Decision No. 951/2003/QD-NHNN on the establishment and operation of remittance companies directly under joint-stock commercial banks of the State and people

DECISION OF THE GOVERNOR OF THE STATE BANK OF VIETNAM

Issuing regulations on the establishment and operation of remittance companies directly under joint-stock commercial banks owned by the State and people

GOVERNOR OF THE STATE BANK OF VIETNAM

Pursuant to the Law on the State Bank of Vietnam No. 01/1997/QH10 dated December 12, 1997 Male Pursuant to the Law on Credit Organizations No. 02/1997/QH10 dated December 12, 1997 12/12/1997;

Pursuant to Decree No. 86/2002/NĐ-CP dated 05/11/2002 of the Government stipulating the functions, tasks, powers, and organizational structure of Ministries and ministerial-level agencies;

Pursuant to Decree No. 49/2000/NĐ-CP dated 12/09/2000 of the Government on the organization and operation of commercial banks;

Pursuant to Decree No. 63/1998/NĐ-CP dated 17/08/1998 of the Government on foreign exchange management;

At the proposal of the Director of the Department of Banks and Non-Bank Financial Institutions,

DECIDES:

Article 1. Attached to this Decision are "Regulations on the Establishment and Operation of Remittance Companies Directly Under Joint-Stock Commercial Banks Owned by the State and People"

Article 2. This Decision shall take effect fifteen days from the date of publication in the Official Gazette.

Article 3. The Director of the Office of the State Bank of Vietnam, the Head of the Department of Commercial Banks and Non-Bank Financial Institutions, the Inspector General of the State Bank of Vietnam, the Heads of relevant units under the State Bank of Vietnam, the Governors of the State Bank of Vietnam Branches in provinces and cities, and the joint-stock commercial banks owned by the State and people shall be responsible for implementing this Decision.

REGULATIONS

ON THE ESTABLISHMENT AND OPERATION OF REMITTANCE COMPANIES
DIRECTLY UNDER JOINT-STOCK COMMERCIAL BANKS
OWNED BY THE STATE AND PEOPLE

(Issued together with Decision No. 951/2003/QĐ-NHNN dated August 18, 2003 of the Governor of the State Bank of Vietnam)
dated August 18, 2003 of the Governor of the State Bank)

PART I. GENERAL PROVISIONS

Article 1. Scope of application

1. Joint-stock commercial banks owned by the State and people (hereinafter referred to as joint-stock commercial banks) may establish remittance companies directly under them, which have independent legal personality and operate independently with their own capital.

2. Remittance companies directly under joint-stock commercial banks (hereinafter referred to as remittance companies directly under) are companies established in the form of a limited liability company with one member, owned by a joint-stock commercial bank.

Article 2. Authority to Establish Remittance Companies Directly Under

The Chairman of the Association The Management Board of joint-stock commercial banks decides to establish remittance companies directly under joint-stock commercial banks after obtaining written approval from the Governor of the State Bank of Vietnam.

PART II. SPECIFIC PROVISIONS

SECTION I. ESTABLISHING REMITTANCE COMPANIES DIRECTLY UNDER

Article 3. Conditions for establishing remittance companies directly under joint-stock commercial banks may be approved by the Governor of the State Bank of Vietnam to establish remittance companies directly under joint-stock commercial banks if they meet the following conditions:

1. Having at least three years of operating experience since the date of commencing operations;

2. Sound financial situation, profitable business operations in the two most recent years, overdue loan ratio below 3%;

3. Efficient management board, operational system, and internal audit system;

4. Information system meeting management requirements;

5. No violation of banking safety regulations and other laws, and no administrative penalties in the field of currency and banking activities within at least one year prior to the application for establishment of remittance companies directly under;

6. Permission from the State Bank of Vietnam to conduct foreign exchange trading activities.

Article 4. Documents for Requesting Approval to Establish Remittance Companies Directly Under

The documents for requesting approval to establish remittance companies directly under joint-stock commercial banks include:

1. A request from the Chairman of the Management Board of joint-stock commercial banks to the Governor of the State Bank of Vietnam for permission to establish remittance companies directly under;

2. Resolution of the Shareholders' Meeting approving the establishment of remittance companies directly under;

3. A feasible project for establishing remittance companies directly under, including the necessity of establishment, registered capital, scope and content of operations, organizational structure and personnel, and plans for operations in the first three years, clearly stating the benefits and effectiveness of establishing remittance companies directly under;

4. Draft charter regarding the organization and operation of remittance companies directly under;

5. Written approval from the People's Committee of the province or city where the main office of the remittance company directly under is located regarding the location of the main office; of the remittance company directly under.

