Circular No. 35/2024/TT-NHNN stipulates on issuing licenses, adding activities to licenses, and organizing and operating non-bank financial institutions.

CIRCULAR

Regulations on issuing new licenses, supplementing business contents to existing licenses, and organizing and operating activities

 of credit institutions other than banks;

for non-bank credit institutions

                                                       

Pursuant to the Law on the State Bank of Vietnam dated June 16, 2010;

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

On the basis of Decree No. 102/2022/NĐ-CP dated December 12, 2022 of the Government stipulating the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;

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

The Governor of the State Bank of Vietnam issues this Circular regulating the issuance of new licenses, supplementing business contents to existing licenses, and organizing and operating activities of non-bank credit institutions. Non-bank credit institution

 

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

1. This Circular regulates the issuance of licenses, addition of operations to licenses, and the organization and operation of non-bank credit institutions.

2. The leasing finance activities of comprehensive financial companies and leasing finance companies shall be carried out in accordance with the regulations of the Governor of the State Bank of Vietnam.

Article 2. Applicability

1. Comprehensive financial company.

2. Specialized financial company.

3. Organizations and individuals related to the issuance of licenses, addition of operations to licenses, and the organization and operation of non-bank credit institutions as prescribed in this Circular.

Article 3. Explanation of Terms

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

1. is a commercial bank of Vietnam or a foreign credit institution holding the entire charter capital of a limited liability non-bank credit institution. Rent payment

2. is the amount of money that the Lessee must pay to the Lessor according to the agreement in the lease operation contract. Lease operation

3. is a form of leasing activity where the leasing company leases assets to the lessee for use over a specified period with the principle of asset return at the end of the lease term. The leasing company owns the leased asset throughout the lease period. The lessee uses the leased asset and pays rent throughout the lease term as stipulated in the lease operation contract. Lessee operation

4. is a legal entity or individual operating in Vietnam.  For households, cooperatives, and other organizations without legal status, when participating in lease operation relations, the members of the household, cooperative, or other organization without legal status are the subjects establishing and performing the lease operation transaction or authorizing representatives to establish and perform the lease operation transaction.

2. The Director of Banking Inspection and Supervision shall examine and decide on the supplementation of business contents to the license of non-bank credit institutions.

Article 4. Competence to Approve the Issuance of New Licenses and the Supplement of Business Content into Licenses for Non-Bank Credit Institutions

1. The Governor of the State Bank shall examine and decide on the issuance of new licenses or the supplement of business content into licenses simultaneously with the issuance of new licenses for non-bank credit institutions.

ISSUING NEW LICENSES, SUPPLEMENTING BUSINESS CONTENTS TO LICENSES

Chapter II

2. The State Bank adjusts the permitted business contents in accordance with the provisions of the Law on Credit Institutions and the Appendices issued together with this Circular. The new license replaces all previous licenses and approval documents (related to the modification and supplementation of the license) issued by the State Bank to the non-bank credit institution prior to the issuance of the new license.

Article 5. Principles for the Issuance of New Licenses and the Supplement of Business Content into Licenses

1. The State Bank shall not issue new licenses for business activities that non-bank credit institutions are not permitted to carry out according to the provisions of the law at the time of issuing new licenses.

3. For foreign exchange trading and foreign exchange service provision activities, the supplementation of business contents to the license shall be carried out in accordance with specific regulations of the State Bank and relevant laws.

4. For other forms of credit provision and other business activities related to banking operations as stipulated in the Appendices issued together with this Circular, non-bank credit institutions may carry them out after obtaining the State Bank's approval; procedures for supplementing these business contents to the license shall comply with specific regulations of the State Bank and relevant laws.

5. In cases where a non-bank credit institution requests to supplement business contents to its license simultaneously with applying for a new license, the State Bank will consider issuing a new license including the supplemented contents based on the non-bank credit institution fulfilling all required documents as stipulated in Clause 3, Article 7 of this Circular.

In the case where a non-bank credit institution requests to supplement the scope of operations in the License at the same time as requesting to renew the License, the State Bank shall consider renewing the License to include the supplemented scope according to the request, based on the non-bank credit institution fulfilling all required documents as stipulated in Clause 3, Article 7 of this Circular.

Article 6. Principles for Establishing Application Files for Renewal of Licenses and Supplementing Business Contents to Licenses

1. The application file for renewal of licenses and supplementing business contents to licenses must be signed by the legal representative or authorized representative of the non-bank financial institution. In case of signing through authorization, the application file must include an authorization document established in accordance with the provisions of the law.

