Circular No. 28/2016/TT-NHNN amending and supplementing certain provisions of Circular No. 21/2014/TT-NHNN dated August 14, 2014, issued by the Governor of the State Bank of Vietnam guiding the scope of foreign exchange activities, conditions, procedures, and formalities for approving foreign exchange activities of credit institutions and branches of foreign banks.

CIRCULAR

Amending and supplementing certain Articles of Circular No. 21/2014/TT-NHNN dated August 14, 2014 of the Governor of the State Bank of Vietnam guiding the scope of foreign exchange activities, conditions, procedures, and approval formalities for foreign exchange activities of credit institutions and branches of foreign banks

guiding the scope of foreign exchange activities, conditions, procedures, and formalities for approving foreign exchange activities of credit institutions and foreign bank branches pursuant to Circular No. 249/2014/ND-CP dated August 2014 of the Governor of the State Bank of Vietnam

regarding the scope of foreign exchange activities, conditions, procedures, and formalities for approving foreign exchange activities of credit institutions and foreign bank branches

foreign exchange activities of credit institutions and overseas bank branches

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Pursuant to the Law on the State Bank of Vietnam No. 46/2010/QH12 dated June 16, 2010;

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

Pursuant to Decree-Law on Foreign Exchange No. 28/2005/PL-UBTVQH11 dated December 13, 2005 and Decree-Law No. 06/2013/UBTVQH13 dated March 18, 2013 amending and supplementing certain Articles of the Decree-Law on Foreign Exchange;

Pursuant to Decree No. 156/2013/NĐ-CP dated November 11, 2013 of the Government stipulating the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;

At the proposal of the Director of the Department of Foreign Exchange Management;

The Governor of the State Bank of Vietnam hereby promulgates this Circular amending and supplementing certain Articles of Circular No. 21/2014/TT-NHNN dated August 14, 2014 guiding the scope of foreign exchange activities, conditions, procedures, and approval formalities for foreign exchange activities of credit institutions and branches of foreign banks.

Article 1. Amending and supplementing certain Articles of Circular No. 21/2014/TT-NHNN dated August 14, 2014 guiding the scope of foreign exchange activities, conditions, procedures, and approval formalities for foreign exchange activities of credit institutions and branches of foreign banks (hereinafter referred to as Circular 21/2014/TT-NHNN):

1. Supplement Clause 5 to Article 1 as follows:

"5. Indirect investment abroad activities of credit institutions and branches of foreign banks shall be carried out in accordance with the laws on indirect investment abroad."

2. Clause 2 of Article 3 is amended and supplemented as follows:

"2. Foreign exchange activities of credit institutions permitted are foreign exchange trading and foreign exchange service provision activities of such credit institutions with residents and non-residents in current transactions, capital transactions, and other transactions related to foreign exchange including basic foreign exchange activities on the domestic market, basic foreign exchange activities on the international market, and other foreign exchange activities on both domestic and international markets."

3. Clause 5 of Article 3 is abolished.

4. Article 4 is amended and supplemented as follows:

“Article 4. Principles of foreign exchange activities

1. For basic foreign exchange activities:

a) After being approved by the State Bank of Vietnam (hereinafter referred to as the State Bank) through issuing new/renewed Licenses for establishment and operation or Decision to amend and supplement Licenses containing the content of conducting foreign exchange business and providing foreign exchange services on the domestic market and/or the international market within the scope prescribed by the State Bank, commercial banks, cooperative banks, comprehensive finance companies, factoring companies, consumer finance companies, leasing companies, and branches of foreign banks may carry out all basic foreign exchange activities on the domestic market and/or the international market within the scope stipulated in this Circular;

b) For derivative activities related to foreign exchange and other foreign exchange activities not covered by the activities specified in point a of Clause 1 and Clause 2 of this Article:

(i) Commercial banks and branches of foreign banks permitted may conduct derivative transactions related to foreign exchange without having to go through additional approval procedures when the State Bank issues guidance documents and such commercial banks and branches of foreign banks have been allowed by the State Bank to conduct derivative transactions in Vietnamese dong;

(ii) Commercial banks and branches of foreign banks permitted may conduct other foreign exchange activities without having to go through additional approval procedures when the State Bank issues guidance documents for such foreign exchange activities;

c) Policy banks may carry out basic foreign exchange activities in the domestic market and international market according to the provisions of this Circular.

2. For other foreign exchange activities:

a) After being approved in writing by the State Bank to implement for a specific period for each product or group of specific products (hereinafter referred to as time-limited approval document), permitted credit institutions may carry out other foreign exchange activities on the domestic market and international market;

b) When the implementation period of foreign exchange activities under the time-limited approval document expires, permitted credit institutions may continue to carry out other foreign exchange activities on the domestic market and international market after the State Bank reviews and extends the time-limited approval document. Each extension period shall not exceed the permitted implementation period specified in the time-limited approval document.

3. During the implementation of foreign exchange activities on the international market, permitted credit institutions shall regularly review, monitor, and evaluate foreign partners to make appropriate adjustments to ensure the safety of their permitted foreign exchange activities.

4. When implementing foreign exchange activities, permitted credit institutions must ensure compliance with the provisions of this Circular and other relevant laws for each foreign exchange activity. In particular, policy banks must ensure compliance with the regulations of the Government, Prime Minister, and related laws.

5. Amend Clause 2 of Article 5; supplement Clauses 15, 16, 17, and 18 to Article 5 as follows:

"2. Conducting foreign currency forward purchase and sale transactions, foreign currency swap transactions, and foreign currency option purchase and sale transactions."

"15. Opening settlement accounts for foreign credit institutions."

