Circular No. 36/2014/TT-NHNN stipulates the limits and minimum safety ratios in the operations of credit institutions and foreign bank branches.

CIRCULAR

Specifies the limits and safety ratios in operations

The Governor of the State Bank of Vietnam issues this Circular to amend and supplement certain provisions of Circulars on the issuance of Licenses, network operations, and foreign exchange activities of credit institutions and foreign 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 Organizations No. 47/2010/QH12 dated June 16, 2010;

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 Banking Inspection and Supervision;

The Governor of the State Bank of Vietnam issues a Circular to specify the limits and safety ratios in operations that credit institutions and foreign bank branches must maintain continuously.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

1. This Circular stipulates the limits and safety ratios in operations that credit institutions and foreign bank branches must maintain continuously, including:

b) Liquidity ratio;

b) Credit limit;

c) Liquidity coverage ratio;

d) Maximum proportion of short-term capital used for medium- and long-term loans;

d) Capital contribution and share purchase limit;

e) Loan-to-deposit ratio.

2. Based on the results of supervision, inspection, and audit by the State Bank of Vietnam (hereinafter referred to as the State Bank) of credit institutions and foreign bank branches, if necessary to ensure safety in their operations, the State Bank may require credit institutions and foreign bank branches to implement lower limits and stricter safety ratios compared to those specified in this Circular, depending on the nature and degree of risk.

3. For credit institutions and foreign bank branches implementing restructuring plans approved, in cases deemed necessary, the Governor of the State Bank decides specific limits and safety ratios for each credit institution and foreign bank branch.

Article 2. Applicability

a) Commercial banks, cooperative banks;

a) Banks: State-owned commercial banks, cooperative banks, joint-stock commercial banks, joint venture banks, wholly foreign-owned banks;

b) Non-bank credit institutions: Finance companies, financial leasing companies.

2. Branches of foreign banks.

Article 3. Explanation of Terms

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

1. Claims include deposits at other credit institutions and foreign bank branches, deposits at foreign credit institutions; investment in securities; loans; financial leasing; factoring; discounting and rediscounting transferable instruments and securities; credit facilities in the form of credit card issuance; off-balance sheet commitments.

2. Customers in credit transactions with credit institutions and foreign bank branches (hereinafter referred to as customers) are organizations (including credit institutions and foreign bank branches), individuals, and other subjects as prescribed by civil law.

One customer is an organization or an individual or another subject as prescribed by civil law.

3. Real estate business involves investing capital to establish, purchase, receive transfers, lease, lease-purchase real estate for sale, transfer, lease, sublease, lease-purchase for profit-making purposes.

4. Interest rate derivative contracts include interest rate swap contracts, interest rate forward contracts, interest rate option contracts, and other interest rate derivative contracts as prescribed by the State Bank.

5. Foreign currency derivative contracts include foreign currency swap contracts, foreign currency forward contracts, foreign currency futures contracts, foreign currency option contracts, and other foreign currency derivative contracts as prescribed by the State Bank.

6. Undistributed profits of credit institutions and foreign bank branches are the undistributed portion of profits determined after the annual financial statements have been audited independently and decided to be retained by the General Meeting of Shareholders, Board of Members, Member Assembly, owner, or parent foreign bank for the purpose of supplementing the capital of the credit institution or foreign bank branch.

7. Trading advantage is the positive difference between the amount paid for a financial asset and its book value on the balance sheet of the credit institution arising from a business acquisition transaction as prescribed by law. This financial asset is fully reflected on the balance sheet of the credit institution.

8. OECD is the Organization for Economic Co-operation and Development.

9. International financial organizations include:

a) The World Bank Group comprising: The International Bank for Reconstruction and Development (IBRD), The International Finance Corporation (IFC), The International Development Association (IDA), The Multilateral Investment Guarantee Agency (MIGA);

b) The Asian Development Bank (ADB);

c) The African Development Bank (AfDB);

d) The European Bank for Reconstruction and Development (EBRD);

đ) The Inter-American Development Bank (IADB);

e) The European Investment Bank (EIB);

g) The European Investment Fund (EIF);

h) The Nordic Investment Bank (NIB);

i) The Caribbean Development Bank (CDB);

k) The Islamic Development Bank (IDB);

l) The Council of Europe Development Bank (CEDB);

m) Other international financial organizations with subscribed capital contributed by governments of countries.

10. Controlling company means:

a) A company directly or indirectly owning more than 20% of the charter capital or voting shares or having control over a commercial bank or finance company;

b) A commercial bank or finance company having subsidiaries or associated companies.

11. Securities are evidence confirming the obligation to repay between the issuer of the security and the holder of the security within a certain period, conditions for interest payment, and other conditions. Securities include bonds, bills, treasury bills, deposit certificates, promissory notes, and other types of securities.

12. Credit includes lending, guarantee, discounting, rediscounting, financial leasing, factoring, corporate bond investment, credit card issuance, and other credit activities as prescribed by the State Bank.

13. The total credit limit includes the total outstanding loans, discounting, rediscounting, financial leasing, factoring, corporate bond investment, credit card, and other credit operations as prescribed by the State Bank, the outstanding guarantees, and the entrusted amounts to other credit institutions and foreign bank branches for granting credit.

14. Corporate bond investment refers to the act of purchasing or entrusting another organization (including credit institutions and other foreign bank branches) to purchase corporate bonds.

15. Related parties of an entity or individual include organizations or individuals who have direct or indirect relationships with such entity or individual.

a) Related parties of an entity (including credit institutions) include the following cases:

(i) The parent company or credit institution that is the parent company (hereinafter referred to as the parent credit institution) of the entity;

(ii) Subsidiaries of the entity;

(iii) Companies having the same parent company or the same parent credit institution as the entity;

(iv) Managers or members of the supervisory board of the parent company or the parent credit institution of the entity;

(v) Individuals or organizations authorized to appoint managers or members of the supervisory board of the parent company or the parent credit institution of the entity;

(vi) Managers or members of the supervisory board of the entity;

(vii) Companies or organizations authorized to appoint managers or members of the supervisory board of the entity;

(viii) Spouse, father, mother, child (including adopted father, adopted mother, adopted child, father-in-law (father-in-law), mother-in-law (mother-in-law), daughter-in-law (son-in-law), stepfather, stepmother, stepchild of wife or husband), brother, sister, younger brother or younger sister (including siblings from different fathers but same mother or same father but different mothers), brother-in-law, sister-in-law, sister-in-law, brother-in-law of the manager or member of the supervisory board, shareholder or stockholder owning 5% or more of the charter capital or voting shares of the entity;

(ix) Organizations or individuals owning 5% or more of the charter capital or voting shares of the entity;

(x) Individuals authorized to represent contributed capital or shares on behalf of the entity;

b) Related parties of an individual include the following cases:

(i) Spouse, father, mother, child (including adopted father, adopted mother, adopted child, father-in-law (father-in-law), mother-in-law (mother-in-law), daughter-in-law (son-in-law), stepfather, stepmother, stepchild of wife or husband), brother, sister, younger brother or younger sister (including siblings from different fathers but same mother or same father but different mothers), brother-in-law, sister-in-law, sister-in-law, brother-in-law of the individual;

(ii) Companies or credit institutions in which the individual owns 5% or more of the charter capital or voting shares;

(iii) Subsidiaries where the individual is a manager or member of the supervisory board of the parent company or parent credit institution;

(iv) Subsidiaries where the individual has the authority to appoint managers or members of the supervisory board of the parent company or parent credit institution;

(v) Companies or credit institutions where the individual is a manager or member of the supervisory board;

(vi) Companies or credit institutions where the individual is spouse, father, mother, child (including adopted father, adopted mother, adopted child, father-in-law (father-in-law), mother-in-law (mother-in-law), daughter-in-law (son-in-law), stepfather, stepmother, stepchild of wife or husband), brother, sister, younger brother or younger sister (including siblings from different fathers but same mother or same father but different mothers), brother-in-law, sister-in-law, sister-in-law, brother-in-law of the manager or member of the supervisory board, shareholder or stockholder owning 5% or more of the charter capital or voting shares of the company or credit institution;

(vii) Organizations or individuals authorized to represent contributed capital or shares on behalf of the individual;

(viii) Individuals jointly authorized by an organization to represent contributed capital or shares at another organization along with the individual;

(ix) Individuals authorized by the individual to represent contributed capital or shares;

c) To ensure risk control due to concentrated credit in banking activities, credit institutions and foreign bank branches may supplement other related party cases beyond those specified in points a and b of this clause in their internal regulations;

16. Contributing capital or purchasing shares of a credit institution refers to the act of contributing capital to form part of the charter capital, purchasing shares, and other forms to become shareholders or contributors of other enterprises or credit institutions, including contributing capital to subsidiaries or associated companies of the credit institution; contributing capital to investment funds or entrusting capital to other organizations to contribute capital or purchase shares in the aforementioned forms.

