Law on the State Bank of Vietnam No. 46/2010/QH12

LAW

State Bank of Vietnam

________________

Pursuant to the Constitution of the Socialist Republic of Vietnam in 1992 as amended and supplemented by Resolution number 51/2001/QH10;

The National Assembly promulgates the Law on the State Bank of Vietnam.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Law stipulates the organization and operation of the State Bank of Vietnam.

Article 2. Position and functions of the State Bank of Vietnam

1. The State Bank of Vietnam (hereinafter referred to as the State Bank) is a ministry-level agency under the Government, and is the Central Bank of the Socialist Republic of Vietnam.

2. The State Bank is a legal entity with statutory capital owned by the state, headquartered in Hanoi, the capital city.

3. The State Bank performs the function of state management over currency, banking activities, and foreign exchange (hereinafter referred to as currency and banking); it also performs the functions of the Central Bank regarding issuance of money, banking for credit organizations, and providing monetary services to the Government.

Article 3. National monetary policy and authority to decide on national monetary policy

1. National monetary policy consists of decisions on currency at the national level made by authorized state agencies, including decisions on the goal of stabilizing the value of the currency expressed through inflation targets, and decisions on using tools and measures to achieve these goals.

2. The National Assembly decides on the annual inflation target through the decision on the consumer price index and monitors the implementation of the national monetary policy.

3. The President fulfills the tasks and powers prescribed by the Constitution and laws in negotiating, signing, and joining international treaties on monetary and banking matters on behalf of the Socialist Republic of Vietnam.

4. The Government submits to the National Assembly for the decision on the annual inflation target.

Article 4. Tasks and powers of the State Bank

1. The operations of the State Bank aim to stabilize the value of the currency; ensure the safety of banking activities and the system of credit organizations; ensure the safety and effectiveness of the national payment system; contribute to promoting socialist-oriented economic and social development.

2. Participate in building strategies and plans for national economic and social development.

3. Develop a strategy for the banking industry to be submitted to authorized state agencies for approval and organize its implementation.

4. Issue or submit to authorized state agencies for issuance of normative legal documents on currency and banking; promote, disseminate, and inspect such normative legal documents according to their authority.

5. Develop the annual inflation target for the Government to submit to the National Assembly for decision and organize its implementation.

6. Organize, manage, and develop the money market.

7. Organize statistical systems, forecasts on currency and banking; publicly disclose information on currency and banking in accordance with the law.

8. Organize printing, minting, storing, transporting paper money and metal coins; carry out issuance, recall, replacement, and destruction of paper money and metal coins.

9. Grant, amend, supplement, revoke licenses for the establishment and operation of credit organizations, branches of foreign banks, representative offices of foreign credit organizations, and other foreign organizations engaged in banking activities; grant and revoke licenses for non-bank organizations to provide payment intermediary services; grant and revoke licenses for organizations to provide credit information services; approve mergers, acquisitions, divisions, consolidations, and dissolution of credit organizations in accordance with the law.

10. Represent the state ownership interest in enterprises performing the functions and tasks of the State Bank and credit organizations with state capital in accordance with the law; use statutory capital to invest in establishing special-purpose enterprises to perform the functions and tasks of the State Bank as decided by

11. Inspect, audit, supervise banking; handle violations of laws on currency and banking in accordance with the law.

12. Decide to apply special measures against credit organizations that seriously violate laws on currency and banking, face financial difficulties, and pose risks to the stability of the banking system, including purchasing shares of credit organizations; suspending, temporarily suspending, or removing managers and executives from credit organizations; deciding on mergers, consolidations, and dissolutions of credit organizations; placing credit organizations in a special control status; performing duties and powers in bankruptcy proceedings for credit organizations as provided by law.

13. Take the lead in coordinating with relevant agencies to build policies, plans, and implement anti-money laundering measures.

14. Implement state management over deposit insurance in accordance with the law on deposit insurance.

15. Take the lead in establishing, monitoring, forecasting, and analyzing the results of implementing the balance of payments.