16. Accepting foreign currency deposits from foreign credit institutions.

17. Conducting interest rate derivative transactions and other derivatives related to foreign exchange on the domestic market according to the principle stipulated at point b(i) Clause 1 Article 4 of this Circular.

18. Conducting other foreign exchange activities on the domestic market outside those specified from Clause 1 to Clause 17 of this Article according to the principle stipulated at point b(ii) Clause 1 Article 4 of this Circular.

6. Article 6 is amended and supplemented as follows:

Article 6. Scope of basic foreign exchange activities on the international market of commercial banks

1. International payments and transfers.

2. Purchase and sale of spot foreign currencies on the international market.

3. Conducting foreign currency forward purchase and sale transactions, foreign currency swap transactions with foreign financial institutions for the purpose of mitigating risks associated with forward foreign currency purchase and sale contracts and swap transactions already concluded and implemented with domestic customers.

4. International documentary collection and foreign currency guarantee.

5. Lend abroad to non-bank customers.

6. Deposit foreign currencies overseas (including term deposits and non-term deposits).

7. Conducting interest rate derivative transactions and other derivatives related to foreign exchange on the international market according to the principle stipulated at point b(i) Clause 1 Article 4 of this Circular.

8. Carry out other foreign exchange activities on the international market outside those specified from Clause 1 to Clause 7 of this Article in accordance with the principles set forth at point b(ii) of Clause 1 of Article 4 of this Circular.

7. Article 7 is amended and supplemented as follows:

“Article 7. Other foreign exchange activities on the domestic market and the international market

1. The State Bank shall consider and permit commercial banks to temporarily carry out other foreign exchange activities on the domestic market and the international market for specific products or product groups, including other foreign exchange activities on the domestic market and the international market outside those specified in Articles 5 and 6 of this Circular.

2. After the expiration of the permitted period for carrying out other foreign exchange activities on the domestic market and the international market as stipulated in the approved document with a time limit, if there is a need to continue such activities, based on meeting the conditions and submitting the documents as required under Clause 2 of Article 10 and Clause 5 of Article 11 of this Circular and relevant regulations of the State Bank, commercial banks may be considered and permitted by the State Bank to carry out these foreign exchange activities in the document extending the approved document with a time limit.

8. Article 8 is amended and supplemented as follows:

“Article 8. Conditions for approving basic foreign exchange activities on the domestic market

The conditions for commercial banks to be considered and approved to conduct basic foreign exchange activities on domestic markets include:

1. Having an information technology system that ensures compliance with requirements for management, risk management, safety, and security for foreign exchange activities, including equipment and devices serving foreign exchange activities, data storage devices, disaster recovery plans, and software supporting the implementation of foreign exchange-related transactions.

2. Having internal regulations on risk management related to proposed foreign exchange activities.”

9. Article 9 is amended and supplemented as follows:

“Article 9. Conditions for approving basic foreign exchange activities on the international market

The conditions for commercial banks to be considered and approved to conduct basic foreign exchange activities on international markets include:

1. Meeting the conditions stipulated in Article 8 of this Circular.

2. Having internal regulations on partner selection standards and transaction limits for foreign partners; among which, foreign partners that credit institutions are allowed to have deposit transactions (non-settlement deposits) must be foreign financial organizations with credit ratings of Baa3/P-3 or higher according to Moody's Investor Service assessment, or BBB-/A-3 or higher according to Standard & Poor's assessment, or BBB-/F3 or higher according to Fitch Ratings assessment.

3. The condition stipulated in Clause 2 of this Article does not apply to cases where commercial banks deposit money (non-settlement deposits) at branches or subsidiaries of those banks abroad.

The total balance of deposits of commercial banks at all branches and subsidiaries of those banks abroad shall not exceed 10% of the charter capital of the commercial bank.”

10. Article 10 is amended and supplemented as follows:

"Article 10. Conditions for approving other foreign exchange activities on domestic and international markets

1. In each period, based on the objectives of monetary policy and foreign exchange management policy, commercial banks may be considered and permitted to temporarily carry out other foreign exchange activities on the domestic market and the international market when meeting the following conditions:

a) Already permitted to carry out basic foreign exchange activities on the domestic market or on the international market;

b) Having internal regulations on business procedures with risk management measures for each proposed foreign exchange activity;

c) Having internal regulations on partner selection standards and appropriate transaction limits for each foreign partner;

d) Complying with legal provisions on safety ratio requirements in banking operations in the year immediately preceding the submission of the application for permission and up to the date of submission of the application for permission;

đ) Not being administratively penalized for foreign exchange activities in the year immediately preceding the submission of the application for permission and up to the date of submission of the application for permission;

e) Banking business operations being profitable in the year immediately preceding the submission of the application for permission according to audited financial reports.

2. Conditions for commercial banks to be considered and permitted to extend the implementation of other foreign exchange activities on domestic and international markets include:

a) Already permitted by the State Bank to carry out temporarily;

b) Not being administratively penalized for foreign exchange activities during the implementation of temporary foreign exchange activities;

c) Complying with legal provisions on safety ratio requirements in banking operations in the year immediately preceding the submission of the extension application and up to the date of submission of the extension application;

d) Banking business operations being profitable in the year immediately preceding the submission of the extension application according to audited financial reports.”

11. Article 11 is amended and supplemented as follows:

"Article 11. Documents for requesting approval of foreign exchange activities

1. Principles for establishing and submitting the application dossier for approval of foreign exchange activities (hereinafter referred to as the dossier):

a) The dossier must be established in Vietnamese. In cases where parts of the dossier are translated from a foreign language, commercial banks may choose to submit certified copies of the translated documents according to Vietnamese laws on certification or documents with confirmation by the legal representative of the commercial bank;

b) All parts of the dossier, including the application for permission to conduct foreign exchange activities, internal regulations, and reports, must be signed by the legal representative of the commercial bank;

c) The dossier shall be submitted to the State Bank either directly or through postal service;

d) For parts of the dossier that are copies, commercial banks shall submit certified copies confirmed by the legal representative of the commercial bank regarding the accuracy of the copy compared to the original.