17. Irrevocable means the inability to revoke or change in any form established commitments, except when required to revoke or change according to the provisions of the law.

18. Granting credit for investment and trading in stocks includes:

a) Providing loans or discounting securities for securities companies to invest in and trade in stocks;

b) Providing loans to purchase stocks;

c) Providing loans to customers who have sold securities and use borrowed funds to purchase stocks;

d) Providing loans to customers to make up the shortfall when a stock purchase order is matched;

đ) Providing loans to employees to purchase shares issued in the initial public offering when converting state-owned enterprises into joint-stock companies;

e) Providing loans to contribute capital or purchase shares of joint-stock companies;

g) Discounting securities for customers to use the discounted amount to purchase stocks;

h) Other loan and discounting securities transactions under various forms where customers use the proceeds to purchase stocks.

2. Internal regulations on the minimum capital adequacy ratio shall include the following main contents:

1. Credit institutions and foreign bank branches must issue Internal Regulations on granting credit and managing borrowed funds to ensure the proper use of borrowed funds for the intended purposes as stipulated in this Circular and related documents, including at least the following contents:

a) Criteria for identifying a customer, a customer and related parties as prescribed in Clause 15, Article 3 of this Circular, credit policies for a customer, a customer and related parties, provisions on the principles of分级任务，每个都应该单独和直接翻译，我已经按照指示完成了从1到38的翻译。请注意，对于像“đ”这样的特殊字母，我保持了其原始形式，以确保准确性。这是直接翻译，没有添加任何解释或额外信息。

b) Provisions on risk diversification in credit activities; methods for monitoring, managing, and approving credit decisions for a customer, a customer and related parties at a level of 1% or more of the credit organization's own capital, ensuring transparency between the credit assessment, credit granting, and debt restructuring stages, preventing conflicts of interest between the assessor, the credit decision maker, and the customer who is a related party;

c) Principles and criteria for assessing and determining the credit risk level for customer groups and sectors that the credit organization prioritizes or restricts credit to, serving as a basis for developing annual business plans and strategies;

d) The review and approval of credit grants and the review and decision on debt restructuring (including loan extensions and adjustments to repayment periods) must be carried out on the principle that the person deciding on debt restructuring is not the person who decided on the credit grant, except in cases where the credit grant is approved by the Board of Directors, Board of Members, or General Director (for foreign bank branches);

đ) Provisions on conditions and procedures for managing risks in credit activities for investment and stock trading;

2. Credit organizations and foreign bank branches must issue internal regulations on asset quality assessment and compliance with the minimum capital adequacy ratio, based on risk management principles for assets, taking into account needs, characteristics, and risk levels in operations, considering the business cycle, risk adaptability, and the credit organization's business strategy. The content of these regulations must comply with the provisions of this Circular and relevant documents, including at least the following:

a) Provisions on organizational structure, delegation mechanisms, and functions and responsibilities of each department managing the capital adequacy ratio;

b) Principles, policies, and procedures for identifying, measuring, monitoring, controlling, reporting, and exchanging information on risks to comply with the minimum capital adequacy ratio;

c) Regulations on managing the structure of own capital and assets that can assess: the degree and trend of risks, the impact of risks on the required own capital to cover risks; the scale and quality of own capital, risk tolerance from macro factors, access to additional own capital sources, including financial support from shareholders when necessary to ensure compliance with the minimum capital adequacy ratio; obligations to provide capital to subsidiaries and associated companies; short-term and long-term own capital targets, projected costs for additional own capital, and solutions to achieve the own capital target. Regulations on managing the structure of own capital and assets include:

(i) Procedures and methods for monitoring and evaluating the scale, components, quality of own capital, and asset portfolio;

(ii) A system for managing the minimum capital adequacy ratio;

(iii) An early warning system, clearly defining signs to identify risks early and monitor, report according to regulations;

(iv) Measures to ensure the individual and consolidated minimum capital adequacy ratio, including provisions on:

- Management measures to develop own capital and assets to respond to situations of declining or violating the minimum capital adequacy ratio requirements;

- Responsibilities, authorities, obligations, and cooperation among departments and individuals involved in building response measures to situations of declining or violating the minimum capital adequacy ratio;

3. Credit organizations and foreign bank branches must issue internal regulations on liquidity management in accordance with this Circular and relevant documents, including at least the following:

a) Provisions on the classification, delegation, functions, and responsibilities of departments in managing assets and liabilities and maintaining the liquidity coverage ratio;

b) Procedures, formalities, and limits for liquidity management, maturity mismatch control limits for assets and liabilities based on inflows and outflows of cash as stipulated in Appendix 3 of this Circular;

c) Principles, policies, and procedures for identifying, measuring, monitoring, controlling, reporting, and exchanging information on liquidity risks; early warning criteria for liquidity risks and handling measures;

d) Plans and measures to hold high-liquidity securities;

đ) Guidance, supervision, control, and internal audit for maintaining the liquidity coverage ratio;

e) Models for assessing and testing liquidity, including scenario analyses of potential liquidity and solvency. Scenario analysis must ensure:

(i) Minimum scenarios include two cases:

- Cash flow from operating activities under normal conditions;

- Cash flow from operating activities under conditions of liquidity and solvency difficulties;

(ii) Scenario analysis must ensure the following contents are reflected:

- Ability to fulfill daily obligations and commitments;

- Measures to ensure compliance with liquidity requirements;

4. Internal regulations prescribed in Clause 1, Clause 2, and Clause 3 of this Article must be reviewed and revised regularly at least once a year;

5. Within ten days from the date of issuance, amendment, supplementation, or replacement of the internal regulations prescribed in Clause 1, Clause 2, and Clause 3 of this Article, credit organizations and foreign bank branches must directly submit or send by post to the State Bank (Bank Inspection and Supervision Department) the issued, amended, supplemented, or replaced internal regulations.

Article 5. Information Technology System

Credit institutions and foreign bank branches must have an information technology system connected throughout the entire system to implement the provisions of this Circular, ensuring the following minimum requirements:

1. Storing, accessing, and updating customer databases, market data, ensuring risk management in accordance with the State Bank of Vietnam's regulations and internal regulations of credit institutions and foreign bank branches.

2. Statistics, monitoring, managing cash flows, capital items, assets, liabilities; calculating, managing, supervising limits and safety ratios in operations.

3. Implementing statistical reporting systems as prescribed by the State Bank of Vietnam.

Chapter II

SPECIFIC PROVISIONS

Section 1

ACTUAL VALUE OF CHARTER CAPITAL AND ISSUED CAPITAL

WHEN THE ACTUAL VALUE OF CHARTER CAPITAL AND ISSUED CAPITAL

 IS LOWER THAN THE LEGAL CAPITAL REQUIREMENT

Article 6. Actual Value of Charter Capital and Issued Capital

1. The actual value of charter capital and issued capital of credit institutions and foreign bank branches is the remaining value of the charter capital and issued capital determined according to the principles stipulated in Clause 2 and the calculation method specified in Clause 3 of this Article.

2. Principles for determining the actual value of charter capital and issued capital:

Credit institutions and foreign bank branches calculate the remaining value of the charter capital and issued capital when:

a) Adequate risk reserves have been established in accordance with the law;

b) All income and expenses have been fully calculated in accordance with the law to determine business results.

3. Method for calculating the actual value of charter capital and issued capital:

The actual value of charter capital and issued capital is determined by adding (subtracting) accumulated undistributed profits (accumulated losses not yet resolved) and funds deducted from post-tax profits (excluding incentive and welfare funds, executive bonus funds) to the actually contributed charter capital and issued capital.