2. The application file for renewal of licenses and supplementing business contents to licenses of non-bank financial institutions shall be prepared in one set in Vietnamese. Foreign components of the application file must be legalized according to Vietnamese law (except where exempted from legalization under Vietnamese law on legalization) and translated into Vietnamese. Translations from foreign languages into Vietnamese must be notarized or certified by the translator's signature in accordance with the law. Where the documents are copies that are not certified copies issued from original records, the originals must be presented for comparison, and the person responsible for comparison bears responsibility for the accuracy of the copy compared to the original.

3. Each set of applications must include a list of documents.

Article 7. Documents for Application to Amend or Supplement the Content of the License

1. For the case of amending the License:

a) A request form for license renewal, specifying clearly the proposed business activities.

b) A list of activities accompanied by a copy of the current License and approval documents.

2. For the case of supplementing the content of the License:

a) A request form for supplementing business contents to the license, specifying clearly the proposed supplementary business contents. For wholly foreign-owned non-bank financial institutions requesting to supplement business contents, the request form must include a commitment that these are business activities that the foreign financial institution's largest equity shareholder or member has been permitted to carry out at the location of its headquarters.

b) The resolution of the Board of Directors or the Board of Members of the non-bank financial institution agreeing to propose the supplementation of the content of the License;

c) Documentation proving compliance with conditions for conducting planned business activities in Vietnam, which are activities that the largest equity shareholder or member in the wholly foreign-owned non-bank financial institution is permitted to conduct at the location of the foreign financial institution's headquarters.

d) In addition to the application file components specified in points a, b, and c of this clause, non-bank financial institutions supplementing banking business activities as specifically defined in the Law on Financial Institutions and the Appendices accompanying this Circular must also include the following documents:

(i) Internal regulations in accordance with the law to carry out the proposed supplementary banking activities;

(ii) A commitment to have met the requirements regarding business operations, staff, and infrastructure and technology necessary to carry out the proposed supplementary banking activities in accordance with relevant laws.

3. For the case of simultaneously applying to supplement the content of the License and amend the License:

a) A request form for supplementing business contents to the license and license renewal, including the proposed business activities to be carried out, proposed supplementary business contents, and the commitments stipulated in point a of Clause 2 of this Article.

b) The documents specified in point b of Clause 1 and points b, c, and d of Clause 2 of this Article.

Article 8. Procedures for Applying to Amend or Supplement the Content of the License

1. Non-bank financial institutions requiring license renewal or supplementation of business contents to the license or supplementation of business contents to the license while renewing the license shall prepare the application file in accordance with Article 7 of this Circular and submit it directly or via postal service to the main office of the State Bank (One-stop Service Department).

2. Within forty days from the date of receiving complete and valid application files, the State Bank will process the renewal of licenses or supplementation of business contents to licenses or supplementation of business contents to licenses while renewing the license as requested by the non-bank financial institution. If rejected, the State Bank will respond in writing and specify the reasons.

3. After being granted the amended License or supplemented content of the License by the State Bank, the non-bank financial institution must:

a) Announce changes to the license within seven working days from the date of receiving the renewed license or supplemented business contents to the license on one State Bank communication medium and one printed newspaper in three consecutive issues or on one Vietnamese online newspaper.

b) The non-bank financial institution must revise and supplement the Articles of Association in accordance with the content of the amended or supplemented License.

Article 9. Payment of Fees for Renewing the License

1. The fee for renewing the License shall be set in accordance with the laws on fees and charges.

2. Within fifteen days from the date of issuance of the renewed License, non-bank financial institutions must pay the fee for renewing the License to the State Bank.

Article 10. Notification of Information on Renewing the License and Supplementing Activities in the License

Within five working days from the date the State Bank issues the renewed license or supplements business contents to the license or supplements business contents to the license while renewing the license, the Banking Inspection and Supervision Authority is responsible for notifying in writing along with the Decision on Supplementing Business Contents to the License or the Renewed License to the Provincial Business Registration Authority where the non-bank financial institution's headquarters is located to update into the national enterprise registration information system.