6. Decision of the Governor of the State Bank of Vietnam allowing the conduct of foreign exchange trading activities.

7. Audited reports for the two most recent years and the latest quarterly balance sheet of the joint-stock commercial bank;

8. Opinion of the State Bank of Vietnam Branch in the province or city where the main office of the remittance company directly under is located (if the main office of the remittance company directly under is located in a different locality from that of the joint-stock commercial bank).

Article 5. Procedure and Formalities

1. Joint-stock commercial banks establishing remittance companies directly under must prepare two sets of documents in accordance with Article 4 of these Regulations and submit them to the State Bank of Vietnam Branch in the province or city where the joint-stock commercial bank is located.

2. Within fifteen working days from the date of receipt of all documents, the State Bank of Vietnam Branch in the province or city where the joint-stock commercial bank is located must review, assess, and provide written comments (with one set of documents) to the Governor of the State Bank of Vietnam.

3. Within thirty working days from the date of receipt of all documents, the Governor of the State Bank of Vietnam must review and provide written comments approving or not approving the establishment of remittance companies directly under.

Article 6. Business Registration and Commencement of Operations

1. Within six months from the date of written approval by the State Bank of Vietnam, joint-stock commercial banks must complete all business registration procedures, publish notices in central or local newspapers for three consecutive issues, and comply with other legal provisions to commence operations of remittance companies directly under.

2. Within seven days from the date of issuance of the Business Registration Certificate, joint-stock commercial banks must send certified copies of the Business Registration Certificate of the remittance company directly under to the Central State Bank of Vietnam, the State Bank of Vietnam Branch in the province or city where the joint-stock commercial bank is located, and the State Bank of Vietnam Branch in the province or city where the remittance company directly under is located. 

PART II. CONTENT OF THE OPERATIONS OF THE COMPANY
FOREIGN REMITTANCE SUBSIDIARY

Article 7. Content of operations

The content of the operations of the foreign remittance subsidiary: Implementing foreign remittance business activities according to current regulations of the State and the State Bank on foreign remittances.

Article 8. Relationship between the Joint Stock Commercial Bank and the Foreign Remittance Subsidiary

1. The Joint Stock Commercial Bank shall provide capital when establishing and supplementing capital for the Foreign Remittance Subsidiary, and must report to the State Bank of Vietnam Branch where the head office of the Joint Stock Commercial Bank is located after providing the capital.

2. When calculating safety ratios, the Joint Stock Commercial Bank must deduct the total amount of capital provided to subsidiaries from its own capital. The Joint Stock Commercial Bank must ensure that the actual registered capital after deducting the total amount of capital provided to subsidiaries is not lower than the statutory capital requirement for joint stock commercial banks.

3. The Joint Stock Commercial Bank owning may not extend credit to the Foreign Remittance Subsidiary.

Article 9. Branches and Subsidiaries

1. Branches:

a. The Foreign Remittance Subsidiary is only permitted to open branches upon approval by the State Bank of Vietnam Branch of the province/city where the Foreign Remittance Subsidiary's main office is located and the State Bank of Vietnam Branch of the province/city where the branch is planned to be opened. b. Procedures, formalities, and documents for opening branches of the Foreign Remittance Subsidiary:

The Foreign Remittance Subsidiary prepares documents to submit to the State Bank of Vietnam Branch of the province/city where it plans to open a branch; The documents include:

Approval for opening a branch by the State Bank of Vietnam Branch of the province/city where the Foreign Remittance Subsidiary's main office is located.

A report from the Chairman of the Board of Directors or the Chairman of the Foreign Remittance Subsidiary detailing the necessity of establishing a branch of the Foreign Remittance Subsidiary;

Operation plan of the branch of the Foreign Remittance Subsidiary;

Certified copy of the approval for establishment of the Foreign Remittance Subsidiary issued by the Governor of the State Bank, and the Business Registration Certificate of the Foreign Remittance Subsidiary.