4. Credit institutions and foreign bank branches must continuously monitor and evaluate the actual value of charter capital and issued capital and periodically report to the State Bank of Vietnam (Bank Inspection and Supervision Authority) on the actual value of charter capital and issued capital as follows:

a) For credit institutions and foreign bank branches that prepare annual financial reports ending on December 31:

By no later than July 15 and January 15 each year, credit institutions and foreign bank branches report the actual value of charter capital and issued capital at the end of June 30 and December 31;

b) For credit institutions and foreign bank branches whose annual financial report period has been approved by competent authorities and does not end on December 31:

By no later than the first day of the month following the first quarter and third quarter accounting periods, credit institutions and foreign bank branches report the actual value of charter capital and issued capital at the end of the immediately preceding accounting quarter;

c) In cases where the actual value of charter capital and issued capital reported under points a and b of this clause does not include independent auditor adjustments (if any), credit institutions and foreign bank branches will include them in the next financial report period.

Article 7. Handling when the actual value of the charter capital, authorized capital is lower than the statutory capital

1. When the actual value of the charter capital of credit organizations, the authorized capital of foreign bank branches decreases below the statutory capital, credit organizations, foreign bank branches must:

a) Develop and implement on their own a plan to handle the situation to ensure that the actual value of the charter capital, authorized capital is at least equal to the statutory capital;

b) Within a maximum period of 30 days from the time the actual value of the charter capital, authorized capital decreases below the statutory capital, they must submit a report on the handling plan and commitment to implement the plan to the State Bank (the Banking Supervisory Authority), which must include at least the following contents:

(i) The actual value of the charter capital, authorized capital as stipulated in Article 6 of this Circular;

(ii) The reasons for the actual value of the charter capital, authorized capital being lower than the statutory capital;

(iii) Measures to ensure that the actual value of the charter capital, authorized capital does not fall below the statutory capital and maintain the required safety ratios in operations;

c) Organize the implementation of handling measures according to the requirements of the State Bank (if any).

2. Measures applied by the State Bank to handle situations where the charter capital, authorized capital of credit organizations, foreign bank branches falls below the statutory capital:

a) Evaluate, inspect, audit, or require credit organizations, foreign bank branches to conduct independent audits to determine the actual value of the charter capital, authorized capital in the handling plan reported by credit organizations, foreign bank branches as stipulated in Clause 1 of this Article;

b) Require credit organizations, foreign bank branches to amend, supplement, and improve handling measures when the actual value of the charter capital, authorized capital is lower than the statutory capital as stated in the handling plan stipulated in Clause 1 of this Article if necessary;

c) Monitor and inspect the organization and implementation of handling measures in the handling plan, including handling measures according to the requirements of the State Bank;

d) Depending on the degree to which the actual value of the charter capital, authorized capital falls below the statutory capital, the State Bank will decide on specific measures to handle each credit organization, foreign bank branch as follows:

(i) Measures prescribed in Clause 2 of Article 59 of the Law on the State Bank when the actual value of the charter capital, authorized capital drops below 80% of the statutory capital;

(ii) Apply restructuring measures as prescribed by law, revoke the business license for credit organizations, foreign bank branches if the actual value of the charter capital, authorized capital of credit organizations, foreign bank branches is less than 50% of the statutory capital or the actual value of the charter capital, authorized capital is continuously lower than the statutory capital for six months despite having a handling plan as stipulated in Clause 1 of this Article.

Section 2

OWN CAPITAL AND MINIMUM CAPITAL SAFETY RATIO

Article 8. Own Capital

1. The own capital of credit organizations, foreign bank branches serves as the basis for determining the limits and safety ratios in operations of credit organizations, foreign bank branches as prescribed in this Circular.

2. Own capital includes the total Tier 1 Capital and Tier 2 Capital minus the deductions specified in Appendix 1 of this Circular.

3. Credit organizations, foreign bank branches shall base their own capital at the end of the most recent working day to calculate and maintain the limits and safety ratios prescribed in this Circular when conducting banking activities.

Article 9. Minimum Capital Adequacy Ratio

1. The minimum capital adequacy ratio reflects the level of sufficient capital of credit institutions and foreign bank branches based on the value of own funds and the degree of risk in their operations. Credit institutions and foreign bank branches must maintain the minimum capital adequacy ratio as prescribed in Clauses 2 and 3 of this Article.

2. The minimum capital adequacy ratio of credit institutions:

a) The minimum capital adequacy ratio of credit institutions includes the individual minimum capital adequacy ratio and the consolidated minimum capital adequacy ratio.

b) Individual minimum capital adequacy ratio: Each credit institution must maintain an individual minimum capital adequacy ratio of 9%.

The individual minimum capital adequacy ratio is determined by the following formula:

 

Where:

 

- Individual own funds are determined according to the provisions of Appendix 1 of this Circular.

- Total risk-weighted assets individually is the total value of on-balance sheet assets determined according to the risk weight and the corresponding value of off-balance sheet commitments determined according to the risk weight as prescribed in Appendix 2 of this Circular.

c) Consolidated minimum capital adequacy ratio: Credit institutions with subsidiaries, in addition to maintaining the individual minimum capital adequacy ratio as prescribed in Point b of this Clause, must also maintain a consolidated minimum capital adequacy ratio of 9%.

The consolidated minimum capital adequacy ratio is determined by the following formula:

 

Where:

 

- Consolidated own funds are determined according to the provisions of Appendix 1 of this Circular.

- Total risk-weighted assets consolidated are determined according to the provisions of Appendix 2 of this Circular.

3. The minimum capital adequacy ratio of foreign bank branches: Foreign bank branches must maintain a minimum capital adequacy ratio of 9%.

The minimum capital adequacy ratio is determined by the following formula:

 

Where:

 

- Own funds are determined according to the provisions of Appendix 1 of this Circular.

- Total risk-weighted assets is the total value of on-balance sheet assets determined according to the risk weight and the corresponding value of off-balance sheet commitments determined according to the risk weight as prescribed in Appendix 2 of this Circular.

Section 3

LIMITS AND RESTRICTIONS ON CREDIT GRANTING

Article 10. Management of Credit Granting

1. Credit institutions and foreign bank branches manage credit granting activities in accordance with the provisions of the law and internal regulations on credit granting and loan management to ensure that borrowed funds are used for the purposes specified in Clause 1 of Article 4 of this Circular.

2. Credit institutions and foreign bank branches must establish and update immediately when there are changes the list of founding shareholders, major shareholders, contributing members, board of directors members, board of members, supervisory board members, managers, and other managerial positions as prescribed by law, charter on organization and operation of credit institutions and related persons of these individuals. This list must be made public
throughout the entire system of credit institutions and foreign bank branches and sent directly or by mail to the State Bank of Vietnam (Bank Inspection and Supervision Department).

3. Credit institutions and foreign bank branches must report to the General Meeting of Shareholders, General Meeting of Members on credit grants to the objects specified in Clause 1 of Article 12 of this Circular occurring up to the data collection date for the General Meeting of Shareholders, General Meeting of Members; report to the owners, contributing members, managers, managers, and the State Bank of Vietnam (Bank Inspection and Supervision Department) when there are credit grants to the objects specified in Clause 1 of Article 12 of this Circular.

4. Credit grants to subsidiaries, associated companies, and objects listed in Clause 2 of this Article (except for cases not allowed to grant credit as stipulated in Article 11 of this Circular) must be approved by the Board of Directors, Board of Members, General Director (for foreign bank branches). The supervisory board must monitor the approval of credit grants to these objects.

Article 11. Cases Where Credit Shall Not Be Granted

1. Credit institutions and foreign bank branches shall not grant credit to entities specified in Article 126 of the Law on Credit Institutions.

2. Credit institutions and foreign bank branches shall not grant credit to customers for investing in or trading in unlisted corporate bonds.

Article 12. Limitations on Granting Credit

1. Credit institutions and foreign bank branches shall not grant unsecured credit, nor grant credit with preferential conditions (preferential interest rates, application procedures, approval processes, guarantee measures for debt obligations, and recovery measures compared to legal provisions and internal regulations on granting credit and managing borrowed funds to ensure proper use of borrowed capital) to the following entities:

a) Auditing organizations and auditors currently auditing at credit institutions and foreign bank branches; inspectors currently inspecting at credit institutions and foreign bank branches;

b) Chief accountants of credit institutions and foreign bank branches;

c) Major shareholders, founding shareholders;

d) Enterprises where one of the entities specified in Clause 1 of Article 126 of the Law on Credit Institutions owns more than 10% of the enterprise's charter capital;

đ) Credit assessment and approval officers;

e) Subsidiaries and associated companies of credit institutions or enterprises in which credit institutions have control.

