The recently amended Law on Credit Institutions in Vietnam seeks to bolster the autonomy and accountability of credit institutions (CIs), fortify the resilience of the CI system, and enhance the oversight, inspection, and monitoring of the nation’s banking sector. This announcement was made by Vu Hong Thanh, Chairman of the National Assembly’s Economic Committee, during an extraordinary general meeting in Hanoi on Monday.
Key provisions of the amended law include the requirement for CIs and foreign bank branches to select an independent audit organization, meeting the State Bank of Vietnam’s (SBV) specified criteria, for auditing financial reports and conducting internal control audits before the fiscal year concludes.
In terms of delegation and agency operations, the National Assembly’s Standing Committee introduced new provisions permitting commercial banks to act as insurance agents in accordance with insurance business laws and within the scope outlined by the Governor of the SBV.
Addressing credit limits, the committee endorsed a detailed roadmap for a gradual reduction over five years from the law’s effective date until 2029. This measured approach aims to ensure transparency and clarity, prevent sudden impacts on CI operations, and limit credit concentration, while simultaneously expanding credit access for diverse customer groups.
The committee also considered government regulations on risk provisions, emphasizing the need for input from relevant ministries and agencies due to the complexity of accounting and corporate income tax regulations.
In cases of early intervention in CIs and foreign bank branches, the SBV is entrusted with the responsibility of reviewing and deciding on intervention, particularly when accumulated losses exceed 15% of the recorded value of charter capital, contributed capital, and reserves, or in cases of violations of the minimum capital adequacy ratio.
The SBV is granted authority to conduct reviews and decide on placing CIs under special control, with the government determining special measures to ensure the safety of the CI system, public order, and social safety during these interventions.
Furthermore, the amended law empowers the SBV to inspect, audit, and supervise credit institutions, foreign bank branches, and representative offices of foreign banks in line with current laws and regulations.
The National Assembly’s Standing Committee has urged the Government, SBV, the Government Inspectorate, and ministries to continue proposing solutions to enhance and improve the effectiveness of inspection, audit, and supervision activities, ensuring the health of CI operations and the efficacy of the law.
With the adoption of these amendments, the law now comprises 15 chapters and 210 articles, and is slated to come into effect on January 1, 2025.