Chapter III

ORGANIZATION, MANAGEMENT, OPERATIONS, AND SUPERVISION

Article 11. Name and Main Office of Non-Bank Financial Institutions

1. The name of the non-bank financial institution must comply with the provisions of the Enterprise Law and related laws and be appropriate to the legal form and type of organization.

a) Joint Stock Comprehensive Finance Company and specific name;

b) Joint Stock Factoring Finance Company and specific name;

c) Joint Stock Consumer Credit Finance Company and specific name;

d) Joint Stock Leasing Finance Company and specific name;

đ) Limited Liability Comprehensive Finance Company with one member and specific name;

e) Limited Liability Factoring Finance Company with one member and specific name;

g) Limited Liability Consumer Credit Finance Company with one member and specific name;

h) Limited Liability Leasing Finance Company with one member and specific name;

i) Limited Liability Comprehensive Finance Company and specific name for comprehensive finance companies with two members or more;

k) Limited Liability Factoring Finance Company and specific name for specialized finance companies with two members or more;

l) Limited Liability Consumer Credit Finance Company and specific name for specialized finance companies with two members or more;

m) Limited Liability Leasing Finance Company and specific name for specialized finance companies with two members or more.

2. The main office of the non-bank financial institution must meet the requirements for the main office of enterprises as stipulated in the Enterprise Law and the following conditions:

a) It must be recorded in the License in accordance with the law and be the place of work for the Board of Directors, Board of Members, Supervisory Board, General Director, and where transactions with customers are conducted;

b) Must be within the territory of Vietnam, with a specific address including the building name (if applicable), house number, street/road name, commune/district/town, district/city/district/provincial city, province/city directly under the central government, province/city directly under the central government; telephone number (if applicable), fax number (if applicable) and email address (if applicable).

c) It must facilitate transactions with customers and comply with the State Bank's regulations on cash vaults;

d) Must have an information management system connected online between the main office and branches and business units of the non-bank financial institution meeting the requirements for governance, risk management of the non-bank financial institution and regulatory requirements of the State Bank.

Article 12. Risk Management Committee and Human Resources Committee

1. The Board of Directors, Board of Members must establish a Risk Management Committee and a Human Resources Committee to assist the Board of Directors, Board of Members in performing their duties. The Board of Directors, Board of Members shall issue regulations on the organization and operation of these committees. Within ten days from the date of issuance, the non-bank financial institution shall send this internal regulation to the State Bank (Banking Inspection and Supervision Authority).

2. Each committee must have at least three members, including the Chairperson who is a member of the Board of Directors, Board of Members and other members appointed, hired, dismissed by the Board of Directors, Board of Members according to the Charter of the non-bank financial institution. One member of the Board of Directors, Board of Members can only be the Chairperson of one committee. For joint-stock non-bank financial institutions, the Risk Management Committee must have at least one independent member of the Board of Directors.

3. Regulations on the organization and operation of the Committees must include at least the following contents:

a) The minimum operating regulations shall include: the number of members of the Committee and the responsibilities of each member; regular meetings of the Committee; extraordinary meetings of the Committee; the form and voting ratio for the proposals of these Committees;

b) Duties and functions of the Risk Management Committee:

(i) Advise the Board of Directors, Board of Members on issuing procedures and policies within the Committee's authority related to risk management in non-bank credit organization operations in accordance with the law and the Charter of the non-bank credit organization;

(ii) Analyze and issue warnings about the safety level of the non-bank credit organization against potential risks that may affect it and preventive measures for such risks in both short-term and long-term perspectives;

(iii) Review and evaluate the appropriateness and effectiveness of current risk management procedures and policies of the non-bank credit organization to make recommendations and proposals to the Board of Directors, Board of Members regarding the requirements for changes to current procedures, policies, and operational strategies;

(iv) Advise the Board of Directors, Board of Members on decisions concerning investment, contracts, and transactions; decide on risk management policies and supervise the implementation of preventive measures for risks within the scope of functions and tasks assigned by the Board of Directors, Board of Members;

c) Duties and functions of the Human Resources Committee:

(i) Advise the Board of Directors, Board of Members on the scale and structure of the Board of Directors, Board of Members, and managers suitable for the scale of operations and development strategy of the non-bank credit organization;

(ii) Advise the Board of Directors, Board of Members on handling personnel issues arising from election, appointment, dismissal, and removal procedures for positions on the Board of Directors, Board of Members, Supervisory Board members, and managers of the non-bank credit organization in accordance with the law and the Charter of the non-bank credit organization;

(iii) Study and advise the Board of Directors, Board of Members on issuing internal regulations of the non-bank credit organization within the authority of the Board of Directors, Board of Members regarding salary, remuneration, bonuses, personnel selection rules, training, and other incentive policies for managers, staff, and employees of the non-bank credit organization.