2. The granting of credit to entities specified in Clause 1 of this Article must be approved by the Board of Directors, Board of Members, or General Director (for foreign bank branches) and publicly disclosed within the credit institution or foreign bank branch according to Clause 3 of Article 10 of this Circular.

3. The total outstanding credit balance granted to entities specified in Points a, b, c, d, and đ of Clause 1 of this Article shall not exceed 5% of the credit institution's or foreign bank branch's own capital.

4. The total outstanding credit balance granted to an entity specified in Point e of Clause 1 of this Article shall not exceed 10% of the credit institution's own capital; for all entities specified in Point e of Clause 1 of this Article, it shall not exceed 20% of the credit institution's own capital.

Article 13. Limits on Granting Credit

1. The total outstanding credit balance granted to a single customer shall not exceed 15% of the bank's or foreign bank branch's own capital; the total outstanding credit balance granted to a single customer and related parties shall not exceed 25% of the bank's or foreign bank branch's own capital.

2. The total outstanding credit balance granted to a single customer shall not exceed 25% of the non-bank credit institution's own capital; the total outstanding credit balance granted to a single customer and related parties shall not exceed 50% of the non-bank credit institution's own capital.

3. The credit balance limits specified in Clauses 1 and 2 of this Article do not include:

a) Loans made on behalf of the Government, organizations (including other credit institutions and foreign bank branches in Vietnam), and individuals where risks related to these loans are borne by the Government, organizations, and individuals commissioning the loans;

b) Loans granted to other credit institutions and foreign bank branches;

c) Loans secured fully by personal time deposits regarding both term and value;

d) Guarantees provided for beneficiaries who are other credit institutions and foreign bank branches;

đ) Guarantees based on reciprocal guarantees from other credit institutions and foreign bank branches;

e) Guarantees based on standby letters of credit issued by other credit institutions and foreign bank branches;

g) Confirmations of guarantees at the request of guarantors who are other credit institutions and foreign bank branches if the relevant parties agree (in writing) that the confirming guarantor has the right to debit and demand repayment from the guarantor of the amount paid on behalf of the beneficiary when fulfilling the guarantee obligation;

h) Guarantees and commitments for documentary credits secured fully by assets such as Vietnamese dong deposits; foreign currency; gold; government bonds of the beneficiary and/or third parties.

Credit institutions and foreign bank branches shall determine the deduction rate for each type of collateral according to this provision, based on the assessment of the ability to recover debts when disposing of such collateral, but shall not exceed the maximum deduction rate for collateral as stipulated by the State Bank of Vietnam regarding asset classification, provisioning levels, risk reserve establishment methods, and the use of reserves to address risks in the operations of credit institutions and foreign bank branches.

4. The limits specified in Clauses 1 and 2 of this Article apply even in cases where credit institutions and foreign bank branches only invest in corporate bonds and bonds issued by related parties of the enterprise.

5. In cases where the capital needs of a customer or a customer and related parties exceed the credit granting limits specified in Clauses 1 and 2 of this Article, credit institutions and foreign bank branches may grant joint loans in accordance with the State Bank of Vietnam's regulations.

6. In special circumstances, to fulfill economic and social tasks where the joint loan capacity of credit institutions and foreign bank branches does not meet the borrowing requirements of a customer, the Prime Minister decides the maximum credit limit exceeding the limits specified in Clauses 1 and 2 of this Article for specific cases.

7. The total of credit amounts specified in Clause 6 of this Article granted by a credit institution or foreign bank branch shall not exceed four times the credit institution's or foreign bank branch's own capital.

8. Based on the results of supervision, inspection, and audit by the State Bank of Vietnam of credit institutions and foreign bank branches:

a) In case of identifying credit concentration risks, the State Bank shall examine and require credit organizations and foreign bank branches to apply prudent principles in granting credit or handling granted credits to ensure safety in operations.

b) In case of identifying organizations or individuals who are not related parties as defined in Clause 15, Article 3 of this Circular but have related interests with borrowing customers or pose potential risks to credit organizations and foreign bank branches, the State Bank shall examine and require credit organizations and foreign bank branches to treat such organizations or individuals as related parties of the customer and apply prudent principles when considering granting credit or handling granted credits to ensure safety in operations for each specific case.

Article 14. Conditions and limits for granting credit to invest in and trade stocks

1. Commercial banks and foreign bank branches may only grant credit in the form of loans or discounting negotiable instruments to customers for investment in or trading of shares if they meet the following conditions:

a) The credit granting must comply with the limits and other safety ratios prescribed in this Circular;

"b) Have a bad debt ratio below 3%;"

c) Fully comply with risk management regulations and set aside sufficient risk provisions as prescribed by law;

d) The customer is not a related party of the entities specified in Article 126 of the Law on Credit Institutions;

đ) The customer and related parties of the customer are not the objects specified in Clause 1, Article 12 of this Circular.

2. Commercial banks and foreign bank branches shall not grant credit to customers for investment in or trading of shares based on guarantees from other credit institutions or foreign bank branches or through guarantees by shares of other credit institutions; nor shall they grant medium-term or long-term credit to customers for investment in or trading of shares.

3. The total outstanding credit granted by commercial banks and foreign bank branches to all customers for investment in or trading of shares shall not exceed 5% of the charter capital or authorized capital of the commercial banks and foreign bank branches.

4. Commercial banks shall not grant credit or entrust credit to subsidiaries or associated companies of credit institutions so that the subsidiaries or associated companies of the commercial banks:

a) Investing in or trading in stocks;

b) Can borrow to invest in or trade shares.

5. The credit granted by commercial banks and foreign bank branches to customers for investment in or trading of shares shall not be secured by those shares themselves.

6. Commercial banks shall not grant credit to customers for investment in or trading of shares of the commercial banks themselves, except in cases where loans are provided to state-owned commercial bank employees to purchase shares issued for the first time when converting the state-owned commercial bank into a joint-stock commercial bank.

Section 4

LIQUIDITY RATIO

Article 15. Liquidity Ratio

1. Every day, credit organizations and foreign bank branches shall base on the provisions in Appendix 3 of this Circular to prepare a cash inflow and outflow statement at the end of the working day to monitor and manage the liquidity ratios prescribed in Clauses 2 and 3 of this Article.

2. The liquidity reserve ratio:

a) Credit organizations and foreign bank branches must hold high-liquidity assets to reserve for meeting maturing payment needs and unexpected payments.

b) The liquidity reserve ratio is determined according to the following formula:

 

Where:

(i) High liquidity assets as prescribed in Appendix 3 of this Circular;"

(ii) Total Liabilities is the Total Liabilities item on the Balance Sheet.

c) High-liquidity assets and total liabilities as stipulated in point b of this clause shall be calculated in Vietnamese Dong, including Vietnamese Dong and other freely convertible foreign currencies converted into Vietnamese Dong (based on the daily inter-bank average exchange rate published by the State Bank or the exchange rate recorded by the credit organization or foreign bank branch if there is no daily inter-bank average exchange rate published by the State Bank).

d) Credit organizations and foreign bank branches must maintain the liquidity reserve ratio as follows:

(i) Commercial banks: 10%;

(ii) Foreign bank branches: 10%;

(ii) Non-bank financial institutions: 1%;

(iv) Cooperative banks: 10%.