2. Basic documents for requesting approval of foreign exchange activities on the domestic market include:

a) An application for approval of foreign exchange activities according to the form attached as Appendix 1 to this Circular;

b) Internal regulations on risk management related to foreign exchange activities, including at least the following contents: identification of types of risks, risk management plans;

c) A report describing the information technology system, technical solutions applied, and procedures for handling foreign exchange activities within the information technology system as stipulated in Appendix 3 attached to this Circular.

3. Basic documents for requesting approval of foreign exchange activities on the international market include:

a) Documents as prescribed in Clause 2 of this Article;

b) Internal regulations on partner organization selection criteria, transaction limits for partners, which must include provisions on periodic review and reassessment of partners when there are unexpected events affecting their credit ratings.

4. The dossier for requesting permission to carry out other foreign exchange activities domestically and internationally for a limited period includes:

a) An application according to the form attached as Appendix 1 to this Circular, specifying the product or group of products proposed to be carried out and the time frame for implementation;

b) A report on compliance with legal provisions on safety ratios in banking operations in the year immediately preceding the submission of the application for limited-term permission and up to the date of submission;

c) Internal regulations on business procedures with risk management measures appropriate to each proposed foreign exchange activity, including at least the following contents: identification of types of risks, management strategies for these risks;

d) Internal regulations on partner organization selection criteria, transaction limits for partners, which must include provisions on periodic review and reassessment of partners when there are unexpected events affecting their credit ratings;

đ) A report on domestic foreign exchange activities in the year immediately preceding the submission of the application for permission and up to the date of submission for limited-term permission, including a commitment not to be subject to administrative penalties for foreign exchange activities;

e) Certified copies of audited financial statements for the year immediately preceding the requested limited-term permission.

5. The dossier for requesting extension of permission to carry out other foreign exchange activities domestically and internationally:

a) An application according to the form attached as Appendix 1 to this Circular, explaining the necessity for extension and committing not to be subject to administrative penalties for foreign exchange activities during the implementation period;

b) A report evaluating the results of the time-limited foreign exchange activities already implemented;

c) Certified copies of audited financial statements for the year immediately preceding the requested extension;

d) A report on compliance with legal provisions on safety ratios in banking operations in the year immediately preceding the submission of the extension request and up to the date of submission.”

12. Article 12 is amended and supplemented as follows:

"Article 12. Procedures and formalities for approving and extending foreign exchange activities

1. When there is a need to carry out foreign exchange activities on the domestic market or international market, commercial banks shall prepare one (1) set of documents in accordance with Article 11 of this Circular and submit it to the State Bank of Vietnam. In case the submitted documents are incomplete, within ten (10) working days from the date of receipt of the documents, the State Bank of Vietnam shall issue a written request for the commercial bank to supplement the documents.

2. Within forty (40) days from the date of receiving complete and valid documents in accordance with this Circular, the State Bank of Vietnam shall examine:

a) Approving basic foreign exchange activities on the domestic market and international market for commercial banks in the form of issuing new/renewing the License for Establishment and Operation or issuing a Decision to amend and supplement the License.

b) Approving other foreign exchange activities on the domestic market and international market for commercial banks.

The approval document of the State Bank of Vietnam for commercial banks to carry out other foreign exchange activities on the domestic market and international market shall include the following main contents: name of business, product, group of products to be carried out; duration of implementation; restrictions and conditions to ensure safety (if any). The approval document for other foreign exchange activities for commercial banks shall follow the model attached as Appendix 04 to this Circular.

c) In case of refusal, the State Bank of Vietnam shall notify the commercial bank in writing and specify the reasons.

3. The procedures and formalities for extending the approval of other foreign exchange activities on the domestic market and international market for commercial banks shall be implemented in accordance with the provisions of Clause 1 and 2 of this Article.”

13. Article 14 shall be amended and supplemented as follows:

“Article 14. Scope of Basic Foreign Exchange Activities on the International Market

1. International payments and transfers to serve customers in Vietnam.

2. Purchase and sale of spot foreign currencies on the international market.

3. Conducting foreign currency forward purchase and sale transactions, foreign currency swap transactions with foreign financial institutions for the purpose of mitigating risks associated with forward foreign currency purchase and sale contracts and swap transactions already concluded and implemented with domestic customers.

4. International factoring and foreign currency guarantees to serve customers in Vietnam.

5. Depositing foreign currency abroad (including term deposits and non-term deposits).

6. Conducting interest rate derivative transactions and other derivative transactions related to foreign exchange on the international market in accordance with the principles stipulated at point b(i) of Clause 1 of Article 4 of this Circular, without having to go through the procedure to request supplementary approval for foreign exchange activities.

7. Conducting other foreign exchange activities on the international market outside those specified in Clauses 1 to 6 of this Article in accordance with the principles stipulated at point b(ii) of Clause 1 of Article 4 of this Circular, without having to go through the procedure to request supplementary approval for foreign exchange activities.”

14. Article 15 is amended and supplemented as follows:

“Article 15. Other Foreign Exchange Activities on the Domestic Market and International Market

1. In addition to the foreign exchange activities prescribed in Articles 13 and 14 of this Circular, the State Bank of Vietnam shall consider and permit branches of foreign banks to carry out other foreign exchange activities for specific products or groups of products on a time-limited basis, including:

a) Other foreign exchange activities on the domestic market;

b) Other foreign exchange activities on the international market to serve customers in Vietnam.