16. Organize, manage, and supervise the national payment system, provide payment services to banks; participate in organizing and supervising the operation of payment systems in the economy.

17. Manage state affairs concerning foreign exchange, foreign exchange activities, and gold trading activities.

18. Manage the state foreign exchange reserve.

19. Manage borrowing, repayment, lending, and recovery of foreign debts in accordance with the law.

20. Take the lead in coordinating with relevant agencies to prepare content, conduct negotiations, and sign international treaties with international financial and monetary organizations where the State Bank is the representative and the officially designated borrower as assigned and delegated by

21. Organize the implementation of international cooperation in monetary and banking matters.

22. Represent the Socialist Republic of Vietnam in international monetary and banking organizations.

23. Organize the credit information system and provide credit information services; perform state management functions over organizations engaged in credit information activities.

24. Act as an agent and perform banking services for the State Treasury.

25. Participate with the Ministry of Finance in issuing government bonds and government-guaranteed bonds.

26. Organize training and professional development in monetary and banking matters; research and apply scientific and technological advancements in banking.

27. Other tasks and authorities as prescribed by law.

Article 5. Responsibilities of ministries, ministerial-level agencies, and People's Committees at all levels

Within their respective tasks and authorities, ministries, ministerial-level agencies, and People's Committees at all levels shall coordinate with the State Bank of Vietnam in managing state affairs concerning money and banking.

Article 6. Interpretation of terms

In this Law, the following terms shall be understood as follows:

1. Banking activities refer to conducting business and providing regularly one or more of the following services:

a) Accepting deposits;

b) Providing credit;

c) Offering payment services through accounts.

2. Foreign exchange including:

a) Currency of another country or the European common currency and other common currencies used in international and regional payments (hereinafter referred to as foreign currency);

b) Payment instruments denominated in foreign currency, including checks, payment cards, bills of exchange for debt collection, bills of exchange for debt acceptance, and other payment instruments;

c) Securities denominated in foreign currency, including government bonds, corporate bonds, promissory notes, stocks, and other securities;

d) Gold in the national foreign exchange reserve, on accounts abroad of residents; gold in the form of bars, ingots, grains, and plates when brought into and taken out of the territory of Vietnam;

đ) The currency of the Socialist Republic of Vietnam when transferred into and out of the territory of Vietnam or used in international payments.

3. Foreign exchange operations refers to the activities of residents and non-residents in current transactions, capital transactions, using foreign exchange within the territory of Vietnam, providing foreign exchange services, and other transactions related to foreign exchange.

4. National foreign exchange reserves are assets denominated in foreign currency reflected in the balance sheet of the State Bank of Vietnam.

5. Exchange rate of the Vietnamese currency is the price of one unit of foreign currency expressed in units of the Vietnamese currency.

6. Money market is a place for short-term capital transactions.

7. Short-term transaction is a transaction with a term of less than 12 months involving securities.

8. Documents Security is evidence confirming the obligation to repay between the issuer of the security and the holder of the security within a specified period, conditions for interest payment, and other conditions.

9. National payment system is a system of inter-bank payments organized, managed, and operated by the State Bank of Vietnam.

10. Payment intermediary service refers to the activity of acting as an intermediary to connect, transmit, and process electronic data of payment transactions between payment service providers and users of payment services.

11. Banking Inspection refers to the inspection activities of the State Bank of Vietnam towards inspected banking entities in compliance with laws on money and banking.

12. Banking supervision refers to the activities of the State Bank of Vietnam in collecting, summarizing, and analyzing information about supervised banking entities through information systems and reports to prevent, detect, stop, and promptly address risks causing instability in banking operations, violations of banking operation safety regulations, and other relevant legal provisions.

Chapter II

ORGANIZATION OF THE STATE BANK OF VIETNAM

Article 7. Organization of the State Bank of Vietnam

1. The State Bank of Vietnam is organized into a centralized and unified system, comprising the management body and operational units at headquarters, branches, representative offices, and other affiliated units.

