Decree No. 26/2014/NĐ-CP On the organization and operation of the Banking Inspection and Supervision

DECREE

Von the organization and operation of the Banking Inspection and Supervision

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Pursuant to the Law on Organization of the Government dated December 25, 2001;

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;

Based on the Inspection Law dated November 15, 2010;

Based on the Law on Prevention and Combating Money Laundering dated June 18, 2012;

Based on the Law on Deposit Insurance dated June 18, 2012;

Pursuant to the Law on Handling Administrative Offenses dated June 20, 2012;

At the proposal of the Governor of the State Bank of Vietnam,

The Government issues a Decree on the organization and operation of the Banking Inspection and Supervision.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Decree stipulates the organization and operation of the Banking Inspection and Supervision; banking inspectors, banking inspection collaborators; responsibilities of agencies, organizations, and individuals in the activities of the Banking Inspection and Supervision.

Article 2. Inspected Entities and Supervised Entities

1. The inspected entities of the Banking Inspection and Supervision (hereinafter referred to collectively as banking inspection entities):

a) Agencies, organizations, and individuals within the management scope of the State Bank of Vietnam (hereinafter referred to as the State Bank);

b) Banking inspection entities as defined in Article 52 of the Law on the State Bank of Vietnam, including policy banks and subsidiaries of credit institutions;

c) State-owned enterprises established by decision of the Governor of the State Bank;

d) Reporting entities under the responsibility for state management of currency, banking operations, and foreign exchange (hereinafter referred to as currency and banking) according to laws on prevention and combating money laundering;

e) Insurance deposit organizations;

f) Other agencies, organizations, and individuals who have the obligation to comply with legal provisions in fields under the state management of the State Bank.

2. The objects of supervision of the Banking Inspection and Supervision (hereinafter referred to collectively as banking supervision objects):

a) Banking supervision entities as defined in Article 56 of the Law on the State Bank of Vietnam, including policy banks and subsidiaries of credit institutions;

b) Objects reporting under the responsibility for state management of currency and banking according to the laws on preventing and combating money laundering;

c) Other objects as prescribed by law.

Article 3. Application of International Treaties

In case an international treaty to which the Socialist Republic of Vietnam is a party provides differently from the provisions of this Decree, the provisions of the international treaty shall apply.

Article 4. Principles of banking inspection and supervision

1. Ensuring concentration and unity in directing and implementing tasks from central to local levels.

2. To comply with the law; ensure accuracy, objectivity, honesty, transparency, democracy, and timeliness; avoid overlapping in scope, objects, content, and time of inspection among agencies performing inspection functions; not to hinder the normal operations of agencies, organizations, and individuals that are banking inspection objects or banking supervision objects.

3. Banking inspections may be conducted by inspection teams or individual banking inspectors.

4. Banking supervision shall be carried out continuously and regularly.

5. To combine the inspection and supervision of compliance with policies and laws with the inspection and supervision of risks in the activities of banking inspection objects and banking supervision objects; to closely integrate banking inspection with banking supervision.

6. Conducting comprehensive inspection and supervision of all activities of credit institutions.

7. To implement in accordance with the provisions of the Law on the State Bank of Vietnam and other relevant legal regulations; in case there is a difference between the provisions on banking inspection and supervision in the Law on the State Bank of Vietnam and those in other laws, the provisions of the Law on the State Bank of Vietnam shall be followed.

8. The Governor of the State Bank of Vietnam shall prescribe the procedures and formalities for banking inspection and supervision.

9. Other principles as prescribed by laws on inspection.

Article 5. Implementation of independent auditing serving the requirements of banking inspection and supervision

1. The Banking Inspection and Supervision has the right to require banking inspection objects and banking supervision objects to engage independent auditing companies to audit organizational structure, operations, and finances when deemed necessary in the following cases:

a) Credit institutions are at risk of being placed under special control measures;

b) Credit institutions are being considered for termination of special control measures;

c) Specialized credit institutions need to be evaluated for their current financial status, determine enterprise value, the actual value of charter capital and reserves as a basis for applying measures according to the law.

d) Credit institutions are being reorganized as provided for in Article 153 of the Law on Credit Institutions;

e) Subsidiaries, associated companies, or subordinate units of credit institutions show signs affecting the safety and soundness of the credit institution;

f) Weak entities requiring handling and restructuring among inspected banking entities and supervised entities;

g) Assessing the financial status, operations, and level of safety and soundness of inspected banking entities and supervised entities to serve as a basis for applying measures to ensure safety;

h) When the content of inspection and supervision exceeds the capacity of the banking inspection and supervision authorities;

i) Other cases as prescribed by law.

2. Inspected banking entities and supervised entities must settle the costs of auditing as stipulated in Clause 1 of this Article.

Chapter II

ORGANIZATION AND DUTIES, LIMITS OF THE BANKING INSPECTION AND SUPERVISION

SUPERVISION OF THE BANKING SECTOR

Article 6. The organizational system of the Banking Inspection and Supervision

The Banking Inspection and Supervision is a state inspection agency, organized into a system comprising:

1. The Banking Inspection and Supervision Agency under the State Bank of Vietnam.

2. Banking Inspection and Supervision of the State Bank branch in provinces and centrally-administered cities (hereinafter referred to as Banking Inspection and Supervision of the State Bank branch) shall be established in provinces and centrally-administered cities where there is no Banking Inspection and Supervision Bureau under the Banking Inspection and Supervision Agency.