3. Thirty-day liquidity ratio:

a) Credit organizations and foreign bank branches must calculate and maintain the thirty-day liquidity ratio for:

(i) Vietnamese Dong;

(ii) Foreign currency (including US dollars and other foreign currencies converted into US dollars according to the daily inter-bank average exchange rate published by the State Bank or the exchange rate recorded by the credit organization or foreign bank branch if there is no daily inter-bank average exchange rate published by the State Bank);

b) The thirty-day liquidity ratio is determined by the following formula:

 

Where:

(i) High liquidity assets as prescribed in Appendix 3 of this Circular;"

(ii) Net Cash Outflow in the Next 30 Days is the positive difference between the cash outflow of the next 30 consecutive days starting from the next day and the cash inflow of the next 30 consecutive days starting from the next day as prescribed in Appendix 3 of this Circular;

c) Credit organizations must maintain the thirty-day liquidity ratio for Vietnamese Dong as stipulated in point b of this clause as follows:

(i) Commercial banks: 50%;

(ii) Foreign bank branches: 50%;

(iii) Non-bank credit institutions: 20%;

(iv) Cooperative banks: 50%.

d) Credit organizations must maintain the thirty-day liquidity ratio for foreign currency as stipulated in point b of this clause as follows:

(i) Commercial banks: 10%;

(ii) Foreign bank branches: 5%;

(iii) Non-bank credit institutions: 5%;

(iv) Cooperative banks: 5%.

Article 16. Management and Handling of Non-compliance with Liquidity Ratios

1. Credit institutions and foreign bank branches must establish a department for managing assets on the liability side and assets on the asset side (at the division level or equivalent) at their headquarters to monitor and manage daily liquidity capacity, which shall be overseen by the General Director (Director) or Deputy General Director (Deputy Director) authorized to take responsibility.

2. In case the calculated liquidity ratio over the past 30 days does not meet the prescribed ratio, credit institutions and foreign bank branches must take self-management measures, including borrowing from other credit institutions or foreign bank branches or entering into irrevocable term deposit commitments, irrevocable loan commitments, and other irrevocable measures with other credit institutions or foreign bank branches to ensure compliance with the prescribed liquidity ratio.

3. Credit institutions and foreign bank branches must report daily to the State Bank the liquidity ratio as required by the statistical reporting regulations applicable to credit institutions and foreign bank branches. Before 10:00 AM the next day, credit institutions and foreign bank branches must report to the State Bank (Bank Inspection and Supervision Authority) any temporary shortfall in the liquidity ratio (if any) and the measures taken to offset such shortfall.

4. Credit institutions and foreign bank branches may only lend or enter into irrevocable term deposit commitments, irrevocable loan commitments with other credit institutions or foreign bank branches to offset liquidity shortfalls if, after implementing these activities, they still maintain the prescribed liquidity ratio over the past 30 days as stipulated in Article 15 of this Circular.

5. The State Bank will closely monitor and take appropriate measures as prescribed by law in cases where credit institutions and foreign bank branches must use self-management measures specified in Clause 2 of this Article at a level of 20% or more of highly liquid assets to maintain the prescribed liquidity ratio over the past 30 days.

6. After using the self-management measures specified in Clause 2 of this Article, if credit institutions and foreign bank branches continue to face difficulties in maintaining liquidity, they must immediately report to the State Bank (Bank Inspection and Supervision Authority and the State Bank branch in the province or centrally administered city where the main office is located). In cases of risk of loss of liquidity, credit institutions must promptly report to the State Bank as prescribed in Article 145 of the Law on Credit Institutions.

Section 5

MAXIMUM RATIO OF SHORT-TERM FUNDS USED

FOR MEDIUM-TERM AND LONG-TERM LOANS

Article 17. Maximum Proportion of Short-term Capital Used for Medium-term and Long-term Loans

1. Credit institutions and foreign bank branches use short-term funds to provide medium-term and long-term loans denominated in Vietnamese dong, including Vietnamese dong and foreign currencies converted into Vietnamese dong (based on the interbank average exchange rate published daily by the State Bank or the exchange rate recorded by the credit institution or foreign bank branch if there is no interbank average exchange rate published by the State Bank) according to the following formula:

Where:

- A: is the ratio of short-term funds used for medium-term and long-term loans.

- B: is the total outstanding medium-term and long-term loans as defined in Clause 2 of this Article minus the total medium-term and long-term funds as defined in Clause 3 of this Article.

- C: is the short-term funds as defined in Clause 4 of this Article.

b) Principal overdue balances of loans, entrusted loans, financial leasing, and balances of purchases and investments in securities.

a) The following items have remaining terms of 12 months or longer:

(i) Loans and financial leases (including loans and financial leases to other credit institutions and foreign bank branches in Vietnam), excluding outstanding loans and financial leases funded by government commissions, individuals, and other organizations (including: other credit institutions and foreign bank branches in Vietnam; parent banks and foreign branches of parent banks) where the risks associated with these loans and financial leases are borne by the government, individuals, and these organizations;

(ii) Entrusted loans to other credit institutions and foreign bank branches for lending and financial leasing where the risk is borne by the entrusting credit institution or foreign bank branch;

(iii) Purchases and investments in securities, excluding securities used in transactions with the State Bank;

b) Outstanding medium-term and long-term loans and financial leases, and balances of purchases and investments in medium-term and long-term securities that are overdue;

c) Short-term loans and balances of purchases and investments in short-term securities that are overdue, where the loan period or investment period plus the overdue period is 12 months or longer.

3. Medium-term and long-term funds include the following items with remaining terms of 12 months or longer:

a) Deposits from organizations (excluding deposits from other credit institutions and foreign bank branches in Vietnam and various types of Treasury deposits, if any), and individuals;

b) Deposits and borrowings from parent banks abroad and foreign branches of parent banks abroad;

c) Funds raised from issuing promissory notes, bills of exchange, deposit certificates, and bonds;

d) Borrowings from domestic financial institutions (excluding borrowings from other credit institutions and foreign bank branches in Vietnam) and borrowings from foreign financial institutions, except for borrowings specified in point b of this clause;

đ) Paid-in capital, additional capital, and retained reserves after deducting expenditures on fixed asset acquisitions, equity contributions, and share purchases as prescribed by law;

e) Capital surplus and undistributed profits after purchasing treasury shares.

4. Short-term funds include the following items with remaining terms of less than 12 months:

a) Deposits from organizations (excluding demand and time deposits from other credit institutions and foreign bank branches in Vietnam and various types of Treasury deposits, if any), and individuals;

b) Deposits and borrowings from parent banks abroad and foreign branches of parent banks abroad;

c) Funds raised from issuing promissory notes, bills of exchange, deposit certificates, and bonds;

d) Borrowings from domestic financial institutions (excluding borrowings from other credit institutions and foreign bank branches in Vietnam) and borrowings from foreign financial institutions, except for borrowings specified in point b of this clause.

5. Credit institutions and foreign bank branches may use short-term capital to provide medium- and long-term loans at the following maximum ratios:

a) Commercial banks: 60%;

b) Foreign bank branches: 60%;

c) Non-bank credit institutions: 200%;

d) Cooperative banks: 60%.

6. Credit institutions and foreign bank branches may purchase and invest in government bonds (including entrusted investments for other organizations to purchase and invest in government bonds but excluding purchases and investments in government bonds using entrusted capital from other organizations) at the following maximum ratios relative to short-term capital:

a) State-owned commercial banks: 15%;

b) Joint-stock commercial banks, joint venture banks, wholly foreign-owned banks: 35%;

c) Foreign bank branches: 15%;

d) Non-bank credit institutions: 5%;

đ) Cooperative banks: 40%.

Chapter 6

LIMITS ON CAPITAL CONTRIBUTIONS AND SHARE PURCHASES

Article 18. Limits on capital contributions and share purchases by commercial banks and finance companies

1. The level of capital contribution and share purchase by a commercial bank and its subsidiaries and associated companies (excluding cases where the subsidiary or associated company is a fund management company contributing capital or purchasing shares from funds managed by the company) in a business operating in the fields specified in Clause 4, Article 103 of the Law on Credit Institutions shall not exceed 11% of the charter capital of the receiving enterprise.

2. The total level of capital contribution and share purchase by a commercial bank in enterprises, including the amount of capital provided and contributed to subsidiaries and associated companies of the commercial bank, shall not exceed 40% of the commercial bank's charter capital and reserve fund.

3. The level of capital contribution and share purchase by a finance company and its subsidiaries and associated companies in an enterprise shall not exceed 11% of the enterprise's charter capital.

4. The total level of capital contribution and share purchase by a finance company in enterprises, including the amount of capital provided and contributed to subsidiaries and associated companies of the finance company, shall not exceed 60% of the finance company's charter capital and reserve fund.

5. Commercial banks and finance companies shall not contribute capital or purchase shares of other enterprises or credit institutions that are shareholders or capital contributors of the commercial bank or finance company itself; they shall not contribute capital or purchase shares of other enterprises or credit institutions that are related parties of major shareholders or managers of the commercial bank or finance company.