2. After the expiration of the permitted period for carrying out other foreign exchange activities on the domestic market and international market as stated in the time-limited approval document, if there is a need to continue such activities, based on meeting the conditions and submitting the required documents as stipulated in Articles 18 and 20 of this Circular and relevant regulations of the State Bank of Vietnam, branches of foreign banks may be considered and permitted by the State Bank of Vietnam to carry out these foreign exchange activities in the extension document of the time-limited approval document.”

15. Amend the name of Article 16 as follows:

“Article 16. Conditions for Approval of Basic Foreign Exchange Activities on the Domestic Market”

16. Amend the name of Article 17 as follows:

“Article 17. Conditions for Approval of Basic Foreign Exchange Activities on the International Market”

17. Amend the name of Article 18 as follows:

“Article 18. Conditions for Approval of Other Foreign Exchange Activities on the Domestic Market and International Market”

18. Article 19 is amended and supplemented as follows:

"Article 19. Documents, procedures, and formalities for requesting approval of basic foreign exchange activities on domestic and international markets

The documents, procedures, and formalities for requesting approval of basic foreign exchange activities on domestic and international markets shall be carried out in accordance with the regulations applicable to commercial banks as stipulated in Clause 1, 2, and 3 of Article 11 and Article 12 of this Circular."

19. Article 20 is amended and supplemented as follows:

"Article 20. Documents, procedures, and formalities for requesting approval of other foreign exchange activities on domestic and international markets

The documents, procedures, and formalities for requesting approval and extending the approval period for other foreign exchange activities on domestic and international markets shall be carried out in accordance with the regulations applicable to commercial banks as stipulated in Clause 1, 4, and 5 of Article 11 and Article 12 of this Circular."

20. Article 21 is amended and supplemented as follows:

"Article 21. Scope of foreign exchange activities of comprehensive financial companies

1. Scope of Basic Foreign Exchange Activities in the Domestic Market:

a) Conducting spot foreign currency transactions;

b) Conducting foreign currency forward transactions, foreign currency swap transactions, and foreign currency option purchase and sale transactions;

c) Accepting foreign currency deposits from non-bank organizations; lending in foreign currencies to non-bank customers;

d) Factoring and guaranteeing foreign currency payments;

đ) Issuing international credit cards;

e) Discounting and rediscounting transferable instruments and securities denominated in foreign currencies;

g) Services for receiving and paying foreign currencies; entrusting economic organizations to act as agents for foreign currency exchange and payment services;

h) Providing management and safekeeping services for foreign currency assets; accepting mandates to lend in foreign currencies;

i) Acting as agents for issuing securities denominated in foreign currencies;

k) Providing advisory services to customers on foreign exchange matters;

l) Opening foreign currency settlement accounts at commercial banks and foreign bank branches authorized to conduct foreign exchange activities;

m) Borrowing and lending in foreign currencies to authorized financial institutions and domestic financial organizations;

n) Depositing and accepting foreign currency deposits with other authorized financial institutions;

o) Accepting foreign currency deposits from foreign financial institutions;

p) Leasing in foreign currencies.

2. Scope of Basic Foreign Exchange Activities in the International Market:

a) Buying and selling spot foreign currencies in the international market;

b) Conducting foreign currency forward purchase and sale transactions, foreign currency swap transactions with foreign financial organizations for the purpose of mitigating risks associated with foreign currency forward contracts and foreign currency swap transactions already concluded and implemented with domestic customers;

c) Lending abroad to non-bank customers;

d) Opening foreign currency accounts at overseas banks for the purpose of issuing credit cards;

đ) International factoring and guaranteeing foreign currency payments.

3. For other foreign exchange activities in the domestic and international markets:

a) The State Bank of Vietnam shall examine and approve the comprehensive financial company's implementation of such activities for a specific period for each product or group of products, including other foreign exchange activities on domestic and international markets outside those specified in Clause 1 and 2 of this Article, based on meeting the conditions and documents as stipulated in Clause 1 of Article 26 and Clause 3 of Article 27 of this Circular;

b) After the expiration of the permitted period for implementing other foreign exchange activities on domestic and international markets as stated in the time-limited approval document, if there is a need to continue such activities, based on meeting the conditions and documents as stipulated in Clause 2 of Article 26 and Clause 4 of Article 27 of this Circular and relevant regulations of the State Bank of Vietnam, the comprehensive financial company may request the State Bank of Vietnam to consider and approve the extension of the time-limited approval document."

21. Article 22 is amended and supplemented as follows:

"Article 22. Scope of foreign exchange activities of factoring financial companies

1. Scope of Basic Foreign Exchange Activities in the Domestic Market:

a) Accepting foreign currency deposits from customers that are organizations other than credit institutions;

b) Depositing funds and accepting foreign currency deposits with permitted credit institutions;

c) Borrowing foreign currency funds from permitted credit institutions and domestic financial organizations;

d) Discounting and rediscounting transferable instruments and securities denominated in foreign currencies;

đ) Factoring in foreign currencies;

e) Providing management and safekeeping services for assets denominated in foreign currencies;

g) Providing foreign exchange advisory services to customers;

h) Opening foreign currency settlement accounts at commercial banks and branches of foreign banks permitted to conduct foreign exchange operations.