Article 7. The Banking Inspection and Supervision Agency

1. The Banking Inspection and Supervision Agency is equivalent to a General Department, directly under the State Bank, performing advisory and assisting functions for the Governor of the State Bank in managing credit organizations, foreign bank branches, and state management of inspection work, complaint resolution, anti-corruption, anti-money laundering, deposit insurance; conducting administrative inspections, specialized inspections, and banking supervision in areas within the scope of state management of the State Bank; implementing anti-money laundering and anti-terrorism financing according to the law and the Governor's assignment.

2. The organizational structure of the Banking Inspection and Supervision Agency includes Departments, Bureaus, and the Office at the headquarters and Banking Inspection and Supervision Bureaus located in some provinces and centrally-administered cities (hereinafter referred to collectively as units under the Banking Inspection and Supervision Agency). Units under the Banking Inspection and Supervision Agency are organized into divisions.

The Director of the Banking Inspection and Supervision Bureau may issue decisions for inspection, establish inspection teams, perform the duties and powers of the decision-maker for inspection and administrative penalty according to the law.

3. The Prime Minister shall specify the tasks, powers, and organizational structure of the Banking Inspection and Supervision Agency based on the proposal of the Governor of the State Bank of Vietnam.

Article 8. Duties and Authorities of the Head of Banking Inspection and Supervision

The title of the head of the Banking Inspection and Supervision Agency is the Chief Inspector and Supervisor of Banking. The Chief Inspector and Supervisor of Banking performs the following tasks and powers:

1. Lead, direct, and inspect the inspection and supervision work within the scope of the State Bank's management; lead the Banking Inspection and Supervision Agency to perform its duties and authorities as prescribed by law.

2. Take the initiative in handling overlapping issues regarding the scope, objects, contents, and timeframes of inspections within the State Bank's management scope; coordinate with the Heads of Provincial Banking Inspectors to resolve overlapping issues regarding the scope, objects, contents, and timeframes of inspections in provincial areas directly under the Central Government.

3. Issue decisions on inspections, establish inspection teams for banking inspection objects within the State Bank's management scope according to the division of labor by the Governor of the State Bank or upon the Governor's request; perform the duties and authorities of the decision-maker for inspections; propose the Branch Governor of the State Bank to appoint banking inspectors and other civil servants to join the inspection team; summon civil servants and staff from relevant agencies and units to participate in the inspection team.

4. Decide to conduct inspections when signs of law violations by banking inspection objects are discovered or when signs of risks threatening the safety of credit institutions' operations and foreign bank branches are detected, and bear responsibility before the Governor of the State Bank for such decisions.

5. When signs of law violations or risks threatening the safety of credit institutions' operations and foreign bank branches are discovered, require the Branch Governor of the State Bank (except where there is a Banking Inspectorate and Supervision Bureau) to conduct inspections on banking inspection objects assigned by the Governor of the State Bank; if the Branch Governor of the State Bank disagrees, have the authority to issue inspection decisions, report, and bear responsibility before the Governor of the State Bank for such decisions.

6. Examine and handle or propose the Governor of the State Bank to handle issues that the Head of Branch Banking Inspection and Supervision does not agree with the Branch Governor of the State Bank in performing their inspection and supervision functions and tasks.

7. Recommend the Governor of the State Bank to temporarily suspend the implementation of incorrect inspection and supervision decisions made by subordinate agencies and units.

8. Recommend the Governor of the State Bank to resolve issues related to inspection and supervision work; if recommendations on inspections are not accepted by the Governor of the State Bank, report to the Chief Inspector General.

9. Recommend competent state agencies to amend, supplement, or promulgate regulations in accordance with management requirements; recommend suspension or revocation of unlawful regulations discovered through inspection and supervision work.

10. Administer administrative penalties according to laws on administrative violation handling.

11. Recommend the Governor of the State Bank to consider responsibilities and handle individuals under the Governor's management who violate laws discovered through inspection and supervision or fail to implement conclusions, recommendations, and decisions on inspection and supervision; request heads of agencies and organizations to consider responsibilities and handle individuals under their management who violate laws discovered through inspection and supervision or fail to implement conclusions, recommendations, and decisions on inspection and supervision.

12. Recommend the Governor of the State Bank to decide and organize the implementation of measures to ensure the safety of banking operations for agencies, organizations, and individuals within the State Bank's management scope.

13. Report to the Governor of the State Bank and the Chief Inspector General on inspection work within the assigned responsibility scope; report to the Governor of the State Bank on other aspects of the Banking Inspection and Supervision Agency's work.

14. Conduct inspections and checks on the responsibility of heads of agencies and units under the State Bank's management in implementing policies, laws, assigned tasks, and authorities.

15. Decide on banking inspectors and other civil servants from the Banking Inspection and Supervision Agency conducting meetings and direct contacts with banking supervision objects.

16. Decide on the level of supervision for banking supervision objects, except in cases decided by the Governor of the State Bank.

17. Perform other duties and authorities as prescribed by law or assigned by the Governor of the State Bank.

Article 9. Inspection and Supervision of State Bank Branches

1. The Branch Banking Inspection and Supervision is a unit within the organizational structure of the Branch State Bank, assisting the Branch Governor of the State Bank in state management, conducting administrative inspections, banking inspections and supervision, handling complaints and reports, preventing corruption, money laundering, and terrorist financing against managed, inspected, and supervised objects within the branch area according to the division of labor, delegation, and authorization by the Governor of the State Bank and as prescribed by law.

The Branch Banking Inspection and Supervision is directly managed and directed by the Branch Governor of the State Bank and guided by the Banking Inspection and Supervision Agency in banking inspection and supervision work, complaint and report handling, anti-corruption, anti-money laundering, and anti-terrorist financing.

