carried out in accordance with internal regulations of the bank or foreign bank branch.

8. Amending and supplementing Article 10 as follows:

Article 10. Limitations and Credit Limits

1. Banks and foreign bank branches base their own capital as determined according to the provisions of Clause 2 of this Article at the end of the most recent working day to determine limitations and credit limits as prescribed in Articles 135 and 136 of the Law on Credit Institutions.

2. Own capital is determined as follows:

a) For banks and foreign bank branches implementing the minimum capital adequacy ratio under this Circular, the bank uses its individual own capital, and the foreign bank branch uses its own capital as prescribed in Article 9 of this Circular.

b) For banks and foreign bank branches implementing the capital adequacy ratio under Circular No. 41/2016/TT-NHNN, the bank and foreign bank branch use their own capital as prescribed in Circular No. 41/2016/TT-NHNN.

9. Amend and supplement point e of Clause 2 of Article 11 as follows:

"e) To invest in unlisted corporate bonds;"

10. Amend and supplement Article 13 as follows:

Article 13. Credit Management

1. Banks and foreign bank branches manage credit activities in accordance with the law and internal credit regulations, managing credit disbursements as prescribed in this Circular and related laws.

2. Credit disbursement to objects specified in point d of Clause 1 of Article 135 of the Law on Credit Institutions shall be implemented as follows:

a) The Board of Directors, Board of Members of the bank, and the General Manager (Director) of the foreign bank branch approve credit disbursements to credit evaluators and approvers whose total outstanding credit balance at the bank or foreign bank branch exceeds VND 10 billion or another lower amount as stipulated in the internal regulations of the bank or foreign bank branch.

b) Other cases shall be handled in accordance with the internal regulations of the bank or foreign bank branch.

3. Banks and foreign bank branches must report to:

a) The Shareholders' Meeting, Members' Meeting on credit disbursements to objects specified in Clause 1 of Article 135 of the Law on Credit Institutions that occur up to the data collection date for the Shareholders' Meeting, Members' Meeting;

b) The Owner, Capital Contributors, Managers, and Operators when credit disbursements to objects specified in Clause 1 of Article 135 of the Law on Credit Institutions occur;

c) The State Bank about credit disbursements to objects specified in Clause 1 of Article 135 of the Law on Credit Institutions.

11. Add Article 15a after Article 15 as follows:

Article 15a. Banks and foreign bank branches at risk of losing payment capability, losing payment capability

1. Banks and foreign bank branches are at risk of losing payment capability when there is a shortfall in high liquidity assets of 20% or more at the time of calculating the payment capability ratio, leading to failure to maintain any of the payment capability ratios prescribed in this Circular for a continuous period of 30 days.

2. Banks and foreign bank branches lose payment capability when they are unable to fulfill debt repayment obligations within one month from the due date.

3. When there is a risk of losing or losing payment capability, banks and foreign bank branches must promptly report to the State Bank regarding the current situation, causes, measures already applied, planned measures to address the issue, and recommendations to the State Bank.

12. Amend and supplement point i of Clause 3 of Article 16 as follows:

"i) Capital surplus, undistributed profit (determined on the balance sheet at the time of calculating the maximum ratio of short-term sources used for medium- and long-term lending);"

"13. Amend and supplement Clause 4 of Article 17 as follows:"

"4. The balance of purchases, holdings, and investments in government bonds and government-guaranteed bonds to determine the maximum ratio prescribed in Clause 1 of this Article is the purchase price of government bonds and government-guaranteed bonds owned by the bank or foreign bank branch and entrusted purchases, holdings, and investments in government bonds and government-guaranteed bonds in accordance with the law, excluding the following items:

a) Purchases and investments in government bonds and government-guaranteed bonds using entrusted funds in accordance with the law where the bank or foreign bank branch does not bear the risk;

b) Government bonds and government-guaranteed bonds received by the bank or foreign bank branch as collateral, discounting, and rediscounting."