Article 13. Transfer and Repurchase of Contributed Capital

1. The transfer and repurchase of contributed capital must comply with the provisions of the Enterprise Law.

2. The transfer of contributed capital must comply with the organizational form regulations of the non-bank credit organization stipulated in Clause 3 and Clause 4, Article 6 of the Law on Credit Institutions.

3. Founding members may only transfer their contributed capital shares to other founding members within five years from the date of issuance of the License.

4. The transfer of contributed capital must comply with the capital contribution ratio specified in Clause 1, Article 77 of the Law on Credit Institutions and the following provisions:

a) The new transferee must meet the conditions stipulated in Clause 5, Article 29 of the Law on Credit Institutions and guiding documents;

b) If the new transferee is a foreign credit institution, it must meet the conditions stipulated in Point b, d, đ, Clause 2 and Clause 5, Article 29 of the Law on Credit Institutions and guiding documents.

5. Repurchase of Contributed Capital:

A limited liability non-bank credit organization repurchasing contributed capital must comply with the following provisions:

a) Payment terms and handling of contributed capital according to the request for repurchasing contributed capital by the contributing member shall be carried out in accordance with the provisions on repurchasing contributed capital under the Enterprise Law;

b) After fully paying off the repurchased contributed capital, the non-bank credit organization must still ensure sufficient payment of all debts and other property obligations, comply with the limits and ratios ensuring safety in banking activities, and the actual value of the registered capital must not be lower than the statutory capital;

c) Fully comply with the risk management regulations and adequately establish reserves as required at the time of requesting the State Bank's approval for the repurchase of contributed capital;

d) Continuously operate profitably for five consecutive years prior to the year of requesting the repurchase of contributed capital and have no accumulated losses;

đ) Not be subject to administrative penalties by the State Bank in the field of currency and banking activities for five consecutive years prior to the year of requesting the repurchase of contributed capital and up to the time of requesting the State Bank's approval for the repurchase of contributed capital.

Article 14. Notification of Information on Legal Representative

1. Within ten days from the date of changing the legal representative, non-bank credit organizations must submit a written notification to the State Bank containing information about their name and surname; gender; position; date of birth; nationality; citizenship; type of legal document of the individual; number of the legal document of the individual; date of issuance; place of issuance; permanent address; contact address of the legal representative (except in cases where the non-bank credit organization has already notified the change of legal representative after receiving approval from the State Bank for the proposed list of personnel).

2. Within five working days from the date of receipt of the written notification of the change of legal representative from the non-bank credit organization, the Banking Inspection and Supervision Authority shall be responsible for submitting a written notification of the information on the legal representative as stipulated in Clause 1 of this Article to the Provincial Business Registration Authority where the non-bank credit organization is headquartered.

Chapter IV

ACTIVITIES OF NON-BANK CREDIT INSTITUTIONS

Article 15. Activities of Financial Companies

1. A comprehensive financial company may carry out activities as prescribed from Article 115 to Article 119 of the Law on Credit Institutions.

2. A specialized financial company may carry out activities as prescribed from Article 120 to Article 124 of the Law on Credit Institutions.

3. A factoring financial company must have a minimum factoring receivables balance of 70% of the total credit disbursement balance.

4. A consumer finance company must have a minimum consumer loan receivables balance of 70% of the total credit disbursement balance.

5. A leasing financial company must have a minimum leasing receivables balance of 70% of the total credit disbursement balance.

Article 16. Leasing Operation Activities

1. Leased operation assets include machinery, equipment, transportation means, other chattels, and real estate as prescribed in Clause 2 of Article 139 of the Law on Credit Institutions.

2. A leasing financial company conducting leasing operation activities must comply with the provisions on asset leasing under the Civil Code and relevant laws.