2. Inspection and Supervision of State Bank Branches have their own seals.

3. The Branch Banking Inspection and Supervision has a Head of Branch Banking Inspection and Supervision, Deputy Heads of Branch Banking Inspection and Supervision, banking inspectors, and other civil servants.

The Chief Inspector of the State Bank Branch shall be appointed, dismissed, or removed from office by the Governor of the State Bank upon the proposal of the Director of the State Bank Branch and the consensus opinion of the Chief Inspector of Banking Supervision. The Deputy Chief Inspector of the State Bank Branch shall be appointed, dismissed, or removed from office by the Director of the State Bank Branch upon the proposal of the Chief Inspector of the State Bank Branch.

4. The Governor of the State Bank shall specify in detail the tasks, powers, and organizational structure of the Inspectorate of the State Bank Branch in accordance with Article 10 of this Decree; decide to dissolve the Inspectorate of the State Bank Branch based on the requirements for performing management, inspection, and supervision tasks.

Article 10. Duties and powers of the Inspection and Supervision Branches of the State Bank of Vietnam

1. Develop annual inspection plans to submit to the Director of the State Bank Branch for approval; develop and implement inspection plans and work programs within the responsibility of the Inspectorate of the State Bank Branch.

2. Inspecting the implementation of policies, laws, and duties and powers of agencies, organizations, and individuals under the direct management of the State Bank of Vietnam Branch.

3. Inspecting banking entities within the scope of state management assigned to the State Bank of Vietnam Branch.

4. Inspecting other cases assigned by the Head of Banking Inspection and Supervision or the Director of the State Bank of Vietnam Branch.

5. Supervising banking entities within the scope of state management assigned to the State Bank of Vietnam Branch and as prescribed by law.

6. Apply measures within their authority or recommend competent authorities to implement measures to ensure safety and handle violations against inspected banking entities and supervised banking entities in accordance with the law.

7. Comply with the guidance of the Banking Inspection Authority regarding administrative inspection, banking inspection and supervision, complaint resolution, anti-corruption, anti-money laundering, and anti-terrorism financing activities.

8. Advise and assist the Director of the State Bank Branch in implementing certain licensing tasks stipulated in Article 30 of this Decree according to the delegation and authorization of the Governor of the State Bank.

9. Monitor, urge, and inspect the implementation of conclusions, recommendations, and decisions on inspection and supervision made by the Director of the State Bank Branch and the Inspectorate of the State Bank Branch.

10. Performing tasks related to complaint and accusation resolution as prescribed by law on complaints and accusations.

11. Performing tasks related to anti-corruption as prescribed by law on anti-corruption.

12. Advise and assist the Director of the State Bank Branch to compile and report on the results of inspection and supervision work, complaint resolution, anti-corruption activities within the jurisdiction of the State Bank Branch.

13. Implementing reports and providing information and materials as required by the Banking Inspection and Supervision Agency.

14. Organizing training sessions on inspection and supervision business for banking inspectors and other civil servants under the Inspection and Supervision Branches of the State Bank of Vietnam.

15. Summarizing and drawing lessons from inspection and supervision work within the scope of management assigned to the State Bank of Vietnam Branch.

16. Implement tasks related to anti-money laundering, anti-terrorism financing, and other duties and powers as prescribed by law or assigned by the Chief Inspector of Banking Supervision and the Director of the State Bank Branch.

Article 11. Tasks and Authorities of the Head of Inspection and Supervision at the State Bank Branch

1. Lead and direct inspection and supervision work within the jurisdiction of the State Bank Branch; lead the Inspectorate of the State Bank Branch to perform tasks and powers as prescribed in this Decree and other relevant laws.

2. Issue inspection decisions, establish inspection teams for banking entities under the jurisdiction of the State Bank Branch or at the request of the Chief Inspector of Banking Supervision and the Director of the State Bank Branch; perform the duties and powers of the decision-maker.

3. Decide to conduct inspections when signs of law violations are detected in inspected banking entities or when risks threatening the safety of operations of credit institutions and foreign bank branches under the jurisdiction are identified, and bear responsibility before the Director of the State Bank Branch for such decisions.

4. Recommend the Director of the State Bank Branch to resolve issues concerning inspection and supervision within their authority; report to the Chief Inspector of Banking Supervision if such recommendations are not accepted.

5. Decide on the conduct of meetings and direct contacts with banking supervision objects by banking inspectors and other civil servants under the Inspection and Supervision Department of the State Bank branch.

6. Recommend competent state agencies to amend, supplement, or issue regulations in line with management requirements; recommend suspension or revocation of unlawful regulations discovered through inspection and supervision.

7. Administer administrative penalties according to laws on administrative offenses handling, while reporting to the Director of the State Bank branch and the Head of Inspection and Supervision of the State Bank.

8. Recommend the Director of the State Bank Branch to consider responsibility and handle individuals under their management who violate the law or fail to implement inspection and supervision conclusions and decisions.

9. Recommend the Director of the State Bank Branch and competent state agencies to apply measures to ensure the safety of banking operations for organizations, entities, and individuals under the State Bank Branch's jurisdiction.

10. Propose to the Director of the State Bank Branch to request the Director of another State Bank Branch or the Chief Inspector of Banking Supervision to dispatch banking inspectors, other civil servants, and staff to join inspection teams; summon civil servants and staff from related agencies and units to participate in inspection activities.

11. Report to the Chief Inspector of Banking Supervision and the Director of the State Bank Branch on inspection and supervision work and other aspects of work within the jurisdiction of the Inspectorate of the State Bank Branch.

12. Perform other tasks and exercise other powers as prescribed by law or as delegated and authorized by the Head of Inspection and Supervision of the State Bank and the Director of the State Bank branch.