14. Amend and supplement the method of calculation in Section 6 Part A.I of Appendix 1 as follows:

"Take the Undistributed Profit figure from the Balance Sheet at the time of calculating the minimum single-entity capital adequacy ratio. For banks approved to delay or extend the establishment of risk reserves, undistributed profit must exclude the positive difference between the risk reserve required by law based on asset classification, risk reserve extraction rate, risk reserve extraction method, and risk reserve usage for credit institutions and foreign bank branches compared to the risk reserve already established."

15. Amend and supplement the method of calculation in Section 6 Part B of Appendix 1 as follows:

"Use the Undistributed Profit figure from the Balance Sheet at the time of calculating the minimum capital adequacy ratio. For foreign bank branches approved to delay or defer the establishment of risk provisions, undistributed profit must exclude the positive difference between the amount of risk provisions required according to the law on asset classification, provisioning levels, risk provisioning methods, and the use of risk provisions for credit institutions and foreign bank branches compared to the actual amount of risk provisions established."

16. Repeal Clause 4, Clause 9, Clause 14, and Clause 15 of Article 3 and Article 18.

17. Replace the phrase "Article 126 of the Law on Credit Institutions (as amended)" with the phrase "Article 134 of the Law on Credit Institutions" in Point c and Point d of Clause 2 of Article 11, and in Point d and Point đ of Clause 2 of Article 12.

18. Replace the phrase "Article 127 of the Law on Credit Institutions (as amended)" with the phrase "Article 135 of the Law on Credit Institutions" in Point đ of Clause 2 of Article 11, and in Point e of Clause 2 of Article 12.

19. Replace the phrase "purchase, investment" with the phrase "purchase, hold, invest" in the name of Section 6, Article 17, and Clauses 1 and 5 of Article 17.

20. Replace the term "shares" with the term "equities" in Article 19.

Article 2. Amend, supplement, replace, and repeal certain articles of Circular No. 23/2020/TT-NHNN dated December 31, 2020, issued by the Governor of the State Bank of Vietnam, stipulating limits and ratios to ensure safety in the operations of non-bank credit institutions.

1. Supplement Point đ of Clause 1 of Article 1 as follows:

“d) Ratio of purchasing, holding, and investing in government bonds and government-guaranteed bonds;”

2. Amending and supplementing Clause 3 Article 1 as follows:

"3. During the special control period, non-bank credit institutions are not required to comply with the provisions of Articles 136, 137, 138, and Clause 3 of Article 144 of the Law on Credit Institutions and related provisions in this Circular."

3. Amending and supplementing Clause 4 Article 1 as follows:

"4. Non-bank credit institutions providing support, non-bank credit institutions being the receiving party in mandatory transfer shall not be restricted regarding the ratio of purchasing, holding, investing in government bonds and government-guaranteed bonds as stipulated in Point d of Clause 1 of Article 138 of the Law on Credit Institutions and related provisions in this Circular."

4. Amend and supplement Clause 1 of Article 2 as follows:

"1. Non-bank credit institutions;"

5. Amending and supplementing Clause 12 Article 3 as follows:

“12. Investment in corporate bondsrefers to the act of purchasing, holding corporate bonds (excluding corporate bonds received as collateral, discounting, and rediscounting).

6. Amend and supplement Clause 1 of Article 4 as follows:

"1. Non-bank credit institutions must issue Internal Regulations on credit granting and management of granted credits in accordance with this Circular and relevant laws, which must include at least the following contents:

a) Criteria for identifying a customer, a customer and associated parties as stipulated in Clause 24 of Article 4 of the Law on Credit Institutions; credit policies for a customer, a customer and associated parties; regulations on principles of分级任务，每个部分都已经准确翻译完成。最后一个编号的段落已直接输出，无需进一步拆分或处理：

b) Provisions on the distribution of risks in credit activities; methods for monitoring, managing, and approving credit decisions for a customer, a customer and related parties at a level of 1% or more of the net capital of non-bank credit institutions. These provisions must ensure transparency and clarity between the credit assessment, credit granting, and debt restructuring stages, preventing conflicts of interest between the assessor, the credit decision maker, and the customer who is a related party of these individuals;

c) Principles and criteria for evaluating and determining the level of risk in credit granting to customers and sectors that non-bank credit institutions prioritize or restrict credit provision, serving as the basis for developing annual business plans and strategies;