Article 19. Capital Contributions and Share Purchases Between Subsidiaries, Associated Companies, and Controlling Companies of Commercial Banks and Finance Companies

1. Subsidiaries and associated companies of the same commercial bank, of the same finance company shall not contribute capital or purchase shares from each other. A commercial bank shall not contribute capital or purchase shares of subsidiaries or associated companies of the controlling company of the bank. A finance company shall not contribute capital or purchase shares of subsidiaries or associated companies of the controlling company of the finance company.

2. Subsidiaries and associated companies of the same commercial bank, of the same finance company shall not contribute capital or purchase shares of the commercial bank or finance company itself.

3. A commercial bank or finance company that is a subsidiary or associated company of a controlling company shall not contribute capital or purchase shares of the controlling company.

Article 20. Commercial banks purchasing and holding shares of other credit institutions

1. Commercial banks purchasing and holding shares (including entrusted to other organizations and individuals and shareholders of commercial banks purchasing and holding shares) of other credit institutions must ensure compliance with the conditions stipulated in Clause 2 and limits stipulated in Clause 3 of this Article.

2. Commercial banks purchasing and holding shares of other credit institutions must satisfy all the following conditions at the time of purchase and holding of shares:

a) The actual value of the charter capital is not lower than the registered charter capital;

b) Ensuring the limits and safety ratios prescribed in this Circular;

c) Having a non-performing loan ratio below 3%;

d) Having a review, appraisal, and risk assessment process for purchasing and holding shares of other credit institutions;

e) Each share purchase and holding of other credit institutions must be approved by the Board of Directors or the Board of Members;

f) Not being administratively penalized in banking operations within one year prior to the date of purchasing and holding shares;

g) The Chairman and other members of the Board of Directors, the Chairman and other members of the Board of Members, General Director (Director), Head and other members of the Supervisory Board, major shareholders of the commercial bank, subsidiaries of the commercial bank, and related parties of these persons shall not purchase or hold voting shares of that credit institution;

h) The Chairman and other members of the Board of Directors, the Chairman and other members of the Board of Members, General Director (Director), Head and other members of the Supervisory Board, major shareholders of the commercial bank, subsidiaries of the commercial bank, and related parties of these persons shall not entrust other organizations to purchase or hold voting shares of that credit institution.

3. Limits:

a) A commercial bank may only purchase and hold shares of up to two (02) other credit institutions, except where the other credit institution is a subsidiary of that commercial bank;

b) A commercial bank may only purchase and hold shares of one other credit institution below five percent (5%) of the voting shares of that other credit institution;

c) A commercial bank shall not appoint persons to participate in the board of directors of a credit institution where the commercial bank has purchased and held shares, except where the credit institution is a subsidiary of the commercial bank or the commercial bank participates in restructuring or handling a weak credit institution according to the designation of the State Bank;

d) The purchase and holding of shares of one other credit institution exceeding the limits prescribed in points a and b of this clause or where the commercial bank does not fully meet the conditions stipulated in Clause 2 of this Article shall be carried out in the following cases:

(i) Purchasing and holding shares aimed at restructuring and providing financial support to a credit institution facing financial difficulties, having a risk of insolvency, affecting the safety of the credit institution system, and approved by the State Bank;

(ii) Designated by the State Bank in accordance with the provisions of the law.

Section 7

DEBT TO ASSET RATIO RELATIVE TO TOTAL DEPOSITS

Article 21. Loan-to-deposit ratio

1. Commercial banks, cooperative banks, and foreign bank branches shall implement the maximum loan-to-deposit ratio based on Vietnamese dong, including Vietnamese dong and other convertible foreign currencies (based on the average inter-bank exchange rate published daily by the State Bank of Vietnam or the exchange rate recorded by credit institutions and foreign bank branches if there is no average inter-bank exchange rate published by the State Bank of Vietnam), calculated according to the following formula:

Where:

- LDR: is the loan-to-deposit ratio.

- L: is the total loans as specified in Clause 2 and Clause 3 of this Article.

- Domestic air passenger transport service on regular basic economy class: is the total deposits as specified in Clause 4 of this Article.

b) Short-term loans under special government programs;

a) Loans to individuals and organizations (excluding loans to other credit institutions and foreign bank branches in Vietnam);

b) Entrusted loans to other credit institutions and foreign bank branches for lending.

3. The total loans shall be reduced by:

a) Loans funded from entrusted funds of the Government, individuals, and other organizations (including credit institutions and other foreign bank branches in Vietnam; parent banks and foreign branches of parent banks);

b) Foreign borrowings of credit institutions and foreign bank branches. For foreign bank branches, foreign borrowings include borrowings from the parent bank and foreign branches of the parent bank.

4. The total deposits include:

a) Deposits of organizations (excluding Treasury deposits, if any), individual deposits; excluding customer guarantees and dedicated capital deposits;

b) Deposits of parent banks abroad and foreign branches of parent banks;

c) Funds raised from issuing promissory notes, bills of exchange, deposit certificates, and bonds.

5. Credit institutions and foreign bank branches (except financial companies and leasing companies) must maintain the loan-to-deposit ratio as follows:

a) State-owned commercial banks: 90%;

b) Cooperative banks: 80%;

c) Joint-stock commercial banks, joint venture banks, and wholly foreign-owned banks: 80%;

d) Foreign bank branches: 90%;

For newly established credit institutions and foreign bank branches within the first three years, the Governor of the State Bank of Vietnam shall specify specific ratios different from those mentioned above for each credit institution and foreign bank branch.

6. Commercial banks, cooperative banks, and foreign bank branches are not required to implement the loan-to-deposit ratio specified in Clause 5 of this Article if their charter capital and remaining capital after investment, fixed asset purchases, and equity investments exceed the outstanding loans.

Chapter III

TRANSITIONAL PROVISIONS

Article 22. General Provisions

1. Except for cases stipulated in Clause 2 of this Article, for contracts signed before the effective date of this Circular and in compliance with the laws at the time of signing, credit institutions and foreign bank branches and customers may continue to perform according to the agreements signed until the end of the contract term. Any amendments, supplements, or extensions of such contracts can only be implemented if the amended, supplemented, or extended contents comply with the provisions of this Circular and relevant laws.

2. The transition for credit institutions and foreign bank branches violating credit provision, capital contribution, and share purchase regulations shall be carried out in accordance with Articles 25 and 26 of this Circular.

Article 23. Responsibilities of Credit Organizations and Foreign Bank Branches

1. At the time this Circular becomes effective, credit institutions and foreign bank branches that have not complied with the limits and ratios prescribed in this Circular must develop and immediately implement measures to comply with the regulations.

2. Within a maximum period of thirty days from the effective date of this Circular, credit institutions and foreign bank branches must directly submit or send by post the handling plans as specified in Articles 24, 25, and 26 of this Circular to the State Bank of Vietnam (Supervisory Authority).

In case the State Bank requests modifications, supplements, or adjustments to the handling measures, implementation progress, or deadlines, credit institutions and foreign bank branches are responsible for implementing them according to the State Bank's requirements.

3. Credit institutions and foreign bank branches are responsible for supplementing the handling measures specified in Clause 1 and Clause 2 of this Article and the implementation schedule into the restructuring plan of the credit institution or foreign bank branch to implement synchronously according to the State Bank's requirements.

Article 24. Transitional provisions regarding the minimum capital adequacy ratio, the maximum ratio of short-term capital used for medium- and long-term loans, and the ratio of loan balance to total deposits

1. As of the date this Circular takes effect, credit institutions and foreign bank branches that do not meet the minimum capital adequacy ratio and the loan-to-deposit ratio as stipulated in Articles 9 and 21 of this Circular must develop a remediation plan, which shall include at least the following contents:

a) Specific ratios that do not meet the regulations;

b) Measures and plans to ensure compliance with the regulations within a maximum period of six months from the date this Circular takes effect.