Chapter III

BANKING INSPECTORS AND

ASSOCIATE INSPECTORS OF THE BANKING INSPECTION AUTHORITY

Article 12. Banking Inspectors

1. A banking inspector is a civil servant belonging to the Banking Inspection Authority who is appointed to the position of inspector to carry out banking inspection and supervision tasks and other tasks of the Banking Inspection Authority.

2. The appointment and removal of banking inspectors shall be carried out in accordance with the provisions of the law.

3. Banking inspectors enjoy benefits and incentives, receive training and further education to improve their professional skills and ensure necessary conditions for inspection and supervision activities in accordance with the law.

4. In addition to the general standards for inspectors prescribed in the Law on Inspection and related legal documents, banking inspectors must have knowledge of state administration, legal knowledge in fields under the State Bank's jurisdiction, and other standards as prescribed by the Governor of the State Bank.

5. Banking inspectors shall have duties, powers, and responsibilities as prescribed by law.

Article 13. Bank Inspection Collaborators

1. Bank inspection collaborators are individuals not included in the establishment of the Inspection and Supervision of the Banking Sector, who are summoned by authorized persons to join inspection teams.

The summoning and utilization of bank inspection collaborators shall be carried out in accordance with the provisions of the law.

2. The authorized persons to summon bank inspection collaborators to join inspection teams as stipulated in Clause 1 of this Article include the Governor of the State Bank of Vietnam, the Chief Inspector and Supervisor of the Banking Sector, the Governor of the State Bank of Vietnam Branches, the Chief Inspector and Supervisor of the State Bank of Vietnam Branches, and the Director of the Banking Sector Inspection and Supervision Department.

3. Bank inspection collaborators must be civil servants or public officials with good political and moral qualities, a sense of responsibility, honesty, objectivity, fairness, and appropriate professional qualifications to meet the requirements for performing inspection tasks.

4. Bank inspection collaborators have duties, rights, and responsibilities as prescribed by law.

5. Bank inspection collaborators enjoy benefits and policies as prescribed by law and are provided with conditions to fulfill their tasks.

Chapter IV

ACTIVITIES OF INSPECTION AND SUPERVISION IN THE BANKING INDUSTRY

PART 1

INSPECTION ACTIVITIES

Article 14. Administrative Inspection

Administrative inspection shall be conducted in accordance with the provisions of the Law on Inspection, detailed regulations and guidance documents implementing the Law on Inspection, and other relevant legal documents.

Article 15. Content and Forms of Banking Inspection

1. Content of banking inspection;

a) Inspect compliance with laws on currency and banking, other relevant legal regulations, and implementation of regulations stipulated in licenses issued by the State Bank of Vietnam;

b) Examine and assess the level of risk, risk management capability, and financial situation of inspected banking entities; examine and assess potential risks, quality, and effectiveness of governance, operation systems, internal audit systems, internal control systems, and risk management systems of credit institutions, foreign bank branches, including the identification, measurement, monitoring, control, and mitigation of risks through the examination of factors affecting operational safety, risk governance quality and effectiveness, and risk resilience capabilities of credit institutions and foreign bank branches;

c) Recommendation to competent state agencies to amend, supplement, revoke, or promulgate regulatory legal documents to meet the requirements of state management over currency and banking;

d) Recommendation and requirement for the inspected banking entity to take measures to limit, reduce, and handle risks to ensure the safety of banking operations and prevent and stop actions leading to violations of the law;

e) Detection, prevention, and handling within the scope of authority; recommendation to competent state agencies to handle violations of the law.

2. Forms of banking inspection:

a) Planned inspections are conducted according to plans approved by authorized authorities;

b) Surprise inspections may be conducted when signs of law violations, risk occurrences, or threats to the safety and soundness of inspected banking entities are detected, or when required for handling complaints, accusations, anti-corruption, anti-money laundering, anti-terrorism financing purposes, or as assigned by competent state management authorities.

Article 16. Basis for issuing inspection decisions

The basis for issuing inspection decisions shall be carried out in accordance with Article 38 of the Inspection Law, Article 54 of the State Bank of Vietnam Law, and related legal normative documents.

Article 17. Construction and approval of annual inspection plans

1. By November 15 each year at the latest, the Inspection and Supervision Authority of the Banking Sector bases its annual inspection plan on the inspection program orientation, guidance from the General Inspector of the Government, and the management requirements of the State Bank of Vietnam, and submits it to the Governor of the State Bank of Vietnam for approval. The Governor of the State Bank of Vietnam is responsible for reviewing and approving the annual inspection plan of the Inspection and Supervision of the Banking Sector by November 25 each year at the latest.

2. By December 10 each year at the latest, the Inspection and Supervision Authority of the State Bank of Vietnam Branches bases its annual inspection plan on the annual inspection plan of the Inspection and Supervision of the Banking Sector and the management requirements of the State Bank of Vietnam Branches, and submits it to the Governor of the State Bank of Vietnam Branches for approval and reports to the Inspection and Supervision Authority of the Banking Sector. The Governor of the State Bank of Vietnam Branches is responsible for reviewing and approving the annual inspection plan of the Inspection and Supervision Authority of the State Bank of Vietnam Branches by December 20 each year at the latest.

3. In cases where adjustments to the annual inspection plan of the Inspection and Supervision of the Banking Sector are necessary, the Inspection and Supervision Authority of the Banking Sector shall submit a written request to the Governor of the State Bank of Vietnam for approval of the adjustment to the inspection plan. Within fifteen days from the date of receipt of the written request from the Inspection and Supervision Authority of the Banking Sector, the Governor of the State Bank of Vietnam is responsible for reviewing and deciding.