2. The organizational structure of the State Bank of Vietnam is regulated by the Government.

3. The organizational structure, tasks, and authorities of units under the State Bank of Vietnam are regulated by the Governor of the State Bank of Vietnam, except for cases stipulated in Clause 2 of Article 49 of this Law.

4. The Governor of the State Bank of Vietnam decides on the establishment and termination of operations of branches, representative offices, committees, advisory boards related to the functions and tasks of the State Bank of Vietnam; decides on the establishment and termination of operations of affiliated units under the State Bank of Vietnam operating in areas such as banking professional training and development, research, information, theoretical scientific studies, provision of services related to vault operations, banking IT services and payments, credit information services according to his authority.

Article 8. Leadership and Management of the State Bank

1. The Governor of the State Bank is a member of the Government, the head and leader of the State Bank; responsible before

2. The Governor of the State Bank has the following tasks and powers:

a) Organizing and directing the implementation of national monetary policy within the scope of authority;

b) Organizing and directing the implementation of the tasks and powers of the State Bank as prescribed by this Law and other relevant laws;

c) Representing the legal entity of the State Bank.

Article 9. Staff of the State Bank

The recruitment, utilization, and management of staff of the State Bank shall be carried out in principle according to the provisions of the Law on Public Officials and Civil Servants.

Chapter III

ACTIVITIES OF THE STATE BANK OF VIETNAM

Section 1

IMPLEMENTATION OF NATIONAL MONETARY POLICY

Article 10. Instruments for Implementing National Monetary Policy

The Governor of the State Bank decides on the use of instruments for implementing national monetary policy, including refinancing, interest rates, exchange rates, reserve requirements, open market operations, and other instruments and measures as prescribed by the Government.

Article 11. Refinancing

1. Refinancing is a form of credit provision by the State Bank aimed at supplying short-term capital and means of payment to credit institutions.

2. The State Bank stipulates and implements refinancing for credit institutions in the following forms:

a) Secured loans through collateral with negotiable instruments;

b) Discounting of negotiable instruments;

c) Other forms of refinancing.

Article 12. Interest Rates

1. The State Bank announces refinancing interest rates, basic interest rates, and other types of interest rates to manage monetary policy and combat usurious lending.

2. In cases where the money market exhibits abnormal developments, the State Bank stipulates mechanisms for managing interest rates applicable in relations between credit institutions and customers, and other credit relationships.

Article 13. Exchange Rates

1. The exchange rate of the Vietnamese dong is formed based on the supply and demand for foreign currencies in the market, regulated by the State.

2. The State Bank announces exchange rates, determines exchange rate regimes, and manages exchange rates.

Article 14. Reserve Requirements

1. Reserve requirements are amounts that credit institutions must deposit with the State Bank to implement national monetary policy.

2. The State Bank stipulates reserve requirement ratios for each type of credit institution and each type of deposit at credit institutions to implement national monetary policy.

3. The State Bank stipulates the payment of interest on reserve deposits and deposits exceeding reserve requirements for each type of credit institution for each type of deposit.

Article 15. Open Market Operations

1. The State Bank conducts open market operations through the purchase and sale of negotiable instruments from credit institutions.

2. The State Bank stipulates the types of negotiable instruments permitted to be traded through open market operations.

Section 2

ISSUE OF PAPER MONEY AND METAL CURRENCY

Article 16. Unit of Currency

The unit of currency of the Socialist Republic of Vietnam is "Dong," with the national symbol being "đ" and the international symbol being "VND"; one dong equals ten hào, and one hào equals ten xu.

Article 17. Issue of Paper Money and Metal Currency

1. The State Bank is the sole agency issuing paper money and metal currency of the Socialist Republic of Vietnam.

2. Paper money and metal currency issued by the State Bank are legitimate means of payment on the territory of the Socialist Republic of Vietnam.