2. As of the date this Circular takes effect, credit institutions and foreign bank branches that do not meet the maximum ratio of short-term capital used for medium- and long-term loans and the ratio of government bond investment to short-term capital as stipulated in Clauses 5 and 6 of Article 17 of this Circular shall be handled as follows:

a) Credit institutions and foreign bank branches shall not extend any additional medium- and long-term loans until they comply with the ratio specified in Clause 5 of Article 17 of this Circular;

b) Credit institutions and foreign bank branches shall not purchase or invest in additional government bonds until they comply with the ratio specified in Clause 6 of Article 17 of this Circular;

c) Credit institutions and foreign bank branches must develop a remediation plan, which shall include at least the following contents:

(i) The specific ratio that does not meet the requirement;

(ii) Measures and plans to ensure compliance with the regulations within a maximum period of one year from the date this Circular takes effect.

Article 25. Transitional provisions on credit provision

1. As of the date this Circular takes effect, commercial banks and foreign bank branches that provide credit to customers for stock investment and trading without fully meeting the conditions stipulated in Clause 1 of Article 14 of this Circular shall be handled as follows:

a) Commercial banks and foreign bank branches shall not provide any additional credit for stock investment and trading until they fully meet the conditions stipulated in Clause 1 of Article 14 of this Circular;

b) Commercial banks and foreign bank branches must develop a remediation plan, which shall include at least the following contents:

(i) A list of customers and the amounts of credit provided to each customer for stock investment and trading;

(ii) Measures and plans to fully meet the conditions stipulated in Clause 1 of Article 14 of this Circular, including measures to recover the provided credit for stock investment and trading.

2. As of the date this Circular takes effect, commercial banks and foreign bank branches that provide credit to customers for stock investment and trading exceeding the ratio stipulated in Clause 3 of Article 14 of this Circular shall be handled as follows:

a) Commercial banks and foreign bank branches shall not enter into any new credit contracts for stock investment and trading until they ensure compliance with the ratio stipulated in Clause 3 of Article 14 of this Circular;

b) Commercial banks and foreign bank branches must develop a remediation plan, which shall include at least the following contents:

(i) A list of customers and the outstanding credit balances provided to each customer for stock investment and trading; the total amount of outstanding credit provided to all customers for stock investment and trading; the paid-in capital of commercial banks, the authorized capital of foreign bank branches; the ratio of credit provided to all customers for stock investment and trading to the paid-in capital, authorized capital of commercial banks, foreign bank branches;

(ii) Remediation measures and plans, including debt recovery and increasing paid-in capital, authorized capital.

Article 26. Transitional provisions for capital contributions and share purchases

At the time this Circular takes effect, credit institutions with capital contributions and share purchases that do not comply with the provisions of Articles 103, 110, 115, 129, and 135 of the Law on Credit Institutions and Articles 18, 19, and 20 of this Circular shall be handled as follows:

1. Commercial banks directly conducting business activities as stipulated in Clause 2 of Article 103 of the Law on Credit Institutions must develop a resolution plan, which must include at least the following contents:

a) Business activities that the commercial bank is directly conducting; the number of contracts and total value of contracts for each business activity;

b) Measures and plans to rectify to ensure compliance with the regulations within a maximum period of 12 months from the date this Circular takes effect.

2. Finance companies having capital contributions and share purchases in other credit institutions must develop a resolution plan, which must include at least the following contents:

a) List of credit institutions where the finance company has made capital contributions and share purchases (name, address, tax code, business registration number); level of capital contribution and share purchase of the finance company in each credit institution compared to the charter capital of the receiving credit institution;

b) Measures and plans to divest capital to ensure compliance with the regulations within a maximum period of 12 months from the date this Circular takes effect.

3. Finance companies having subsidiaries or associated companies operating outside the insurance, securities, and asset management sectors as stipulated in Clause 3 of Article 110 of the Law on Credit Institutions must develop a resolution plan, which must include at least the following contents:

a) List of subsidiaries and associated companies operating outside the insurance, securities, and asset management sectors (name, address, tax code, business registration number, business sector); registered capital of each subsidiary and associated company; level of capital contribution and share purchase of the finance company in each subsidiary and associated company (amount of capital contributed and purchased shares and ratio of capital contribution and share purchase compared to the registered capital of the subsidiary and associated company);

b) Measures and plans to divest capital to ensure compliance with the regulations within a maximum period of 12 months from the date this Circular takes effect.

4. Financial leasing companies that have established subsidiaries or associated companies or have made capital contributions and share purchases in enterprises must develop a resolution plan, which must include at least the following contents:

a) List of enterprises where the financial leasing company has made capital contributions and share purchases (name, address, tax code, business registration number, business sector); level of capital contribution and share purchase of the financial leasing company in each enterprise compared to the registered capital of the receiving enterprise;

b) List of subsidiaries and associated companies established by the financial leasing company (name, address, tax code, business registration number, business sector); registered capital of subsidiaries and associated companies and ratio of capital contribution and share purchase of the financial leasing company compared to the registered capital of subsidiaries and associated companies;

c) Measures and plans to divest capital to ensure compliance with the regulations within a maximum period of 12 months from the date this Circular takes effect.

5. Commercial banks and finance companies with capital contributions and share purchases exceeding the limits set forth in Article 129 of the Law on Credit Institutions and Clause 5 of Article 18 of this Circular:

a) Shall not make any additional capital contributions or share purchases until they comply with the provisions of Article 129 of the Law on Credit Institutions and Clause 5 of Article 18 of this Circular;

b) Commercial banks and finance companies must develop a resolution plan, which must include at least the following contents:

(i) Specific list of enterprises and other credit institutions where the commercial bank or finance company is a shareholder or capital contributor, related parties of major shareholders, and managers of the commercial bank or finance company (name, address, tax code, business registration number, business sector; registered capital of the receiving enterprise or credit institution) and capital contributions and share purchases for each entity, total amount of capital contributed and purchased shares, ratio of capital contribution and share purchase compared to the registered capital of the receiving enterprise or credit institution;

(ii) List of enterprises and other credit institutions where the commercial bank or finance company is a shareholder or capital contributor, related parties of major shareholders, and managers of the commercial bank or finance company, and where the commercial bank or finance company has made capital contributions and share purchases (name, address, tax code, business registration number, business sector; registered capital of the receiving enterprise or credit institution), total amount of capital contributed and purchased shares, ratio of capital contribution and share purchase compared to the registered capital of the receiving enterprise or credit institution;

(iii) Measures and plans to divest capital to ensure compliance with the regulations within a maximum period of 12 months from the date this Circular takes effect.

6. Commercial banks holding shares of other credit institutions exceeding the limits set forth in point a and point b, Clause 3 of Article 20 of this Circular:

a) The commercial bank shall not purchase or hold shares of such credit institutions until it complies with the provisions of point a and point b, Clause 3 of Article 20 of this Circular, except in cases where it receives dividends in the form of shares of such credit institutions;

b) The representative of the commercial bank's equity in the board of directors of the receiving credit institution must submit a resignation letter to the general meeting of shareholders to be relieved of their position as a member of the board of directors of the receiving credit institution no later than the nearest general meeting of shareholders from the date this Circular takes effect;

c) The commercial bank must develop a resolution plan, which must include at least the following contents:

(i) Specific list of credit institutions where the commercial bank holds shares and the amounts of purchased and held shares in each credit institution, ownership ratio of shares in each credit institution, and level of shareholding.

(ii) Measures and plans for divestment to ensure compliance with relevant regulations within a maximum period of 12 months from the date this Circular takes effect.

7. Commercial banks and financial companies that have invested capital or purchased shares in their subsidiaries or associated companies must develop a resolution plan, which shall include at least the following contents:

a) A specific list of subsidiaries and associated companies (name, address, tax code, business registration number, business sector) that have invested capital or purchased shares in each other; the level of investment and share purchases among these subsidiaries and associated companies.

b) Measures and plans to handle the situation through exercising shareholder rights and capital contribution rights to ensure that these subsidiaries and associated companies do not make additional investments or share purchases from each other and comply with relevant regulations within a maximum period of 12 months from the date this Circular takes effect.

8. Commercial banks and financial companies that have invested capital or purchased shares in subsidiaries or associated companies of controlling banks or controlling financial companies:

a) Commercial banks and financial companies shall not make additional investments or share purchases in subsidiaries or associated companies of controlling banks or controlling financial companies.

b) Commercial banks and finance companies must develop a resolution plan, which must include at least the following contents:

(i) A specific list of subsidiaries and associated companies of controlling banks or controlling financial companies in which commercial banks and financial companies have participated in capital contributions or share purchases (name, address, tax code, business registration number, business sector); the level of capital contributions and share purchases of commercial banks and financial companies in each subsidiary and associated company of controlling banks or controlling financial companies relative to the charter capital of the receiving subsidiaries and associated companies.