2. Scope of basic foreign exchange activities on the international market: International factoring."

22. Supplement Article 22a after Article 22 as follows:

"Article 22a. Scope of foreign exchange activities of consumer credit financial companies

1. Scope of Basic Foreign Exchange Activities in the Domestic Market:

a) Accepting foreign currency deposits from customers that are organizations other than credit institutions;

b) Depositing funds and accepting foreign currency deposits with permitted credit institutions;

c) Borrowing foreign currency funds from permitted credit institutions and domestic financial organizations;

d) Discounting and rediscounting transferable instruments and securities denominated in foreign currencies;

đ) Issuing international credit cards;

e) Providing management and safekeeping services for assets denominated in foreign currencies;

g) Providing foreign exchange advisory services to customers;

h) Opening foreign currency settlement accounts at commercial banks and branches of foreign banks permitted to conduct foreign exchange operations.

2. Scope of basic foreign exchange activities on the international market: Opening foreign currency settlement accounts at foreign banks to implement credit card issuance activities."

23. Article 23 is amended and supplemented as follows:

"Article 23. Scope of basic foreign exchange activities on the domestic market of leasing financial companies

1. Accepting foreign currency deposits from customers that are organizations other than credit institutions.

2. Depositing funds and accepting foreign currency deposits with permitted credit institutions.

3. Borrowing foreign currency funds from permitted credit institutions and domestic financial organizations.

4. Leasing in foreign currencies.

5. Supplementing working capital loans in foreign currencies for lessees.

6. Accepting mandates for foreign currency leasing.

7. Providing management and safekeeping services for assets denominated in foreign currencies.

8. Providing advisory services to customers regarding foreign exchange.

9. Purchasing and reselling under foreign currency leasing arrangements.

10. Opening foreign currency settlement accounts at commercial banks and branches of foreign banks authorized to conduct foreign exchange activities."

24. Article 24 is amended and supplemented as follows:

"Article 24. Conditions for approving basic foreign exchange activities on the domestic market of comprehensive financial companies, factoring financial companies, consumer credit financial companies, and leasing financial companies

1. Comprehensive financial companies that meet the conditions stipulated in Article 8 of this Circular for commercial banks shall be considered by the State Bank of Vietnam for approval of basic foreign exchange activities on the domestic market as specified in Clause 1 of Article 21 of this Circular.

2. Factoring financial companies that meet the conditions stipulated in Article 8 of this Circular for commercial banks shall be considered by the State Bank of Vietnam for approval of basic foreign exchange activities on the domestic market as specified in Clause 1 of Article 22 of this Circular.

3. Consumer credit financial companies that meet the conditions stipulated in Article 8 of this Circular for commercial banks shall be considered by the State Bank of Vietnam for approval of basic foreign exchange activities on the domestic market as specified in Clause 1 of Article 22a of this Circular.

4. Leasing financial companies that meet the conditions stipulated in Article 8 of this Circular for commercial banks shall be considered by the State Bank of Vietnam for approval of basic foreign exchange activities on the domestic market as specified in Article 23 of this Circular."

25. Article 25 is amended and supplemented as follows:

"Article 25. Conditions for approving basic foreign exchange activities on the international market of consolidated financial companies, factoring companies, consumer credit finance companies

1. Meeting the conditions prescribed in Article 9 of this Circular;

2. The consolidated financial company's business must have been profitable for at least 01 (one) consecutive year prior to submitting the application for approval of foreign exchange activities according to the audited financial report."

26. Article 26 is amended and supplemented as follows:

"Article 26. Conditions for approving other foreign exchange activities on the domestic and international markets of consolidated financial companies

1. In each period, based on the objectives of monetary policy and foreign exchange management policy, consolidated financial companies may be considered and permitted to carry out other foreign exchange activities on the domestic and international markets for a limited time when meeting the following conditions:

a) Meeting the conditions prescribed for commercial banks under points a, b, c, d, and đ Clause 1, Article 10 of this Circular;

b) The business operations of the integrated financial company must have been profitable in the two consecutive years prior to the year of submitting the application for permission according to the audited financial report.

2. Conditions for integrated financial companies to be considered and permitted to extend the implementation of other foreign exchange activities on the domestic and international markets include:

a) Meeting the conditions prescribed for commercial banks under points a, b, c Clause 2, Article 10 of this Circular;

b) The consolidated financial company's business must have been profitable for at least 02 (two) consecutive years prior to requesting an extension according to the audited financial report."

27. Article 27 is amended and supplemented as follows:

"Article 27. Documents for requesting approval of foreign exchange activities

1. The documents for requesting approval of basic foreign exchange activities on the domestic market of consolidated financial companies, factoring companies, consumer credit finance companies, and financial leasing companies shall be carried out in accordance with Clauses 1 and 2, Article 11 of this Circular.

2. The basic documents for requesting approval of foreign exchange activities on the international market by consolidated financial companies, factoring financial companies, consumer credit financial companies include:

a) The document components as prescribed in Clause 3, Article 11 of this Circular;

b) A copy of the audited financial report for the most recent year preceding the year of the request for approval of foreign exchange activities.

3. The documents for requesting permission to temporarily carry out other foreign exchange activities on both the domestic and international markets by consolidated financial companies include:

a) The document components prescribed in points a, b, c, d, đ Clause 4, Article 11 of this Circular;

b) A copy of the audited financial reports for the two consecutive years preceding the year of the request for temporary approval.

4. The documents for requesting extension of permission to carry out other foreign exchange activities on both the domestic and international markets by consolidated financial companies include:

a) The document components prescribed in points a, b, d Clause 5, Article 11 of this Circular;

b) A copy of the audited financial report for the two consecutive years prior to the request for extension."