3. The State Bank ensures adequate supply and structure of paper money and metal currency for the economy.

4. Paper money and metal currency issued into circulation are liabilities ("Debts") to the economy and are balanced by assets ("Credits") of the State Bank.

Article 18. Designing, printing, minting, storing, transporting, circulating, and destroying currency

1. The State Bank designs the denomination, size, weight, images, patterns, and other characteristics of the currency.

2. The State Bank organizes the implementation of printing, minting, storing, transporting, circulating, and destroying currency.

Article 19. Handling torn and damaged currency

The State Bank stipulates standards for classifying torn and damaged currency; exchanging and recalling torn and damaged currency during circulation; not exchanging torn and damaged currency caused by illegal destruction.

Article 20. Recall and replacement of currency

The State Bank recalls and withdraws from circulation types of currency that are no longer suitable and issues other types of currency to replace them. Recalled currencies can be exchanged for other types of currency with equivalent value within the period specified by the State Bank. After the recall period, recalled currencies will no longer have circulation value.

Article 21. Sample Currency and Commemorative Currency

The State Bank organizes the design, printing, minting, and sale of sample currency and commemorative currency domestically and internationally for collection purposes or other purposes as prescribed by law.

Article 22. Issuance Business Regulations and Inspection

1. The Government promulgates regulations on issuance business, including printing, minting, storing, transporting, circulating, recalling, replacing, and destroying currency, as well as costs for issuance business activities.

2. The Ministry of Finance inspects the implementation of printing, minting, and destroying currency operations.

Article 23. Prohibited Acts

1. Counterfeiting currency; transporting, storing, and circulating counterfeit currency.

2. Illegally destroying currency.

3. Refusing to accept or circulate currency issued by the State Bank that meets circulation standards.

4. Other prohibited acts as prescribed by law.

Section 3

LOANING, GUARANTY, TEMPORARY ADVANCE FOR THE STATE BUDGET

Article 24. Loans

1. The State Bank provides short-term loans to credit organizations as stipulated in point a, Clause 2.

2. The State Bank considers and decides to provide special loans to credit organizations in the following cases:

a) Credit organizations are in a state of losing payment capability, threatening the stability of the credit organization system;

b) Credit organizations are at risk of losing payment capability due to serious incidents.

3. The State Bank does not provide loans to individuals or organizations that are not credit organizations as stipulated in Clauses 1 and 2 of this Article.

Article 25. Guarantees

The State Bank does not guarantee loans for organizations and individuals, except for guarantees for credit organizations borrowing foreign capital as decided by the State Bank.

Article 26. Temporary Advance for the State Budget

The State Bank shall provide advance payment to the central budget to address temporary shortages in the state budget fund according to the decision of

Section 4

PAYMENT ACTIVITIES AND RESERVES

Article 27. Opening Accounts and Conducting Transactions on Accounts

1. The State Bank may open accounts and conduct transactions on accounts at foreign banks, financial institutions, and international banks.

2. The State Bank opens accounts and conducts transactions for credit organizations.

3. The National Treasury opens an account at the State Bank. In provinces, centrally-administered cities, counties, districts, towns, and provincial cities without branches of the State Bank, the implementation of transactions for the National Treasury follows the regulations of the State Bank.

Article 28. Organization, management, operation, and supervision of the national payment system

1. The State Bank organizes, manages, operates, and supervises the national payment system.

2. The State Bank implements the management of payment instruments in the economy.

Article 29. Treasury services

The State Bank provides treasury services through the collection and disbursement of funds for account holders, transportation, counting, sorting, and processing of currency in circulation.

Article 30. Agency for the State Treasury

The State Bank acts as an agent for the State Treasury in organizing auctions, issuing, custody, and settling government securities such as Treasury bills and bonds.