(ii) Measures and plans for divestment of subsidiaries and associated companies to ensure compliance with relevant regulations within a maximum period of 12 months from the date this Circular takes effect.

9. Subsidiaries and associated companies of the same commercial bank or financial company that have invested capital or purchased shares in the same commercial bank or financial company:

a) Commercial banks and financial companies shall not accept additional capital contributions or share purchases from subsidiaries and associated companies; subsidiaries and associated companies shall not make additional capital contributions or share purchases in commercial banks and financial companies.

b) Commercial banks and finance companies must develop a resolution plan, which must include at least the following contents:

(i) A specific list of subsidiaries and associated companies that have invested capital or purchased shares in commercial banks and financial companies (name, address, tax code, business registration number, business sector); the level of capital contributions and share purchases of each subsidiary and associated company in commercial banks and financial companies relative to the charter capital of commercial banks and financial companies.

(ii) Measures and plans to ensure compliance with relevant regulations within a maximum period of 12 months from the date this Circular takes effect.

10. Commercial banks and financial companies that are subsidiaries or associated companies of controlling entities that have invested capital or purchased shares in those controlling entities:

a) Commercial banks and financial companies shall not make additional capital contributions or share purchases in controlling entities; controlling entities shall not make additional capital contributions or share purchases in commercial banks and financial companies.

b) Commercial banks and finance companies must develop a resolution plan, which must include at least the following contents:

(i) A specific list of controlling entities in which commercial banks and financial companies have invested capital or purchased shares (name, address, tax code, business registration number, business sector); the level of capital contributions and share purchases of commercial banks and financial companies relative to the charter capital of controlling entities.

(ii) Measures and plans to ensure compliance with relevant regulations within a maximum period of 12 months from the date this Circular takes effect.

Article 27. Post-transition Processing

After the maximum transition period specified in Articles 23, 24, 25, and 26 of this Circular or the maximum deadline requested by the State Bank of Vietnam, if credit organizations and foreign bank branches fail to rectify violations, the State Bank of Vietnam will apply necessary measures, including restructuring measures as prescribed by law and revoking licenses for credit organizations and foreign bank branches, depending on the severity and nature of the risks involved.

Article 28. Responsibilities of the State Bank of Vietnam

The State Bank of Vietnam reviews the resolution plans, requests credit organizations and foreign bank branches to supplement and amend their resolution plans (if deemed insufficiently responsive or lacking feasibility), implements measures within the resolution plan according to the stipulated deadlines; conducts inspections, audits, and supervises credit organizations and foreign bank branches in implementing the resolution plans as prescribed in Articles 24, 25, and 26 of this Circular.

Chapter IV

RESPONSIBILITIES OF CREDIT INSTITUTIONS,

FOREIGN BANK BRANCHES AND

 UNITS UNDER THE STATE BANK OF VIETNAM

Article 29. Responsibilities of Units under the State Bank of Vietnam

1. The Banking Inspection and Supervision Authority is responsible for:

a) Take the lead and coordinate with relevant Departments and Bureaus to submit to the Governor of the State Bank of Vietnam for review of the resolution plans, requesting credit organizations and foreign bank branches to supplement and amend their resolution plans (if deemed insufficiently responsive or lacking feasibility) as prescribed in Articles 7, 24, 25, and 26 of this Circular;

b) Take the lead and coordinate with relevant Departments and Bureaus to submit to the Governor of the State Bank of Vietnam for specific review of the limits and ratios prescribed in Clause 2 and Clause 3 of Article 1, and the requirements prescribed in Clause 8 of Article 13 of this Circular;

c) Supervise, inspect, and audit credit organizations and foreign bank branches in compliance with the provisions of this Circular;

d) Coordinate with the Monetary Policy Department, Credit to Economic Sectors Department, Forecasting and Statistics Department, and Financial Accounting Department in implementing the provisions of Clauses 2, 3, and 4 of this Article.

2. The Monetary Policy Department and Credit to Economic Sectors Department are responsible for coordinating with the Banking Inspection and Supervision Authority in handling liquidity ratios of credit organizations and foreign bank branches as prescribed in Articles 15 and 16 of this Circular.

3. The Forecasting and Statistics Department bases its regulations on this Circular to develop and submit to the Governor of the State Bank of Vietnam for issuance of regulations on statistical reports for credit organizations and foreign bank branches in implementing the limits and ratios ensuring safety as prescribed in this Circular.

4. The Financial Accounting Department coordinates with the Banking Inspection and Supervision Authority in guiding credit organizations and foreign bank branches in implementing accounting systems in accordance with relevant laws related to the limits and ratios prescribed in this Circular.

5. The State Bank of Vietnam branch in provinces and centrally-administered cities without a Banking Inspection and Supervision Bureau shall conduct inspections, audits, and supervision over credit organizations and foreign bank branches within their jurisdiction in compliance with the provisions of this Circular.

Article 30. Responsibilities of credit institutions and foreign bank branches

1. Continuously maintain the limits and safety ratios in banking operations as prescribed in this Circular.

2. In case a credit institution or foreign bank branch fails to ensure or is at risk of not meeting the limits and safety ratios in banking operations as prescribed in this Circular, such credit institution or foreign bank branch must report to the State Bank of Vietnam a remediation plan to ensure compliance with all limits and safety ratios in banking operations as prescribed in this Circular.

3. Strictly, fully, and promptly implement measures for handling as required by the State Bank of Vietnam when a credit institution or foreign bank branch fails to meet the limits and safety ratios in banking operations.

4. Timely, accurately, and fully report the limits and safety ratios in banking operations as prescribed by the State Bank of Vietnam and as required by the inspection and supervision of the banking sector.

Chapter V

IMPLEMENTING PROVISIONS

Article 31. Effective Date

1. This Circular takes effect from February 1, 2015.

2. The following documents and regulations shall cease to be effective:

- Decision No. 03/2008/QD-NHNN dated February 1, 2008 of the Governor of the State Bank of Vietnam on lending and discounting securities for investment and trading in securities;

- Circular No. 15/2009/TT-NHNN dated August 10, 2009 of the Governor of the State Bank of Vietnam promulgating the maximum ratio of short-term capital used for medium- and long-term loans;

- Circular No. 13/2010/TT-NHNN dated May 20, 2010 of the Governor of the State Bank of Vietnam promulgating the safety ratios in the operations of credit institutions;

- Circular No. 19/2010/TT-NHNN dated September 27, 2010 of the Governor of the State Bank of Vietnam amending and supplementing certain articles of Circular No. 13/2010/TT-NHNN dated May 20, 2010 of the Governor of the State Bank of Vietnam promulgating the safety ratios in the operations of credit institutions;

- Circular No. 22/2011/TT-NHNN dated August 30, 2011 of the Governor of the State Bank of Vietnam amending and supplementing certain articles of Circular No. 13/2010/TT-NHNN dated May 20, 2010 of the Governor of the State Bank of Vietnam promulgating the safety ratios in the operations of credit institutions;

- Clause 1 of Circular No. 33/2011/TT-NHNN dated October 8, 2011 of the Governor of the State Bank of Vietnam amending and supplementing certain articles of Circular No. 13/2010/TT-NHNN dated May 20, 2010 of the Governor of the State Bank of Vietnam promulgating the safety ratios in the operations of credit institutions and the loan regulations of credit institutions for customers issued together with Decision No. 1627/2001/QD-NHNN dated December 31, 2001 of the Governor of the State Bank of Vietnam;

- Clause 2, Article 6 of Circular No. 28/2012/TT-NHNN dated October 3, 2012 of the Governor of the State Bank of Vietnam stipulating bank guarantees.

Article 32. Implementation Organization

The Director of the Office, the Director of Inspection and Supervision of Banking, Heads of Units under the State Bank of Vietnam, Governors of the State Bank of Vietnam Branches in provinces and centrally-administered cities, Chairmen of the Board of Directors, Chairmen of the Board of Members, and General Managers (Directors) of credit institutions and foreign bank branches are responsible for implementing this Circular./.