In cases where adjustments to the annual inspection plan of the Inspection and Supervision Authority of the State Bank of Vietnam Branches are necessary, the Inspection and Supervision Authority of the State Bank of Vietnam Branches shall submit a written request to the Governor of the State Bank of Vietnam Branches for approval of the adjustment to the inspection plan. Within fifteen days from the date of receipt of the written request from the Inspection and Supervision Authority of the State Bank of Vietnam Branches, the Governor of the State Bank of Vietnam Branches is responsible for reviewing and deciding. The Inspection and Supervision Authority of the State Bank of Vietnam Branches shall report to the Inspection and Supervision Authority of the Banking Sector on the contents of the adjusted annual inspection plan of the Inspection and Supervision Authority of the State Bank of Vietnam Branches that have been approved by the Governor of the State Bank of Vietnam Branches.

4. If the adjustment to the annual inspection plan of the Governor of the State Bank of Vietnam Branches affects the inspection plan already approved by the Governor of the State Bank of Vietnam, then the Governor of the State Bank of Vietnam Branches must report to the Chief Inspector and Supervisor of the Banking Sector for approval before approving the adjustment to the annual inspection plan.

5. The annual inspection plan under this Article shall be sent to the Inspection and Supervision Authority of the Banking Sector, inspected banking entities, and related agencies and organizations.

Article 18. Authority to issue inspection decisions and re-inspection

1. The Chief Inspector of Banking Inspection, the Director of the Banking Inspection Department, the Chief Inspector of Branches of the State Bank of Vietnam shall issue inspection decisions and establish inspection teams. When deemed necessary, the Governor of the State Bank of Vietnam, the Director of Branches of the State Bank of Vietnam (where there is no Banking Inspection Department) may issue inspection decisions and establish inspection teams.

2. The Chief Inspector of Banking Inspection shall decide on re-inspection of cases that have been concluded by the Director of the Banking Inspection Department, the Chief Inspector of Branches of the State Bank of Vietnam but where signs of violation of laws have been discovered; cases that have been concluded by the Chairman of the People's Committee at provincial level, the Director of Branches of the State Bank of Vietnam but where signs of violation of laws have been discovered upon assignment by the Governor of the State Bank of Vietnam.

Article 19. Inspection Period

1. The time limit for conducting an inspection by the Banking Inspection Sector shall not exceed 45 days; in complex cases, it may be extended up to 70 days. In cases requiring extension of the inspection period beyond 70 days, the Banking Inspection Sector shall report to the Governor of the State Bank of Vietnam for submission to the Prime Minister for decision.

2. The inspection period begins on the day the inspection decision is published and ends on the day the inspection concludes at the inspected location.

3. The extension of the inspection period as stipulated in Clause 1 of this Article shall be decided by the person issuing the inspection decision, with the case of extension beyond 70 days being based on the decision of the Prime Minister.

Article 20. Reporting Inspection Results and Inspection Conclusions for Credit Institutions and Foreign Bank Branches

1. Within the latest 25 days from the end date of the inspection of credit institutions, foreign bank branches, the Head of the inspection team must submit a report on the inspection results, except when the content of the inspection conclusion requires waiting for a specialized conclusion from the competent authority.

2. Based on the report on the inspection results of credit institutions, foreign bank branches, and the explanations provided by the inspected banking entity (if any), within the latest 25 days from receiving the inspection result report, the person issuing the inspection decision must sign and issue the inspection conclusion, except when the content of the inspection conclusion requires waiting for a specialized conclusion from the competent authority.

3. The Governor of the State Bank of Vietnam shall provide guidance on the content of the inspection result report, the content of the inspection conclusion, and post-inspection handling for inspections of credit institutions and foreign bank branches.

Article 21. Inspection related to anti-money laundering, deposit insurance, and other areas under the management of the State Bank of Vietnam

1. Anti-money laundering inspections shall be carried out in accordance with laws on anti-money laundering and laws on inspection.

2. Deposit insurance inspections shall be carried out in accordance with laws on deposit insurance and laws on inspection.

3. Inspections of other areas under the State Bank of Vietnam’s management shall be conducted in accordance with relevant laws and laws on inspection.

Article 22. Sending Inspection Conclusions and Publicizing Inspection Conclusions

1. Within 15 days from signing the inspection conclusion, the inspection conclusion must be sent as follows:

a) For inspections conducted by the Banking Inspection Authority, the inspection conclusion must be sent to the Governor of the State Bank of Vietnam, the General Inspector of the Government, the Chief Inspector of Banking Inspection, the inspected banking entity, the head of the supervising authority directly above the inspected banking entity (if any), and relevant agencies, organizations, and individuals.

b) For inspections conducted by Branches of the State Bank of Vietnam’s Banking Inspection, the inspection conclusion must be sent to the Banking Inspection Authority, the Director of Branches of the State Bank of Vietnam, the inspected banking entity, the head of the supervising authority directly above the inspected banking entity (if any), and relevant agencies, organizations, and individuals.

2. The inspection conclusion must be made public, except for contents in the inspection conclusion that are state secrets and sensitive matters whose publication could affect the operational safety of the inspected banking entity.

3. The person signing the inspection conclusion decides on the content of the inspection conclusion to be made public and bears responsibility for the public disclosure of the inspection conclusion, reporting to the head of the supervising authority at the same level for consideration and decision if necessary.