28. Article 29 is amended and supplemented as follows:

"Article 29. Foreign Exchange Activities of the Social Policy Bank

1. The Social Policy Bank is allowed to conduct basic foreign exchange activities on the domestic market without seeking approval from the State Bank of Vietnam, including:

a) Conducting spot foreign currency transactions;

b) Conducting forward foreign currency transactions, foreign currency swap transactions, and foreign currency option purchase and sale transactions;

c) Accepting foreign currency deposits and lending in foreign currencies to customers who are not credit institutions;

d) Providing foreign currency transfer and payment services within Vietnam; Services for receiving and paying out foreign currencies;

đ) Purchasing, selling, discounting, and rediscounting negotiable instruments and other securities denominated in foreign currencies;

e) Providing foreign currency asset management and safekeeping services; Accepting mandates to lend in foreign currencies;

g) Providing foreign exchange advisory services to customers;

h) Opening foreign currency settlement accounts at other commercial banks and foreign bank branches authorized to conduct foreign exchange activities;

i) Borrowing and lending in foreign currencies with other authorized credit institutions;

k) Depositing and accepting foreign currency deposits with other authorized credit institutions.

2. The Social Policy Bank is allowed to conduct basic foreign exchange activities on the international market without seeking approval from the State Bank of Vietnam, including:

a) International payments and transfers;

b) Buying and selling spot foreign currencies on the international market;

c) Conducting forward foreign currency transactions and foreign currency swap transactions with foreign financial organizations for the purpose of mitigating risks associated with foreign currency purchase and sale contracts and foreign currency swap transactions concluded and implemented with domestic customers;

3. For other foreign exchange activities in the domestic and international markets:

a) Based on the objectives of monetary policy and foreign exchange management policy in each period, the State Bank will consider and permit the Vietnam Bank for Social Policies to implement for a limited time specific products or product groups, including other foreign exchange activities on the domestic and international markets outside those specified in Clauses 1 and 2 of this Article, provided that the Vietnam Bank for Social Policies meets the conditions and documents as required for commercial banks under points a, b, c, đ, e Clause 1, Article 10 and points a, c, d, đ, e Clause 4, Article 11 of this Circular;

b) After the expiration of the permitted period for carrying out other foreign exchange activities on the domestic and international markets as stipulated in the approved document with a limited term, if there is a need to continue implementing these activities, based on meeting the conditions and documents as required for commercial banks under points a, b, d Clause 2, Article 10 and points a, b, c Clause 5, Article 11 of this Circular and related regulations of the State Bank, the Vietnam Bank for Social Policies will be considered and permitted by the State Bank to extend the implementation of these foreign exchange activities in the extended approval document.

4. The procedures for considering and approving, extending the approval of other foreign exchange activities shall be carried out in accordance with Article 12 of this Circular.”_.

29. Supplement Article 29a after Article 29 as follows:

"Article 29a. Foreign exchange activities of the Vietnam Development Bank

1. The Vietnam Development Bank shall carry out the following basic foreign exchange activities on the domestic market:

a) Conducting spot foreign currency transactions;

b) Conducting forward foreign currency transactions, foreign currency swap transactions, and foreign currency option purchase and sale transactions;

c) Accepting foreign currency deposits and lending in foreign currencies to customers who are not credit institutions;

d) Collection and guarantee with foreign currency;

đ) Provision of money transfer and payment services in foreign currency within the territory of Vietnam;

e) Purchase, sale, discounting, and rediscounting of negotiable instruments and other securities denominated in foreign currency;

g) Acceptance of mandates for lending in foreign currency;

h) Supplying advisory services to customers regarding foreign exchange;

i) Opening foreign currency settlement accounts at commercial banks and branches of foreign banks permitted to conduct foreign exchange activities;

k) Borrowing and lending in foreign currency with other credit institutions permitted to do so;

l) Depositing and accepting deposits in foreign currency with other credit institutions permitted to do so;

m) Opening settlement accounts for foreign credit institutions;

n) Accepting deposits in foreign currency from foreign credit institutions.

2. The Vietnam Development Bank shall carry out the following basic foreign exchange activities on the international market:

a) International payments and transfers;

b) Buying and selling spot foreign currencies on the international market;

c) Conducting forward foreign currency transactions and foreign currency swap transactions with foreign financial organizations for the purpose of mitigating risks associated with foreign currency purchase and sale contracts and foreign currency swap transactions concluded and implemented with domestic customers;

d) International collection and guarantee with foreign currency;

đ) Lending abroad to non-bank clients;

e) Depositing foreign currencies abroad (including fixed-term deposits and non-fixed-term deposits).

3. For other foreign exchange activities in the domestic and international markets:

a) Based on the objectives of monetary policy and foreign exchange management policy in each period, the State Bank will consider and permit the Vietnam Development Bank to implement for a limited time specific products or product groups, including other foreign exchange activities on the domestic and international markets outside those specified in Clauses 1 and 2 of this Article, provided that the Vietnam Development Bank meets the conditions and documents as required for commercial banks under points a, b, c, đ, e Clause 1, Article 10 and points a, c, d, đ, e Clause 4, Article 11 of this Circular;

b) After the expiration of the permitted period for carrying out other foreign exchange activities on the domestic and international markets as stipulated in the approved document with a limited term, if there is a need to continue implementing these activities, based on meeting the conditions and documents as required for commercial banks under points a, b, d Clause 2, Article 10 and points a, b, c Clause 5, Article 11 of this Circular and related regulations of the State Bank, the Vietnam Development Bank will be considered and permitted by the State Bank to extend the implementation of these foreign exchange activities in the extended approval document.

4. The procedures for considering and approving, extending the approval of other foreign exchange activities shall be carried out in accordance with Article 12 of this Circular.”