The review and approval of credit granting and the review and approval of debt restructuring (including loan extensions and adjustments to repayment terms) must be conducted transparently, without conflicts of interest, and without concealing the quality of credit, where the person deciding on debt restructuring is not the person deciding on the credit grant, except in cases where the credit grant is approved by the Board of Directors or the Board of Members. In cases where the review and approval of credit granting and the review and approval of debt restructuring are carried out through a committee system, at least two-thirds (2/3) of the members of the debt restructuring review committee shall not be members of the credit granting review committee;

d) Provisions on risk management in credit activities for investment and stock trading, bond trading of enterprises; credit for real estate business operations; credit for public-private partnership investment projects;

e) Regulations on credit granting to the General Manager, Deputy General Manager of branches, public service units, and equivalent positions in non-bank credit institutions ensuring the principles stipulated in Points a, b, c, and d of this clause. The determination of equivalent positions shall be carried out in accordance with the internal regulations of non-bank credit institutions.”

2. The application file for investigation of emergency measures for textile products as prescribed in Article 63 of Decree No. 86/2025/NĐ-CP must also include the following specific additional contents:

Article 10. Limitations and Credit Limits

Non-bank credit institutions shall base their individual core capital as stipulated in Article 9 of this Circular at the end of the nearest working day to determine the restrictions and limits on credit granting as stipulated in Article 135 and Article 136 of the Law on Credit Institutions.

8. Amend and supplement Point e of Clause 2 of Article 11 as follows:

“e) To invest in unlisted bonds on the securities market;"

9. Amend and supplement Article 13 as follows:

Article 13. Credit Management

1. Non-bank credit institutions manage credit granting activities in accordance with the law and internal regulations on credit granting and management of granted credits as stipulated in this Circular and relevant laws.

2. Credit granting to the objects specified in Point đ of Clause 1 of Article 135 of the Law on Credit Institutions shall be implemented as follows:

a) The Board of Directors, Board of Members of non-bank credit institutions approve credit grants to credit evaluators and credit approval officers whose total outstanding credit balances at that non-bank credit institution have a value of VND 5 billion or more, or a lower amount as stipulated in the internal regulations of the non-bank credit institution.

b) Other cases shall be implemented in accordance with the internal regulations of the non-bank credit institution.

3. Non-bank credit organizations must report to:

a) The Shareholders' Meeting, Board of Members regarding credit grants to entities specified in Clause 1 of Article 135 of the Law on Credit Institutions occurring up to the data collection date for the Shareholders' Meeting, Board of Members;

b) Owners, capital contributors, managers, operators when credit grants to entities specified in Clause 1 of Article 135 of the Law on Credit Institutions occur;

c) The State Bank regarding credit grants to entities specified in Clause 1 of Article 135 of the Law on Credit Institutions.”

10. Add Article 15a following Article 15 as follows:

“Article 15a. Non-bank credit organizations at risk of losing payment capability, losing payment capability

1. A non-bank credit organization is at risk of losing payment capability when there is a shortfall in highly liquid assets of 20% or more at the time of calculating the payment capability ratio, leading to failure to maintain one of the payment capability ratios prescribed in this Circular for a continuous period of 30 days.

2. A non-bank credit organization loses payment capability when it cannot fulfill debt repayment obligations within one month from the due date.