4. The method of publicizing the inspection conclusion shall be carried out in accordance with the law.

PART 2

BANK SUPERVISION ACTIVITIES

Article 23. Content and Form of Bank Supervision

1. Content of bank supervision:

a) Collecting, compiling, and processing documents, information, and data of banking supervision entities according to supervision requirements; combining macro-level supervision of the entire system of credit institutions with micro-level supervision of each individual credit institution and foreign bank branch;

b) Reviewing and monitoring compliance with regulations on banking operation safety and other relevant laws; implementation of inspection conclusions, recommendations, and decisions on handling inspections, and warnings and recommendations on banking supervision;

c) Regularly analyzing and evaluating the financial situation, operations, governance, management, and risk levels of credit institutions and foreign bank branches, systemic risks; annually ranking credit institutions according to their safety levels;

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

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

2. Forms of bank supervision:

a) Banking supervision is carried out continuously through macro-level safety supervision, micro-level safety supervision, and using methods, standards, tools, information systems, and reports prescribed by the Governor of the State Bank of Vietnam;

b) Micro-level safety supervision is a form of supervision targeting individual supervised entities based on a ranking and evaluation system of banking supervision entities; information and reporting systems serving micro-level safety supervision; safety standards; systems of procedures, tools, standards, and financial and operational analysis skills; evaluating, supervising, and warning about various types of risks and legal violations of supervised entities;

c) Macro-level safety supervision is a form of supervision covering the entire system of credit institutions and foreign bank branches based on indicators reflecting the financial health and operational safety; information and reporting systems serving macro-level safety analysis and supervision; systems of methods, tools, procedures for analyzing, supervising, and warning about the safety and stability of the system of credit institutions and foreign bank branches; regular or ad hoc reports on the safety and stability of the system.

Article 24. Coordination between Banking Inspection and Banking Supervision

1. The results of banking supervision are one of the bases for building annual inspection plans and determining the scope, objects, and content of banking inspections.

2. Based on the results of banking supervision, authorized persons may issue decisions to inspect banking objects.

3. The results of inspections are one of the bases for implementing appropriate banking supervision activities.

Article 25. Measures for Banking Supervision

Depending on the level of safety, soundness, and violations of law of the banking supervision object, the Banking Inspection and Supervision Authority shall apply the following measures:

1. Recommend the Governor of the State Bank of Vietnam or the person authorized by the Governor of the State Bank of Vietnam to apply the measures for handling as prescribed in Article 59 of the Law on the State Bank of Vietnam.

2. Recommend the competent authority to place credit institutions under special control, and apply restructuring measures as prescribed by law.

3. Require the banking supervision object to comply with reporting requirements as requested by the Banking Inspection and Supervision Authority.

4. Recommend the Governor of the State Bank of Vietnam or the person authorized by the Governor of the State Bank of Vietnam to establish a supervisory team to monitor and oversee the supervised banking entity.

5. Recommend the Governor of the State Bank of Vietnam or the person authorized by the Governor of the State Bank of Vietnam to suspend, terminate actions that violate the law and activities causing risks to the safe operation of the supervised banking entity.

6. Recommend the Governor of the State Bank of Vietnam or the person authorized by the Governor of the State Bank of Vietnam to apply measures to control transactions with potential risks and limit growth, expansion, and activities affecting the safe operation of the supervised banking entity.

7. Recommend the competent authority to suspend, temporarily suspend, remove from office the managers and executives, and handle individuals who have violated the law or posed a risk to the safe operation of the supervised banking entity; recommend the competent authority not to appoint, reappoint, remove from office, dismiss, terminate labor contracts, or handle individuals who have violated the law and posed a risk to the safe operation of the supervised banking entity through other means.

8. Other measures as prescribed by law.

Article 26. Basis for implementing banking supervision

1. Legal regulations governing the banking supervision object.

2. Charter and internal policies of the banking supervision object.

3. Financial reports, business reports, periodic activity reports.

4. Statistical reports.

5. Results of inspections, audits.

6. Other relevant information and documents as prescribed by law.

Article 27. Rights and Obligations of the Banking Inspection and Supervision Authority in Banking Supervision Activities

1. Require the managers, executives, and employees of the supervised banking entity to work with the Banking Inspection and Supervision and provide relevant information and materials for banking supervision; review and assess the documents, information, and data provided by the supervised banking entity.

2. Review and assess the activities of the supervised banking entity, including domestic and foreign operations, activities of parent companies, subsidiaries, associated companies, and affiliated units of the supervised banking entity that affect the supervised banking entity.

3. Warn and advise on risks, operational safety, and legal violations of the banking supervision object.

4. Verify information and documents, and conduct work and exchanges with related units and individuals of the banking supervision object.

5. Require the supervised banking entity to report and provide periodic or ad hoc information and materials for supervision; require parent companies, subsidiaries, associated companies, and affiliated units of the supervised banking entity and related organizations and individuals to provide information and materials to the Banking Inspection and Supervision for the purpose of supervision.

6. When necessary, require the supervised banking entity to conduct independent audits as stipulated in Article 5 of this Decree.

7. Require the supervised banking entity or recommend the Governor of the State Bank of Vietnam and the competent state authorities to apply preventive, blocking, and handling measures for risks and violations by the supervised banking entity, amend, supplement, suspend implementation, or revoke provisions contrary to the law or affecting the safe operation of the banking sector.

8. Handle administrative violations by the supervised banking entity that violate the law according to the provisions of the law; compel the supervised banking entity to cease actions violating the law or business transactions posing risks of loss or damage to the supervised banking entity.

9. Apply the measures for banking supervision as prescribed in Article 25 of this Decree.

10. Manage and use information and documents serving bank supervision in accordance with the provisions of the law and agreements with the provider.