3. Leasing Operation Contract:

a) The leasing operation contract is an agreement between the leasing financial company and the lessee regarding the leasing and use of one or more assets as prescribed in Clause 1 of this Article. The leasing operation contract becomes effective from the date agreed upon by both parties in the leasing operation contract;

b) The leasing operation contract must minimally contain the following contents:

(i) Name, address, tax code of the leasing financial company, lessee;

(ii) Name, type, code (if any) of the leased asset and necessary information to identify the leased asset correctly;

(iii) Lease term;

(iv) Rent;

(v) Obligations of each party concerning insurance, maintenance, warranty, inspection, repair, replacement, and other responsibilities agreed upon for the leased asset during the lease period;

(vi) Rights and obligations of the leasing financial company and the lessee in leasing operation activities, early termination of the leasing operation contract in accordance with civil law regulations and related laws.

Article 17. Scope of Insurance Agency Activities

1. When the State Bank's license granted to a non-bank credit organization includes insurance agency activities, such non-bank credit organization may carry out insurance agency activities for types of insurance as prescribed by the Law on Insurance Business.

2. When carrying out insurance agency activities, non-bank financial institutions must comply with the provisions of the laws on insurance business and other relevant laws.

Chapter V

RESPONSIBILITIES OF THE RELATED ORGANIZATIONS AND UNITS

Article 18. Responsibilities of Units under the State Bank

1. The Banking Inspection and Supervision Authority:

a) Acts as the focal point for receiving, examining, and submitting to the Governor of the State Bank the application for license renewal;

b) Serve as the focal point for receiving, examining, and deciding on the addition of content to the license;

c) Implements notifications as prescribed in Article 10, Clause 2 of Article 14 of this Circular.

2. Department of Finance and Accounting:

Guide accounting entries for the activities of non-bank financial institutions as prescribed in this Circular.

3. The Forecasting and Statistics Department:

Serve as the focal point for building and guiding the implementation of statistical reporting systems for the activities of non-bank financial institutions as prescribed in this Circular.

4. Trading Floor:

a) Guide non-bank financial institutions to implement the payment of fees for license renewal;

b) Collect license renewal fees from non-bank financial institutions and remit the entire amount of collected fees to the State Budget in accordance with current regulations.

Article 19. Responsibilities of non-bank credit institutions

1. Provide complete, accurate, and timely information as required by the State Bank of Vietnam as stipulated in this Circular and bear full responsibility under the law for such information.

2. Ensure compliance with conditions to perform the proposed activities and continue to maintain compliance with these conditions as prescribed.

3. To establish and be responsible for the content of internal regulations in accordance with the provisions of the law; to carry out activities permitted according to the internal procedures established, the provisions of this Circular, and other relevant provisions of the law.

4. To implement the payment of fees for the renewal of the License in accordance with Article 32 of the Law on Credit Institutions.

Chapter VI

IMPLEMENTING PROVISIONS

Article 20. Effective Date

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

2. This Circular abolishes:

a) Circular No. 30/2015/TT-NHNN dated December 25, 2015 of the Governor of the State Bank of Vietnam on the issuance of Licenses, organization, and operation of non-bank credit institutions (Circular No. 30/2015/TT-NHNN);

b) Circular No. 15/2016/TT-NHNN dated June 30, 2016 of the Governor of the State Bank of Vietnam amending and supplementing certain articles of Circular No. 30/2015/TT-NHNN;

c) Circular No. 01/2019/TT-NHNN dated February 1, 2019 of the Governor of the State Bank of Vietnam amending and supplementing certain articles of Circular No. 30/2015/TT-NHNN;

d) Circular No. 05/2023/TT-NHNN dated June 22, 2023 of the Governor of the State Bank of Vietnam amending and supplementing certain articles of Circular No. 30/2015/TT-NHNN.

Article 21. Transitional Provisions

1. Applications for the renewal of Licenses, additional content of activities in Licenses, and the simultaneous renewal of Licenses and additional content of activities submitted by non-bank credit institutions before the effective date of this Circular shall continue to be considered and processed in accordance with the legal provisions at the time of submission of the application.

2. Non-bank credit institutions may continue to perform insurance fee collection activities, collect documents to serve the resolution of compensation and payment of insurance benefits under agreements signed before July 1, 2024 for insurance contracts and agreements where the non-bank credit institution acts as an insurance agent. Amendments, supplements, and extensions of such contracts and agreements can only be implemented if the amended, supplemented, or extended content complies with the provisions of the Law on Credit Institutions and this Circular.

Article 22. Implementation organization

The Director of the Office, the Director of Banking Inspection and Supervision, the Heads of units under the State Bank of Vietnam, and non-bank credit institutions are responsible for organizing the implementation of this Circular./.