Section 5

FOREIGN EXCHANGE MANAGEMENT AND FOREIGN EXCHANGE ACTIVITIES

Article 31. Tasks and powers of the State Bank regarding foreign exchange management and foreign exchange activities

1. Manage and utilize foreign exchange on the territory of Vietnam in accordance with the provisions of the law.

2. Organize and develop the foreign exchange market.

3. Issue and revoke licenses for foreign exchange operations to credit institutions and other organizations engaged in foreign exchange activities.

4. Propose to the Prime Minister to decide on measures to restrict foreign exchange transactions to ensure national financial and monetary security.

5. Organize, manage, and participate in the interbank foreign exchange market.

6. Other tasks and powers concerning foreign exchange management and foreign exchange activities as prescribed by law.

Article 32. Management of State Foreign Exchange Reserves

1. State foreign exchange reserves include:

a) Cash foreign currencies and foreign currency deposits abroad;

b) Securities and other valuable papers denominated in foreign currencies issued by the Government, foreign organizations, and international organizations;

c) Special drawing rights and reserves at the International Monetary Fund;

d) Gold managed by the State Bank;

e) Other types of foreign exchange of the State.

2. The State Bank manages the State Foreign Exchange Reserves in accordance with the provisions of the law on foreign exchange to implement national monetary policy, ensure international payment capacity, and preserve the State Foreign Exchange Reserves.

3. The Prime Minister decides on the use of the State Foreign Exchange Reserves for urgent needs of the State; if the use of the State Foreign Exchange Reserves leads to changes in the budget estimate, it shall be implemented in accordance with the provisions of the Law on State Budget.

4. The State Bank reports to the Prime Minister periodically and urgently on the management of the State Foreign Exchange Reserves.

5. The Ministry of Finance audits the State Bank's management of State foreign exchange reserves according to the Government's regulations.

Article 33. Foreign Exchange Activities of the State Bank

The State Bank carries out the purchase and sale of foreign exchange on the domestic market for the purpose of national monetary policy; purchases and sells foreign exchange on the international market and conducts other foreign exchange transactions as prescribed by law.

Article 34. Purchase and Sale of Foreign Currency between State Foreign Exchange Reserves and the State Budget

The Prime Minister stipulates the amount of foreign currency that the Ministry of Finance may retain from budget revenue to cover regular foreign currency expenditures of the State Budget. The remaining foreign currency is sold by the Ministry of Finance to the centralized State Foreign Exchange Reserves at the State Bank.

Chapter 6

INFORMATION AND REPORTING ACTIVITIES

Article 35. Responsibility for Providing Information to the State Bank

1. Organizations and individuals have the responsibility to provide information to the State Bank to build the Balance Sheet of Money Supply, construct the Balance of Payments of Vietnam, and assess and forecast trends in the development of the money market to serve the formulation and implementation of national monetary policy and foreign exchange management work.

2. Credit institutions have the responsibility to provide information and statistical data as required by the State Bank to evaluate, audit, and supervise the situation of operations of the credit institution system and each individual credit institution.

3. The Governor of the State Bank specifies the subjects, procedures, scope, types of information, deadlines, and methods of providing information as prescribed in Clause 1 and Clause 2 of this Article.

Article 36. Principles for Providing Information

Information provided to the State Bank of Vietnam by organizations and individuals must ensure accuracy, honesty, completeness, and timeliness.

Article 37. Tasks of the State Bank of Vietnam in Information Activities

1. In information activities, the State Bank of Vietnam shall perform the following tasks:

a) Organizing the collection, utilization, storage, provision, and publication of information in accordance with the provisions of the law;

b) Organizing and supervising the provision of credit information of customers related to credit institutions to credit institutions;

c) Guiding the provision of information and urging, inspecting the implementation of information provision by organizations and individuals in accordance with the provisions of the law.

2. The State Bank of Vietnam has the responsibility to publish the following information within its authority:

a) Policies, laws on currency and banking;

b) Decisions on currency and banking management by the Governor of the State Bank of Vietnam;

c) The situation of currency and banking developments;

d) Notifications related to the establishment, purchase, sale, division, merger, bankruptcy, or dissolution of credit institutions;

đ) Financial results and operations of the State Bank of Vietnam as prescribed by law.