30. Article 30 is amended and supplemented as follows:

"Article 30. Foreign exchange activities of cooperative banks

1. Basic foreign exchange activities on the domestic market of cooperative banks:

a) Conducting spot foreign currency transactions;

b) Conducting foreign currency forward transactions, foreign currency swap transactions, and foreign currency option purchase and sale transactions;

c) Accepting foreign currency deposits and lending in foreign currencies to customers who are not credit institutions;

d) Providing foreign currency transfer and payment services within Vietnam; Services for receiving and paying out foreign currencies;

đ) Purchasing, selling, discounting, and rediscounting negotiable instruments and other securities denominated in foreign currencies;

e) Providing foreign currency asset management and safekeeping services; Accepting mandates to lend in foreign currencies;

g) Providing foreign exchange advisory services to customers;

h) Opening foreign currency settlement accounts at other commercial banks and foreign bank branches authorized to conduct foreign exchange activities;

i) Borrowing and lending in foreign currencies with other permitted credit institutions and domestic financial organizations;

k) Depositing and accepting foreign currency deposits with other authorized credit institutions.

2. Basic foreign exchange activities on the international market:

a) International payments and transfers;

b) Buying and selling spot foreign currencies on the international market;

c) Carry out foreign currency forward transactions and foreign currency swap transactions with foreign financial organizations for the purpose of preventing and limiting risks associated with foreign currency purchase and sale contracts and foreign currency swap transactions already concluded and implemented with domestic customers.

3. Conditions, documents, procedures, and formalities for reviewing and approving basic foreign exchange activities on the domestic market and international market shall be conducted in accordance with the provisions for commercial banks under Articles 8 and 9, Clauses 1, 2, and 3 of Article 11, and Article 12 of this Circular."

31. Article 31 is amended and supplemented as follows:

"Article 31. Principles of Conversion

1. The State Bank of Vietnam shall carry out conversion for commercial banks, comprehensive finance companies, factoring finance companies, consumer credit finance companies, leasing companies, and foreign bank branches that have been authorized to conduct foreign exchange activities according to the following principles:

a) Conversion to a License for Establishment and Operation or Decision to Amend and Supplement the License for Establishment and Operation containing the content of foreign exchange business and service provision on the domestic market and/or the international market within the scope prescribed by the State Bank of Vietnam for commercial banks, comprehensive finance companies, factoring finance companies, consumer credit finance companies, leasing companies, and foreign bank branches that have been granted permission to conduct one or more basic foreign exchange activities on the domestic market and the international market;

b) Conversion to a time-limited approval document for other foreign exchange activities;

c) For credit institutions currently under special supervision, the conversion of foreign exchange activities shall be carried out in accordance with the provisions of this Circular. During the period of special supervision, these credit institutions shall operate in accordance with the contents stipulated in the Special Supervision Decision of the State Bank of Vietnam, the consolidation plan for organization and operation approved, and relevant laws and regulations;

d) The conversion process must be completed by October 31, 2017. Beyond this deadline, commercial banks, comprehensive finance companies, factoring finance companies, consumer credit finance companies, leasing companies, and foreign bank branches permitted to conduct foreign exchange activities must terminate those activities not converted or not eligible for conversion due to non-compliance with conditions specified in Article 32 of this Circular.

2. The State Bank of Vietnam shall carry out conversion of foreign exchange activities for the Vietnam Development Bank in accordance with the provisions of this Circular. After completion of the conversion, the Vietnam Development Bank shall be allowed to conduct all basic foreign exchange activities on the domestic market and the international market as stipulated in this Circular. The approval document for foreign exchange activities for the Vietnam Development Bank after conversion shall follow the model attached as Appendix 05 to this Circular.

3. During the conversion period, commercial banks, the Vietnam Development Bank, comprehensive finance companies, factoring finance companies, consumer credit finance companies, leasing companies, and foreign bank branches permitted to conduct foreign exchange activities may continue to implement such activities based on their Licenses, Certificates of Eligibility for Foreign Exchange Activities on the Domestic Market, Certificates of Registration for Foreign Exchange Activities on the International Market, and other approval documents issued by the State Bank of Vietnam.

4. For foreign exchange activities that have been permitted by the State Bank of Vietnam for pilot implementation, credit institutions and foreign bank branches may continue to implement them until the end of the pilot period as specified in the approval document. After the expiration of the pilot period, if there is a need to continue implementation, credit institutions and foreign bank branches shall submit an application for extension in accordance with the provisions of this Circular."

32. Article 32 is amended and supplemented as follows:

"Article 32. Conditions for Conversion

1. The State Bank shall consider and convert basic foreign exchange activities in the domestic market when commercial banks, consolidated finance companies, factoring companies, consumer credit finance companies, financial leasing companies, and foreign bank branches are permitted to meet the conditions stipulated in Article 8 of this Circular.

2. The State Bank shall consider and convert basic foreign exchange activities in the international market when commercial banks, consolidated finance companies, factoring companies, consumer credit finance companies, financial leasing companies, and foreign bank branches are permitted to meet the conditions stipulated in Article 9 of this Circular.

3. The State Bank shall consider and convert other foreign exchange activities in the domestic market and international market when commercial banks and foreign bank branches meet the conditions stipulated in Clause 1 of Article 10 of this Circular.

4. The State Bank shall consider and convert other foreign exchange activities in the domestic market and international market when consolidated finance companies meet the conditions stipulated in Clause 1 of Article 26 of this Circular."

33. Article 33 is amended and supplemented as follows:

"Article 33. Documents for Conversion

1. Documents for converting basic foreign exchange activities in the domestic market include:

a) A conversion request form according to the model attached as Appendix 2 to this Circular;

b) Copies of the License for Establishment and Operation, Certificate of Eligibility, Registration Confirmation, and other documents allowing the conduct of foreign exchange activities (if applicable);

c) Internal regulations on risk management related to foreign exchange activities, which must at least include the identification of types of risks and risk management solutions;

d) A report describing the information technology system, technical solutions applied, and procedures for handling foreign exchange activities within the information technology system according to the contents specified in Appendix 3 attached to this Circular.