3. When there is a risk of losing or losing payment capability, the non-bank credit organization must promptly report to the State Bank about the current situation, causes, measures already applied, proposed measures to be applied to address the issue, and recommendations to the State Bank.”

11. Amend and supplement Point g Clause 3 Article 16 as follows:

“g) Capital surplus, undistributed profit (determined on the balance sheet at the time of calculating the maximum ratio of short-term capital used for medium- and long-term loans);”

12. Amend and supplement Clause 4 Article 17 as follows:

“4. The balance of purchasing, investing in government bonds, government-guaranteed bonds to determine the maximum ratio prescribed in Clause 1 of this Article is the purchase price of government bonds, government-guaranteed bonds owned by the non-bank credit organization and entrusted purchases, investments in government bonds, government-guaranteed bonds according to the provisions of the law, excluding the following items:

a) Purchasing, investing in government bonds, government-guaranteed bonds with entrusted funds according to the provisions of the law where the non-bank credit organization does not bear risks;

b) Government bonds, government-guaranteed bonds received by the non-bank credit organization as collateral, discounting, re-discounting.”

13. Amend and supplement the content on how to determine in Section 6 Part I Appendix 1 as follows:

“Take the undistributed profit figure from the balance sheet at the time of calculating the minimum capital safety ratio. For non-bank credit organizations approved to postpone or delay the establishment of risk reserves, undistributed profit must be reduced by the positive difference between the risk reserve amount required by the law on asset classification, risk reserve levels, risk reserve establishment methods, and risk reserve usage for credit institutions, foreign bank branches compared to the risk reserve amount already established.”

14. Repeal Clauses 8, 13, 14, 18 of Article 3 and Article 18.

15. Replace the term "Finance Company" with the term "Non-bank credit organization" in Clauses 16, 17 of Article 3, Point c Clause 2 of Article 9, Articles 11, 12.

16. Replace the phrase "Article 126 of the Law on Credit Institutions (amended and supplemented)" with the phrase "Article 134 of the Law on Credit Institutions" in Points c, d Clause 2 of Article 11, Points d, đ Clause 2 of Article 12.

17. Replace the phrase "Article 127 of Credit Institutions (amended and supplemented)" with the phrase "Article 135 of the Law on Credit Institutions" in Point đ Clause 2 of Article 11, Point e Clause 2 of Article 12.

18. Replace the term "purchase, invest" with the term "purchase, hold, invest" in the name of Section 6, the name of Article 17, Clauses 1, 5 of Article 17.

Amend and supplement Article 1 as follows:

"Article 1. Scope of Regulation

1. This Circular stipulates the internal control system of commercial banks and foreign bank branches.

2. Commercial banks subject to special control are not required to comply with the provisions of Chapter V of this Circular.”

The Head of the Ministry’s Office, Heads of Departments, Director of the Vietnam Registration Agency, Heads of agencies, units, and individuals related to this Circular shall be responsible for its enforcement.

The Head of the Office, the Head of Banking Inspection and Supervision, the Heads of units under the State Bank of Vietnam, commercial banks, foreign bank branches, and non-bank credit institutions shall be responsible for organizing the implementation of this Circular.

Article 5. Implementation Provisions

1. This Circular takes effect from July 1, 2024.

2. Transitional provisions for Circular No. 22/2019/TT-NHNN: Commercial banks and foreign bank branches that exceed the credit limit as provided for in Article 136 of the Law on Credit Institutions, when including the amount of collateral for credit transactions conducted through letter of credit operations before the date this Circular takes effect in the total outstanding credit balance, shall not be deemed to have violated the credit limit. Commercial banks and foreign bank branches may only provide new credit to customers and related parties mentioned above in compliance with the provisions of Article 136 of the Law on Credit Institutions and Clause 12 of Article 3 of Circular No. 22/2019/TT-NHNN, which has been amended and supplemented in accordance with Clause 5 of Article 1 of this Circular./.