Article 38. Protection of Confidential Information

1. The State Bank of Vietnam is responsible for compiling lists, changing levels of confidentiality, and declassifying state secrets in the field of currency and banking submitted to competent state agencies for decision-making; protecting the confidentiality of the State Bank of Vietnam and of organizations and individuals as prescribed by law.

2. The State Bank of Vietnam has the right to refuse requests from organizations and individuals for the provision of confidential information on currency and banking, except in cases where such requests are made by competent state agencies as prescribed by law.

3. Staff members of the State Bank of Vietnam must keep confidential operational information of the State Bank of Vietnam, of credit institutions, and deposit secrecy of organizations and individuals as prescribed by law.

Article 39. Statistics, Analysis, and Forecasting of Currency

The State Bank of Vietnam organizes statistics and collects information on the economy, currency, and banking both domestically and internationally to serve research, analysis, and forecasting of currency developments for the formulation and implementation of national monetary policy.

Article 40. Reporting Activities

1. The Prime Minister reports or authorizes the Governor of the State Bank of Vietnam to report to the National Assembly annually on the results of implementing national monetary policy, reporting and explaining issues raised before the National Assembly, the Standing Committee of the National Assembly, and other National Assembly bodies; providing timely information and materials necessary for National Assembly bodies when requested to supervise the implementation of national monetary policy.

2. The State Bank of Vietnam reports to the Government on the following contents:

a) The situation of currency and banking developments on a six-monthly and annual basis;

b) Annual financial reports that have been audited.

3. The State Bank of Vietnam provides reports to ministries and ministerial-level agencies as prescribed by law.

Article 41. Publishing Activities

The State Bank of Vietnam organizes the publication of publications on currency and banking as prescribed by law.

Chapter IV

FINANCE AND ACCOUNTING OF THE STATE BANK OF VIETNAM

Article 42. Statutory Capital

The statutory capital of the State Bank shall be provided from the state budget. The level of statutory capital of the State Bank shall be determined by

Article 43. Financial Revenue and Expenditure

The financial revenue and expenditure of the State Bank shall, in principle, be implemented in accordance with the provisions of the State Budget Law.

Article 44. Financial Results

The annual financial results of the State Bank shall be determined by the sources of income from banking operations and other sources, after deducting operating costs and risk reserves.

Article 45. Funds

1. The State Bank may allocate from its annual financial results to establish the following funds:

a) National Monetary Policy Implementation Fund;

b) Financial Reserve Fund;

c) Other funds as decided by the Prime Minister.

2. The allocation levels and usage of the funds mentioned in Clause 1 of this Article shall be carried out in accordance with the regulations of the Prime Minister.

3. The financial results of the State Bank after establishing the funds mentioned in Clause 1 of this Article shall be submitted to the state budget.

Article 46. Accounting Records

The State Bank shall implement accounting records in accordance with Vietnamese accounting standards and the special accounting regime for the central bank as prescribed by the Prime Minister.

Article 47. Audit

The annual financial reports of the State Bank shall be audited and confirmed by the State Audit Agency.

Article 48. Fiscal Year

The fiscal year of the State Bank begins on January 1 and ends on December 31 of each calendar year.

Chapter V

INSPECTION AND SUPERVISION OF BANKS

Article 49. Banking Inspection and Supervision Authority

2. The Prime Minister shall specify in detail the organization, duties, and powers of the Banking Inspection and Supervision Authority.

Article 50. Purpose of Banking Inspection and Supervision

Banking inspection and supervision aim to ensure the safe and sound development of credit organizations and the financial system; protect the legitimate rights and interests of depositors and customers of credit organizations; maintain and enhance public confidence in the credit organization system; ensure compliance with monetary and banking policies and laws; contribute to improving the efficiency and effectiveness of state management in the monetary and banking sectors.