11. Apply appropriate supervisory measures commensurate with the level of risk, operational safety, and violations of the law by the supervised banking entities.

12. Conduct inspections and examinations of supervised banking entities when signs of law violations, risks, and lack of operational safety are detected.

13. Take the lead and coordinate with relevant agencies, organizations, and units to implement macro-prudential supervision, limit systemic risks, ensure operational safety of banks and credit institutions, and financial stability.

14. Other rights and obligations as prescribed by law.

Article 28. Rights and Obligations of Supervised Banking Entities in the Process of Bank Supervision

1. Perform the rights and obligations of supervised banking entities as stipulated in Article 57 of the Law on the State Bank of Vietnam and Article 160 of the Law on Credit Institutions.

2. Receive and implement recommendations and warnings from the Banking Inspection and Supervision regarding risks and threats to the safe operation and violation of the law; implement measures to prevent, control, reduce, and handle risks and threats to the safe operation and violation of the law.

3. Implement recommendations and decisions for handling issued by the Banking Inspection and Supervision.

4. Other rights and obligations as prescribed by law.

PART 3

POLICY DEVELOPMENT ACTIVITIES,

LEGAL REGULATORY DOCUMENTS; LICENSE ISSUANCE

Article 29. Building policies and regulatory legal documents

The Banking Inspection and Supervision Authority shall assist the Governor of the State Bank of Vietnam in drafting and promulgating policies and regulatory legal documents within its scope of management responsibility regarding organization, operation, operational safety of banks, banking inspection and supervision, deposit insurance, and anti-money laundering and anti-terrorism financing activities, either directly or by submitting them to the competent authority for promulgation.

Article 30. License Issuance

1. The Banking Inspection and Supervision Authority shall assist the Governor of the State Bank of Vietnam and the Branch Banking Inspection and Supervision Authorities shall assist the Branch Governors of the State Bank of Vietnam (in cases where the Branch Governors have been delegated or authorized by the Governor of the State Bank of Vietnam) in performing the following tasks:

a) Issuing, amending, supplementing, and revoking licenses for the establishment and operation of credit institutions, foreign bank branch establishments, representative offices of foreign credit institutions, other foreign organizations with banking activities, and other types of banking operation licenses;

b) Issue and revoke licenses for providing credit information services to organizations;

c) Confirming the registration of the Charter of credit institutions;

d) Approving the purchase, sale, division, merger, consolidation, conversion of legal form, dissolution of credit institutions, foreign bank branches; approving the list of candidates for election or appointment as members of the Board of Members, members of the Board of Management, members of the Supervisory Board, and General Managers (Directors) of credit institutions, except for personnel of wholly state-owned commercial banks appointed or recommended by state shareholders holding more than 50% of the charter capital of state-owned commercial joint-stock banks; approving the appointment of candidates as General Managers (Directors) of foreign bank branches; approving the establishment, termination, and dissolution of domestic branches, representative offices, and non-profit units, as well as overseas branches, representative offices, and other forms of commercial presence of credit institutions; approving the establishment and acquisition of subsidiaries and associated companies of credit institutions; approving capital contributions and share purchases by credit institutions; approving other issues concerning governance, organization, finance, and operations as required by law to be approved or permitted by the State Bank of Vietnam;

đ) Handling issues related to the organization, management, and operation of credit institutions and foreign bank branches to ensure that these entities operate soundly, safely, and in accordance with the provisions of the law;

e) Rights and responsibilities of state representatives owning shares in credit institutions with state capital according to the provisions of the law;

g) Building and organizing the implementation of plans and schemes to consolidate, rectify, and restructure credit institutions and foreign bank branches.

2. The Banking Inspection and Supervision Authority decides on certain matters specified in Clause 1 of this Article according to the delegation and empowerment of the Governor of the State Bank of Vietnam.

Chapter

RESPONSIBILITIES OF AUTHORITIES, ORGANIZATIONS, AND INDIVIDUALS IN

ACTIVITIES OF INSPECTION AND SUPERVISION IN THE BANKING INDUSTRY

Article 31. Responsibilities of the Governor of the State Bank of Vietnam

1. Specific regulations on the relationship between authorities and units:

a) The banking inspection and supervision agency with the State Bank of Vietnam branch's inspection and supervision agency;

b) The banking inspection and supervision agency with the State Bank of Vietnam branch;

c) The Banking Inspection and Supervision Bureau with the State Bank of Vietnam branch in the locality;

d) Between State Bank of Vietnam branch inspection and supervision authorities with each other.

2. Leading and directing the activities of the banking inspection and supervision within the management scope of the State Bank of Vietnam.

3. Approving the annual inspection plan of the Banking Inspection and Supervision sector.

4. Handling and directing timely handling of conclusions and recommendations of the banking inspection and supervision.

5. Prescribing information and reporting systems regarding banking inspection and supervision work, complaint resolution, anti-corruption measures for relevant agencies, organizations, and individuals.

6. Providing specific guidelines for banking operation safety standards, inspection and supervision methods, procedures, and processes.

7. Organizing, directing, ensuring funding, equipping material infrastructure, technical equipment, uniforms, and other necessary conditions for the banking inspection and supervision.

8. Other responsibilities as prescribed by law.

Article 32. Responsibilities of the Governor of the State Bank Branch

1. Responsibilities of the Governor of the State Bank of Vietnam branch where there is no Banking Inspection and Supervision Bureau:

a) Leading and directing the activities of the State Bank of Vietnam branch's Inspection and Supervision Authority within the scope of management of the State Bank of Vietnam branch;

b) Approving the annual inspection plan of the State Bank of Vietnam branch's Inspection and Supervision Authority;

c) Promptly addressing conclusions and recommendations of the State Bank of Vietnam branch's Inspection and Supervision Authority;

d) Organizing, directing, ensuring funding, equipping facilities, technical equipment, uniforms, and other necessary conditions for the State Bank of Vietnam branch's Inspection and Supervision Authority;

đ) Other responsibilities as prescribed by law and the State Bank of Vietnam.