2. Documents for converting basic foreign exchange activities in the international market include:

a) Documents as prescribed in Clause 1 of this Article;

b) Internal regulations on partner organization selection criteria, transaction limits for partners, which must include provisions on periodic review and reassessment of partners when there are unexpected events affecting their credit ratings.

3. Documents for converting other foreign exchange activities in the domestic market and international market include:

a) A conversion request form according to the model attached as Appendix 2 to this Circular;

b) Documents as prescribed in points b, c, d, đ of Clause 4 of Article 11 of this Circular (for commercial banks, foreign bank branches);

c) Documents as prescribed in point e of Clause 4 of Article 11 of this Circular (for commercial banks, foreign bank branches);

d) Documents as prescribed in point b of Clause 3 of Article 27 of this Circular (for consolidated finance companies);

đ) A report on the implementation of each other foreign exchange activity since being permitted by the State Bank.

4. Documents for conversion for the Vietnam Development Bank:

a) A conversion request form according to the model attached as Appendix 2 to this Circular

b) Copies of the Certificate of Eligibility, Registration Confirmation for foreign exchange service provision activities.

34. Amend and supplement Clause 3 of Article 35; add Clause 11 to Article 35 as follows:

"3. Establish and be responsible for the content of internal regulations on business procedures and risk management procedures for foreign exchange activities; Only conduct foreign exchange activities after establishing internal regulations on business procedures; Conduct foreign exchange activities in accordance with the established internal procedures. Transactions must be controlled according to current internal audit and internal audit regulations."

"11. When conducting deposit activities at branches or subsidiaries of commercial banks abroad as stipulated in Clause 3 of Article 9 of this Circular, commercial banks must be responsible for their own business results. Quarterly, no later than the tenth day of the first month of each quarter, commercial banks must submit reports on deposit balances at branches or subsidiaries abroad to the State Bank (Supervisory Authority)."

35. Article 36 is amended and supplemented as follows:

"Article 36. Responsibilities of units under the State Bank of Vietnam

1. The Banking Inspection and Supervision Authority:

a) To be responsible for receiving and examining the completeness and validity of applications for approval of foreign exchange activities and applications for approval of conversion of foreign exchange activities;

b) To send documents to relevant units under the State Bank of Vietnam for their opinions on applications for approval of foreign exchange activities and conversion of foreign exchange activities of credit institutions and branches of foreign banks;

c) To compile opinions from relevant units, conduct final examination, and submit to the Governor of the State Bank of Vietnam for approval or rejection of foreign exchange activities or approval or rejection of conversion of foreign exchange activities of credit institutions and branches of foreign banks;

d) To be responsible for handling issues related to the approval of foreign exchange activities and conversion of foreign exchange activities as stipulated in this Circular.

2. Department of Foreign Exchange Management:

Within ten working days from the date of receipt of the document from the Banking Inspection and Supervision Authority, based on the assigned functions and tasks, the Department of Foreign Exchange Management shall be responsible for:

a) Providing comments on applications for approval of foreign exchange activities related to the functions and tasks of the Department of Foreign Exchange Management of credit institutions and branches of foreign banks;

b) Providing comments on applications for approval of conversion of foreign exchange activities related to the functions and tasks of the Department of Foreign Exchange Management of credit institutions and branches of foreign banks authorized to engage in foreign exchange activities;

c) Being responsible for handling issues arising during the implementation of this Circular.

3. Monetary Policy Department:

Within ten working days from the date of receipt of the document from the Banking Inspection and Supervision Authority, based on the assigned functions and tasks, the Department of Monetary Policy shall be responsible for:

a) Provide comments on reports on compliance with total foreign currency position limits based on foreign currency position reports of credit institutions and foreign bank branches permitted to conduct foreign exchange activities;

b) Providing comments on applications for approval of foreign exchange activities related to the functions and tasks of the Department of Monetary Policy of credit institutions and branches of foreign banks;

c) Providing comments on applications for approval of conversion of foreign exchange activities related to the functions and tasks of the Department of Monetary Policy of credit institutions and branches of foreign banks authorized to engage in foreign exchange activities.

4. The Information Technology Bureau:

Within ten working days from the date of receipt of the document from the Banking Inspection and Supervision Authority, based on the assigned functions and tasks, the Information Technology Bureau shall provide comments on reports describing information technology systems, technical solutions applied, and procedures for processing foreign exchange activities within the information technology system when credit institutions and branches of foreign banks apply for approval or conversion of foreign exchange activities.

5. Other relevant units under the State Bank of Vietnam:

Based on the assigned functions and tasks, other relevant units under the State Bank of Vietnam shall participate in providing opinions on issues related to the approval of foreign exchange activities and conversion of foreign exchange activities for credit institutions and branches of foreign banks as requested by the Banking Inspection and Supervision Authority.

Article 2. Replacing and Supplementing Certain Appendices

1. Replacing Appendix 1 of Circular No. 21/2014/TT-NHNN with Appendix 1 attached to this Circular.

2. Replacing Appendix 2 of Circular No. 21/2014/TT-NHNN with Appendix 2 attached to this Circular.

3. Supplementing Appendices 3, 4, and 5 attached to this Circular.

Article 3. Effectiveness

This Circular takes effect from November 18, 2016.

Article 4. Organization of Implementation

The Director of the Office, Heads of the Department of Foreign Exchange Management, Heads of Units under the State Bank of Vietnam, Governors of the State Bank of Vietnam Branches in provinces and cities, Chairmen of the Board of Directors, Chairmen of the Board of Members, General Managers (Directors) of commercial banks, and General Managers (Directors) of branches of foreign banks are responsible for organizing the implementation of this Circular.