Article 51. Principles of Banking Inspection and Supervision

1. Banking inspection and supervision must comply with the law; ensure accuracy, objectivity, honesty, transparency, democracy, and timeliness; not obstruct the normal activities of inspected and supervised agencies, organizations, and individuals.

2. Combine inspection and supervision of compliance with monetary and banking policies and laws with inspection and supervision of risks in the activities of inspected and supervised entities.

3. Banking inspection and supervision shall be conducted based on the principle of inspecting and supervising all activities of credit organizations.

4. Banking inspection and supervision shall be carried out in accordance with this Law and other relevant legal provisions; in case there is a discrepancy between the provisions on banking inspection and supervision in this Law and those in other laws, the provisions of this Law shall prevail.

5. The Governor of the State Bank shall stipulate the procedures and formalities for banking inspection and supervision.

Article 52. Objects of Banking Inspection

The State Bank shall inspect the following objects:

1. Credit organizations, foreign bank branches, representative offices of foreign credit organizations, other foreign organizations engaging in banking activities. In cases where necessary, the State Bank may request competent state agencies to inspect or cooperate in inspecting subsidiaries and associated companies of credit organizations.

2. Organizations engaging in foreign exchange activities, gold trading activities; organizations providing credit information services; organizations supplying non-bank payment intermediary services.

3. Vietnamese agencies, organizations, and individuals, and foreign agencies, organizations, and individuals in Vietnam in implementing laws on currency and banking within the scope of management by the State Bank.

Article 53. Rights and Obligations of Banking Inspection Objects

1. Implement inspection conclusions.

2. Perform rights and obligations as prescribed by law.

Article 54. Basis for Issuing Inspection Decisions

The issuance of inspection decisions must be based on one of the following grounds:

1. Inspection programs and plans.

2. Requests from the Governor of the State Bank.

3. When signs of law violations are detected.

4. When there are signs of risks threatening the safety of credit organization operations.

Article 55. Contents of Banking Inspection

1. Inspect compliance with laws on currency and banking, and implementation of regulations stipulated in licenses issued by the State Bank.

2. Examine and assess risk levels, risk management capabilities, and financial conditions of banking inspection objects.

3. Recommend competent state agencies to amend, supplement, revoke, or promulgate normative legal documents to meet requirements for state management over currency and banking.

4. Recommend and require banking inspection objects to take measures to limit, reduce, and handle risks to ensure the safety of banking operations and prevent actions leading to law violations.

5. Detect, prevent, and handle according to authority; recommend competent state agencies to handle law violations concerning currency and banking.

Article 56. Objects of Banking Supervision

The State Bank shall conduct banking supervision over all activities of credit organizations and foreign bank branches. In cases where necessary, the State Bank may request competent state agencies to supervise or cooperate in supervising subsidiaries and associated companies of credit organizations.

Article 57. Rights and Obligations of Banking Supervision Objects

1. Timely, fully, and accurately provide information and documents as requested by the Banking Inspection and Supervision Agency; bear legal responsibility for the accuracy and truthfulness of provided information and documents.

2. Report and explain recommendations, risk warnings, and operational safety of the Banking Inspection and Supervision Agency.

3. Implement recommendations, risk warnings, and operational safety of the Banking Inspection and Supervision Agency.

Article 58. Contents of Banking Supervision

1. Collect, compile, and process documents, information, and data as required for banking supervision.

2. Examine and monitor compliance with regulations on banking operational safety and other laws on currency and banking; implementation of inspection conclusions, recommendations, and decisions on handling inspections and supervision recommendations and warnings.

3. Analyze and evaluate financial situations, operations, governance, management, and risk levels of credit organizations; rank credit organizations annually.

4. Detect and warn about risks causing loss of banking operational safety and risks leading to law violations concerning currency and banking.