2. Responsibilities of the Governor of the State Bank of Vietnam branch where there is a Banking Inspection and Supervision Bureau:

a) Within the scope of assigned duties and powers, the Governor of the State Bank of Vietnam branch shall be responsible for coordinating with the Banking Inspection and Supervision Authority and the Banking Inspection and Supervision Bureau in inspection, supervision, complaint resolution, anti-corruption work;

b) Serving as the point of contact of the State Bank of Vietnam in the locality for implementing reporting tasks, relations with local party committees and governments, handling monetary and banking complaints, and other tasks assigned by the Governor of the State Bank of Vietnam;

c) Other responsibilities as prescribed by law and the State Bank of Vietnam.

Article 33. Responsibilities for Coordination between Banking Inspection and Supervision and Relevant Agencies and Organizations in Banking Inspection and Supervision Activities

1. Implementing cooperation in work as stipulated in Article 11 of the Inspection Law.

2. Organizations, individuals provided with information, documents, and results of banking inspection and supervision by the Banking Inspection and Supervision sector must properly manage and use such information, documents, and results for their intended purposes and in accordance with the law; they may not use such information, documents, and results of banking inspection and supervision to negatively impact the stability and safety of banking operations and credit institutions, foreign bank branches.

3. In cases where it is necessary to ensure the safety of credit institutions' operations, state assets, and people's deposits, the banking inspection and supervision may request:

a) Competent state authorities conducting inspections or cooperating with the Banking Inspection and Supervision sector to inspect subsidiaries and associated companies of credit institutions according to the content of the Banking Inspection and Supervision sector;

b) Competent state authorities conducting supervision or cooperating with the Banking Inspection and Supervision sector to supervise subsidiaries and associated companies of credit institutions according to the content of the Banking Inspection and Supervision sector;

c) Competent state authorities managing, inspecting, and supervising the implementation of inspections and supervision; providing complete and timely results of inspections and supervision of subsidiaries and associated companies of credit institutions to the Banking Inspection and Supervision sector upon request.

4. The banking inspection and supervision shall coordinate with foreign competent authorities for banking inspection and supervision as stipulated in Article 61 of the State Bank of Vietnam Law.

5. Foreign inspections:

a) The competent authority for inspecting and supervising foreign banks, parent credit institutions, and foreign credit institutions shall inspect and examine the operations of foreign bank branches, joint venture credit institutions, wholly foreign-owned credit institutions, and other foreign organizations conducting banking activities in Vietnam. Prior to inspection and examination, the competent authority for inspecting and supervising foreign banks, parent credit institutions, and foreign credit institutions must notify the State Bank of Vietnam (the Inspection and Supervision Authority) in writing about the content, expected start and end dates of the inspection and examination;

b) Within sixty days from the completion of the inspection and examination, the competent authority for inspecting and supervising foreign banks, parent credit institutions, and foreign credit institutions must submit a report on the results of the inspection and examination to the State Bank of Vietnam;

During the inspection and examination process, if violations of laws or unusual activities that may affect the safety of operations of foreign bank branches, joint venture credit institutions, wholly foreign-owned credit institutions, and other foreign organizations conducting banking activities in Vietnam are discovered, the competent authority for inspecting and supervising foreign banks, parent credit institutions, and foreign credit institutions must immediately notify the State Bank of Vietnam (the Inspection and Supervision Authority) in writing and recommend measures for handling (if any);

6. In cases where necessary, the Banking Inspection and Supervision Authority shall conduct inspections and examinations of subsidiaries and overseas units of credit institutions according to the provisions of this Decree and relevant laws, while complying with the laws of the country where the inspection and examination takes place and agreements signed with the competent authority for inspecting and supervising foreign banks;

7. The provision, exchange of information, materials, and inspection and supervision results between the Banking Inspection and Supervision Authority and the competent authority for inspecting and supervising foreign banks shall comply with Vietnamese law and agreements signed with the competent authority for inspecting and supervising foreign banks;

Article 34. Responsibilities, rights, and obligations of agencies, organizations, and individuals that are the objects of banking inspections and supervisions, and responsibilities of related agencies, organizations, and individuals

1. The inspected banking entities and supervised banking entities have responsibilities, rights, and obligations as prescribed by the Law on Inspection, the Law on the State Bank of Vietnam, the Law on Credit Institutions, Article 5 and Article 28 of this Decree, and other relevant legal provisions;

2. Organizations, individuals having information and materials related to banking inspection and supervision content must provide them fully and promptly upon request of the Banking Inspection and Supervision Authority and in accordance with the provisions of this Decree and other relevant legal provisions;

Chapter VI

IMPLEMENTING PROVISIONS

Article 35. Effective Date

This Decree takes effect from June 1, 2014, and replaces Government Decree No. 91/1999/NĐ-CP dated September 4, 1999, on the organization and operation of banking inspections.

Article 36. Responsibility for Implementation

1. The Governor of the State Bank of Vietnam is responsible for guiding the implementation of this Decree.

2. Ministers, Heads of ministerial-level agencies, Heads of agencies under the Government, Chairpersons of provincial and centrally-administered city People's Committees, and the Head of the Banking Inspection and Supervision Authority are responsible for implementing this Decree./.