Other documents (if necessary).

2. Subsidiaries: The Foreign Remittance Subsidiary of the Joint Stock Commercial Bank may not establish subsidiaries.

Accounting Records

Article 10. The Foreign Remittance Subsidiary shall maintain accounting records in accordance with the current accounting system of the State applicable to the type of company.

Reports on Operations

Article 11. Annually once every six months, the Foreign Remittance Subsidiary must submit reports on organizational personnel and operational status to the State Bank of Vietnam Branch of the province/city where the Foreign Remittance Subsidiary is located, the State Bank of Vietnam Branch of the province/city where the Joint Stock Commercial Bank is located, and the State Bank of Vietnam (Bank Inspection Department and Banking Division).

Dissolution, Bankruptcy, Liquidation In cases where the Foreign Remittance Subsidiary operates ineffectively, incurs losses, or violates laws, dissolution, liquidation, or bankruptcy shall be carried out in accordance with current legal provisions.

Article 12. Dissolution, bankruptcy, liquidation

In cases where a remittance company subsidiary operates ineffectively, incurs losses, or violates the law, it shall be liquidated, dissolved, or declared bankrupt in accordance with current legal provisions.

CHAPTER III. RESPONSIBILITIES OF THE UNITS UNDER THE STATE BANK
OF VIETNAM

Article 13. Responsibilities of the State Bank of Vietnam Branches in Provinces and Cities.

1. The State Bank of Vietnam Branch in the province or city where the head office of the joint-stock commercial bank is located shall be responsible for:

a. Receiving applications to establish remittance companies directly under joint-stock commercial banks, studying, examining, and submitting reports along with the application files to the Governor of the State Bank of Vietnam for consideration and approval of the establishment of remittance companies directly under joint-stock commercial banks on the territory according to the provisions of Article 5 Clause 2 of this Regulation;

b. Cooperating with the State Bank of Vietnam Branch in the province or city where the head office of the remittance company is located to implement management and supervision of the remittance company directly under the joint-stock commercial bank in accordance with current laws;

c. Submitting to the Governor of the State Bank of Vietnam to suspend operations and close down the remittance company directly under the joint-stock commercial bank when there is serious violation of the law.

2. The State Bank of Vietnam Branch in the province or city where the head office of the remittance company is located shall be responsible for:

a. Providing opinions to the State Bank of Vietnam Branch in the province or city where the head office of the joint-stock commercial bank is located regarding the establishment of the remittance company directly under the joint-stock commercial bank;

b. Supervising and guiding the opening and operation of the remittance company directly under the joint-stock commercial bank to ensure compliance with regulations;

c. Implementing management and supervision of the remittance company directly under the joint-stock commercial bank on the territory in accordance with current laws.

3. The State Bank of Vietnam Branch in the province or city where the branch of the remittance company is located shall be responsible for: Cooperating with the State Bank of Vietnam Branch in the province or city where the head office of the remittance company is located regarding the establishment of branches and management, supervision of the activities of the branch of the remittance company directly under the joint-stock commercial bank on the territory in accordance with the law.

Article 14. Responsibilities of units under the Central State Bank:

1. Department of Banks and Non-Bank Credit Institutions:

a. Receiving, studying, and examining the files of remittance companies directly under joint-stock commercial banks sent by the Director of the State Bank of Vietnam Branch in the province or city; submitting to the Governor of the State Bank of Vietnam for decision on approval or non-approval of the establishment of remittance companies directly under joint-stock commercial banks;

b. Proposing measures to handle issues related to the approval of establishment, suspension of operations, and closure of remittance companies directly under joint-stock commercial banks.

2. Banking Inspection Department:

a. The Banking Inspection Department shall be responsible for reviewing and evaluating the files and conditions for joint-stock commercial banks to establish remittance companies directly under them;

b. Directing and organizing inspections and supervision of the activities of remittance companies directly under joint-stock commercial banks in accordance with their functions, tasks, and powers prescribed by law.

3. Foreign Exchange Management Department shall be responsible for participating and providing opinions on the activities of remittance companies directly under joint-stock commercial banks when applying for establishment.

CHAPTER IV. IMPLEMENTATION PROVISIONS

Article 15. Amendments and supplements to the provisions of this Regulation shall be decided by the Governor of the State Bank of Vietnam.