5. Recommend and propose preventive, blocking, and handling measures for risks and law violations.

Article 59. Handling of Banking Inspection and Supervision Targets

1. If banking inspection and supervision targets violate laws on currency and banking, they shall be subject to disciplinary action, administrative penalties, or criminal prosecution depending on the nature and severity of the violation. If damage is caused, compensation must be provided according to the law.

2. Depending on the nature and level of risk, the State Bank may also apply the following measures against banking inspection and supervision targets:

a) Limiting dividend distribution, share transfer, and asset transfer;

b) Restricting expansion of scope, scale, and operating areas;

c) Restricting, suspending, or temporarily suspending one or several banking activities;

d) Requiring credit institutions to increase their charter capital to meet safety requirements in banking operations;

đ) Requiring credit institutions to transfer charter capital or share capital; major shareholders or controlling shareholders must transfer shares;

e) Deciding on credit growth limits for credit institutions when necessary to ensure safety for the credit institution and the system of credit institutions;

g) Applying higher safety ratios than those prescribed.

Article 60. Coordination between the State Bank and Ministries/Equivalent Agencies in Banking Inspection and Supervision Activities

1. The State Bank coordinates with relevant ministries/equivalent agencies to exchange information on inspection and supervision activities within their jurisdiction in the financial and banking sectors.

2. The State Bank leads and coordinates with authorized state agencies to inspect and supervise credit institutions; coordinates with authorized state agencies to inspect and supervise subsidiaries and associated companies of credit institutions as stipulated in Articles 52 and 56 of this Law.

Article 61. Coordination of Banking Inspection and Supervision between the State Bank and Foreign Authorities with Inspection and Supervision Powers

1. The State Bank exchanges information and coordinates with foreign authorities with inspection and supervision powers to inspect and supervise foreign banking inspection and supervision targets operating in Vietnam and Vietnamese banking inspection and supervision targets operating abroad.

2. The State Bank agrees with foreign authorities with inspection and supervision powers on the form, content, mechanism for exchanging information, and coordinating inspections and supervision in accordance with Vietnamese law.

Chapter VI

INTERNAL AUDIT

Article 62. Internal Audit

1. Internal audit is a unit within the organizational structure of the State Bank, responsible for conducting internal audits and internal controls at the State Bank.

2. Regulations on internal audit and internal control are issued by the Governor of the State Bank.

Article 63. Objectives, Goals, and Principles of Operation of Internal Audit

1. The object of internal audit is units within the State Bank system.

2. The goal of internal audit is to evaluate the effectiveness of internal control to ensure the reliability of financial reports, the efficiency of activities, compliance with laws, regulations, procedures of the State Bank, and the security of assets.

3. The operation of internal audit is carried out based on the following principles:

a) Compliance with laws, regulations, procedures, and plans approved by the Governor of the State Bank;

b) Ensuring independence, honesty, objectivity, and confidentiality of state secrets and the confidentiality of the audited unit;

c) Not hindering normal operations of the audited unit;

d) Internal audit has access to documents, records, transactions, and other necessary materials of the audited entity to achieve the audit objectives.

Article 64. Duties and powers of Internal Audit

1. Conduct audits of all units under the State Bank system in accordance with the approved audit plan or at the request of the Governor of the State Bank.

2. Conduct financial audits, operational audits, and other tasks assigned to the State Bank.

Chapter VII

IMPLEMENTING PROVISIONS

Article 65. Effective Date

This Law shall take effect from January 1, 2011.

2. The Law on the State Bank of Vietnam No. 01/1997/QH10 and the Law amending and supplementing certain articles of the Law on the State Bank of Vietnam No. 10/2003/QH11 shall cease to be effective from the date this Law takes effect.

Article 66. Detailed Provisions and Guidance on Implementation

The Government shall provide detailed provisions and guidance on the implementation of the Articles and Clauses assigned in this Law; provide necessary guidance on other contents of this Law to meet management requirements.

This Law was passed by the National Assembly of the Socialist Republic of Vietnam, the twelfth session, seventh meeting, on June 16, 2010.